8-K
T-Mobile US, Inc. (TMUS)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of report (Date of earliest event reported): April 25, 2024
T-MOBILE US, INC.
(Exact Name of Registrant as Specified in Charter)
| Delaware | 1-33409 | 20-0836269 |
|---|---|---|
| (State or other jurisdiction | (Commission File Number) | (I.R.S. Employer |
| of incorporation) | Identification No.) |
12920 SE 38th Street
Bellevue, Washington
(Address of principal executive offices)
98006-1350
(Zip Code)
Registrant’s telephone number, including area code: (425) 378-4000
(Former Name or Former Address, if Changed Since Last Report):
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
|---|---|
| ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.00001 per share | TMUS | The NASDAQ Stock Market LLC |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Item 2.02 — Results of Operations and Financial Condition
On April 25, 2024, T-Mobile US, Inc. (the “Company”) issued a press release announcing the financial and operating results of the Company for the quarter ended March 31, 2024. The text of the press release and accompanying Investor Factbook are furnished as Exhibits 99.1 and 99.2 and incorporated herein by reference.
The information in Item 2.02 to this Current Report on Form 8-K, including Exhibits 99.1 and 99.2, is being furnished and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that section, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as expressly set forth by specific reference in such filing.
Item 9.01 — Financial Statements and Exhibits
(d) Exhibits:
| Exhibit | Description |
|---|---|
| 99.1 | Press release, dated April 25, 2024, entitled "T-Mobile Delivers Industry-Leading Customer, Service Revenue and Profitability Growth in Q1 2024, and Raises 2024 Guidance" |
| 99.2 | Investor Factbook of T-Mobile US, Inc.FirstQuarter2024Results |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101) |
| SIGNATURES | |
| --- |
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| T-MOBILE US, INC. | |
|---|---|
| April 25, 2024 | /s/ Peter Osvaldik |
| Peter Osvaldik<br>Executive Vice President and Chief Financial Officer |
Document
EXHIBIT 99.1
T-Mobile Delivers Industry-Leading Customer, Service Revenue and Profitability Growth in Q1 2024, and Raises 2024 Guidance
Un-carrier Matches Lowest Ever Q1 Postpaid Phone Churn and Surpasses 5 Million High Speed Internet Customers While Returning $4.3 Billion to Stockholders in Q1
Industry-Leading Customer Growth Fueled by Best Network and Best Value Combination(1)
•Postpaid net account additions of 218 thousand, best in industry
•Postpaid net customer additions of 1.2 million, best in industry
•Postpaid phone net customer additions of 532 thousand, best in industry and higher share of industry net adds year-over-year
•Postpaid phone churn of 0.86%, matches record low for Q1
•High Speed Internet net customer additions of 405 thousand, best in industry, passing 5 million customers
Translating Industry-Leading Customer Growth Into Industry-Leading Financial Performance
•Service revenues of $16.1 billion grew 4% year-over-year, best in industry growth
•Postpaid service revenues of $12.6 billion grew 6% year-over-year, best in industry growth
•Net income of $2.4 billion grew 22% year-over-year, best in industry growth
•Diluted earnings per share (“EPS”) of $2.00 grew 27% year-over-year, best in industry growth
•Core Adjusted EBITDA(2) of $7.6 billion grew 8% year-over-year, best in industry growth
•Net cash provided by operating activities of $5.1 billion grew 25% year-over-year, record high for Q1
•Adjusted Free Cash Flow(2) of $3.3 billion grew 39% year-over-year, record high for Q1
•Returned $4.3 billion to stockholders in Q1 2024, including repurchases of $3.6 billion of common stock and its second quarterly dividend payment of $769 million
T-Mobile Strengthens Largest, Fastest and Most Advanced 5G Network with Additional Mid-Band Spectrum
•Nearly 95% of 5G network traffic on mid-band spectrum given the expansive breadth and depth of deployment
•85% of 5G traffic carried on sites with all three spectrum layers, delivering an incredibly consistent network experience
Bellevue, WA — April 25, 2024 — T-Mobile US, Inc. (NASDAQ: TMUS) reported first quarter 2024 results today,
raising full-year guidance and delivering industry-leading customer growth, including taking a higher share of postpaid phone net additions year-over-year and matching its lowest ever Q1 postpaid phone churn. The company translated best-in-class customer growth into industry-leading growth in service revenues and profitability, while returning $4.3 billion to stockholders in the quarter. The Un-carrier continues to build on its recent successes as a top broadband provider by surpassing 5 million High Speed Internet customers.
“T-Mobile had a great start to 2024 with industry-leading growth in service revenues and profitability,” said Mike Sievert, CEO of T-Mobile. “Even as the rest of wireless saw moderated customer growth, our momentum continued thanks to our increasingly differentiated combination of the best value, best network, and best experiences that customers love. We’re excited about our path forward and our raised guidance for 2024 reflects our confidence in what’s to come.”
___________________________________________________________
(1)AT&T Inc. does not disclose postpaid net account additions. Comcast and Charter do not disclose postpaid phone net customer additions. Industry-leading claims are based on consensus expectations if results are not yet reported.
(2)Core Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures tables. We are not able to forecast Net income on a forward-looking basis without unreasonable efforts due to the high variability and difficulty in predicting certain items that affect Net income, including, but not limited to, Income tax expense and Interest expense. Core Adjusted EBITDA should not be used to predict Net income as the difference between this measure and Net income is variable.
Industry-Leading Customer Growth Fueled by Best Network and Best Value Combination(1)
•Postpaid net account additions of 218 thousand decreased 69 thousand year-over-year.
•Postpaid net customer additions of 1.2 million decreased 73 thousand year-over-year.
•Postpaid phone net customer additions of 532 thousand decreased 6 thousand year-over-year. Postpaid phone churn of 0.86% improved 3 basis points year-over-year.
•Prepaid net customer losses of 48 thousand decreased 74 thousand year-over-year. Prepaid churn of 2.75% improved 1 basis point year-over-year.
•High Speed Internet net customer additions of 405 thousand decreased 118 thousand year-over-year. T-Mobile ended the quarter with 5.2 million High Speed Internet customers.
•Total net customer additions of 1.2 million decreased 147 thousand year-over-year. Total customer connections increased to a record high of 120.9 million.
| Quarter | ||||||
|---|---|---|---|---|---|---|
| (in thousands, except churn) | Q1 2024 | Q4 2023 | Q1 2023 | |||
| Postpaid net account additions | 218 | 299 | 287 | |||
| Total net customer additions | 1,172 | 1,623 | 1,319 | |||
| Postpaid net customer additions | 1,220 | 1,570 | 1,293 | |||
| Postpaid phone net customer additions | 532 | 934 | 538 | |||
| Postpaid other net customer additions (2) | 688 | 636 | 755 | |||
| Prepaid net customer (losses) additions (2) | (48) | 53 | 26 | |||
| Total customers, end of period (2)(3) | 120,872 | 119,700 | 114,917 | |||
| Postpaid phone churn | 0.86 | % | 0.96 | % | 0.89 | % |
| Prepaid churn | 2.75 | % | 2.86 | % | 2.76 | % |
| High Speed Internet net customer additions | 405 | 541 | 523 | |||
| Total High Speed Internet customers, end of period | 5,181 | 4,776 | 3,169 |
(1)AT&T Inc. does not disclose postpaid net account additions. Comcast and Charter do not disclose postpaid phone net customer additions. Industry-leading claims are based on consensus expectations if results are not yet reported.
(2)Includes High Speed Internet customers.
(3)In the fourth quarter of 2023, we recognized an additional base adjustment to increase postpaid phone customers by 20,000 and increase postpaid other customers by 150,000 due to fewer customers than expected whose service was deactivated as a result of the network shutdowns.
Translating Industry-Leading Customer Growth Into Industry-Leading Financial Performance(1)
•Total service revenues of $16.1 billion increased 4% year-over-year, and Postpaid service revenues of $12.6 billion increased 6% year-over-year.
•Net income of $2.4 billion increased 22% year-over-year, which included Merger-related costs, net of tax, of $97 million.
•Diluted EPS of $2.00 per share increased 27% year-over-year.
•Core Adjusted EBITDA of $7.6 billion increased 8% year-over-year.
•Net cash provided by operating activities of $5.1 billion increased 25% year-over-year, which included cash payments for Merger-related costs of $293 million.
•Cash purchases of property and equipment, including capitalized interest, of $2.6 billion decreased 12% year-over-year.
•Adjusted Free Cash Flow of $3.3 billion increased 39% year-over-year, which included cash payments for Merger-related costs of $293 million.
•Stockholder Returns included 21.9 million shares of common stock repurchased for $3.6 billion in Q1 2024, with 136.2 million cumulative shares repurchased for $19.8 billion as of March 31, 2024. The remaining authorization for stock repurchases and quarterly cash dividends through December 2024 is $11.7 billion, with the next dividend payable on June 13, 2024.
| Quarter | Q1 2024<br><br>vs.<br><br>Q4 2023 | Q1 2024<br><br>vs.<br><br>Q1 2023 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except EPS) | Q1 2024 | Q4 2023 | Q1 2023 | ||||||||
| Total service revenues | $ | 16,096 | $ | 16,043 | $ | 15,546 | 0.3 | % | 3.5 | % | |
| Postpaid service revenues | 12,631 | 12,472 | 11,862 | 1.3 | % | 6.5 | % | ||||
| Total revenues | 19,594 | 20,478 | 19,632 | (4.3) | % | (0.2) | % | ||||
| Net income | 2,374 | 2,014 | 1,940 | 17.9 | % | 22.4 | % | ||||
| Diluted EPS | 2.00 | 1.67 | 1.58 | 19.8 | % | 26.6 | % | ||||
| Adjusted EBITDA | 7,652 | 7,224 | 7,199 | 5.9 | % | 6.3 | % | ||||
| Core Adjusted EBITDA | 7,617 | 7,181 | 7,052 | 6.1 | % | 8.0 | % | ||||
| Net cash provided by operating activities | 5,084 | 4,859 | 4,051 | 4.6 | % | 25.5 | % | ||||
| Cash purchases of property and equipment, including capitalized interest | 2,627 | 1,587 | 3,001 | 65.5 | % | (12.5) | % | ||||
| Adjusted Free Cash Flow | 3,347 | 4,305 | 2,401 | (22.3) | % | 39.4 | % |
(1) Industry-leading claims are based on consensus expectations if results are not yet reported.
T-Mobile Strengthens Largest, Fastest and Most Advanced 5G Network with Additional Mid-Band Spectrum
T-Mobile’s best-in-class Ultra Capacity 5G network has the deepest dedicated mid-band 5G spectrum deployment, with nearly 95% of 5G network traffic on mid-band including the recently deployed Auction 108 spectrum. The company’s unique multi-layer approach to 5G, with dedicated standalone 5G deployed nationwide across 600MHz, 1.9GHz, and 2.5GHz delivers customers a consistently strong experience, with 85% of 5G traffic on sites with all three spectrum bands deployed.
T-Mobile’s 5G leadership has translated into overall network leadership, while 5G is increasingly becoming the overall network experience for customers. Approximately 75% of postpaid phone customers are on a 5G device and the company has earned third-party recognition for its overall network performance.
Note: See 5G device, coverage, & access details at T-Mobile.com. Fastest: Based on median, overall combined speeds according to analysis by Ookla® of Speedtest Intelligence® data download speeds for Q4 2023. Ookla trademarks used under license and reprinted with permission. Opensignal Awards: USA: Mobile Network Experience Report January 2024, based on independent analysis of mobile measurements recorded during the period September 16 - December 14, 2023. © 2024 Opensignal Limited.
Raising 2024 Guidance
•Postpaid net customer additions are expected to be between 5.2 million and 5.6 million, an increase from prior guidance of 5.0 million to 5.5 million.
•Core Adjusted EBITDA, which is Adjusted EBITDA less lease revenues, is expected to be between $31.4 billion and $31.9 billion, an increase from prior guidance of $31.3 billion to $31.9 billion.
•Net cash provided by operating activities, including payments for Merger-related costs, is expected to be between $21.6 billion and $22.3 billion, an increase from prior guidance of $21.5 billion to $22.3 billion.
•Cash purchases of property and equipment, including capitalized interest, are expected to be between $8.6 billion and $9.4 billion.
•Adjusted Free Cash Flow, including payments for Merger-related costs, is expected to be between $16.4 billion and $16.9 billion, an increase from prior guidance of $16.3 billion to $16.9 billion. Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization.
| (in millions, except Postpaid net customer additions and Effective tax rate) | Previous | Current | Change (Mid-point) | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Postpaid net customer additions (thousands) | 5,000 | 5,500 | 5,200 | 5,600 | 150 | ||||||||||
| Net income (1) | N/A | N/A | N/A | N/A | N/A | ||||||||||
| Effective tax rate | 24 | % | 26 | % | 24 | % | 26 | % | — | % | |||||
| Core Adjusted EBITDA (2) | $ | 31,300 | $ | 31,900 | $ | 31,400 | $ | 31,900 | $ | 50 | |||||
| Net cash provided by operating activities | 21,500 | 22,300 | 21,600 | 22,300 | 50 | ||||||||||
| Capital expenditures (3) | 8,600 | 9,400 | 8,600 | 9,400 | — | ||||||||||
| Adjusted Free Cash Flow (4) | 16,300 | 16,900 | 16,400 | 16,900 | 50 |
(1)T-Mobile is not able to forecast Net income on a forward-looking basis without unreasonable efforts due to the high variability and difficulty in predicting certain items that affect GAAP Net income, including, but not limited to, Income tax expense and Interest expense. Core Adjusted EBITDA should not be used to predict Net income as the difference between this measure and Net income is variable.
(2)Management uses Core Adjusted EBITDA as a measure to monitor the financial performance of Company operations, excluding the impact of lease revenues from related device financing programs. Guidance ranges assume lease revenues of approximately $100 million for 2024.
(3)Capital expenditures means cash purchases of property and equipment, including capitalized interest.
(4)Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2024.
Financial Results
For more details on T-Mobile’s Q1 2024 financial results, including the Investor Factbook with detailed financial tables, please visit T-Mobile US, Inc.’s Investor Relations website at https://investor.t-mobile.com.
Earnings Call Information
Date/Time
•Thursday, April 25, 2024, at 4:30 p.m. (EDT)
Pre-registration link for dial-in access
Participants can pre-register for the conference call here in order to receive dial-in information.
Access via Phone (audio only)
Please plan on accessing the call 10 minutes prior to the scheduled start time.
•Toll Free: 1-866-777-2509
•International: 1-412-317-5413
Access via Webcast
The earnings call will be broadcasted live and can be replayed via the Investor Relations website at https://investor.t-mobile.com.
Submit Questions via X
Send a post to @TMobileIR or @MikeSievert using $TMUS
Contact Information
•Media Relations: mediarelations@t-mobile.com
•Investor Relations: investor.relations@t-mobile.com
T-Mobile Social Media
Investors and others should note that we announce material financial and operational information to our investors using our investor relations website (https://investor.t-mobile.com), newsroom website (https://t-mobile.com/news), press releases, SEC filings and public conference calls and webcasts. We also intend to use certain social media accounts as a means of disclosing information about us and our services and for complying with our disclosure obligations under Regulation FD (the @TMobileIR X account (https://twitter.com/TMobileIR), the @MikeSievert X account (https://twitter.com/MikeSievert), which Mr. Sievert also uses as a means for personal communications and observations, and the @TMobileCFO X account (https://twitter.com/tmobilecfo), and our CFO’s LinkedIn account (https://www.linkedin.com/in/peter-osvaldik-3887394), both of which Mr. Osvaldik also uses as a means for personal communication and observations). The information we post through these social media channels may be deemed material. Accordingly, investors should monitor these social media channels in addition to following our press releases, SEC filings and public conference calls and webcasts. The social media channels that we intend to use as a means of disclosing the information described above may be updated from time to time as listed on our investor relations website.
About T-Mobile US, Inc.
T-Mobile US, Inc. (NASDAQ: TMUS) is America’s supercharged Un-carrier, delivering an advanced 4G LTE and transformative nationwide 5G network that will offer reliable connectivity for all. T-Mobile’s customers benefit from its unmatched combination of value and quality, unwavering obsession with offering them the best possible service experience and undisputable drive for disruption that creates competition and innovation in wireless and beyond. Based in Bellevue, Wash., T-Mobile provides services through its subsidiaries and operates its flagship brands, T-Mobile and Metro by T-Mobile. For more information please visit: https://www.t-mobile.com.
Forward-Looking Statements
This communication includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including information concerning T-Mobile US, Inc.’s future results of operations, are forward-looking statements. These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could” or similar expressions.
Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties and may cause actual results to differ materially from the forward-looking statements. Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the following: competition, industry consolidation and changes in the market for wireless communications services and other forms of connectivity; criminal cyberattacks, disruption, data loss or other security breaches; our inability to take advantage of technological developments on a timely basis; our inability to retain or motivate key personnel, hire qualified personnel or maintain our corporate culture; system failures and business disruptions, allowing for unauthorized use of or interference with our network and other systems; the scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use; the impacts of the actions we have taken and conditions we have agreed to in connection with the regulatory proceedings and approvals of the Transactions (as defined below), including the acquisition by DISH Network Corporation (“DISH”) of the prepaid wireless business operated under the Boost Mobile and Sprint prepaid brands (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Personal Communications Company LLC and Swiftel Communications, Inc.), including customer accounts, inventory, contracts, intellectual property and certain other specified assets, and the assumption of certain related liabilities (collectively, the “Prepaid Transaction”), the complaint and proposed final judgment agreed to by us, Deutsche Telekom AG (“DT”), Sprint Corporation, now known as Sprint LLC (“Sprint”), SoftBank Group Corp. (“SoftBank”) and DISH with the U.S. District Court for the District of Columbia, which was approved by the Court on April 1, 2020, the proposed commitments filed with the Secretary of the Federal Communications Commission (“FCC”), which we announced on May 20, 2019, certain national security commitments and undertakings, and any other commitments or undertakings entered into, including, but not limited to, those we have made to certain states and nongovernmental organizations (collectively, the “Government Commitments”), and the challenges in satisfying the Government Commitments in the required time frames and the significant cumulative costs incurred in tracking and monitoring compliance over multiple years; adverse economic, political or market conditions in the U.S. and international markets, including changes resulting from increases in inflation or interest rates, supply chain disruptions, and impacts of geopolitical instability, such as the Ukraine-Russia war and Israel-Hamas war; sociopolitical volatility and polarization; our inability to manage the ongoing commercial services arrangements entered into in connection with the Prepaid Transaction, and known or unknown liabilities arising in connection therewith; the timing and effects of any future acquisition, divestiture, investment, or merger involving us; any disruption or failure of our third parties (including key suppliers) to provide products or services for the operation of our business; our substantial level of indebtedness and our inability to service our debt obligations in accordance with their terms; changes in the credit market conditions, credit rating downgrades or an inability to access debt markets; the risk of future material weaknesses we may identify, or any other failure by us to maintain effective internal controls, and the resulting significant costs and reputational damage; any changes in regulations or in the regulatory framework under which we operate; laws and regulations relating to the handling of privacy and data protection; unfavorable outcomes of and increased costs from existing or future regulatory or legal proceedings; difficulties in protecting our intellectual property rights or if we infringe on the intellectual property rights of others; our offering of regulated financial services products and exposure to a wide variety of state and federal regulations; new or amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations; our wireless licenses, including those controlled through leasing agreements, are subject to renewal and may be revoked; our exclusive forum provision as provided in our Certificate of Incorporation; interests of DT, our controlling stockholder, which may differ from the interests of other stockholders; the dollar amount authorized for our 2023-2024 Stockholder Return Program may not be fully utilized, and our share repurchases and dividend payments pursuant thereto may fail to have the desired impact on stockholder value; future sales of our common stock by DT and SoftBank and our inability to attract additional equity financing outside the United States due to foreign ownership limitations by the FCC; and other risks as disclosed in our most recent annual report on Form 10-K, 10-Q and other filings with the Securities and Exchange Commission. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law.
T-Mobile US, Inc.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
(Unaudited)
This Press Release includes non-GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations for the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below. T-Mobile is not able to forecast Net income on a forward-looking basis without unreasonable efforts due to the high variability and difficulty in predicting certain items that affect GAAP net income, including, but not limited to, Income tax expense and Interest expense. Adjusted EBITDA and Core Adjusted EBITDA should not be used to predict Net income as the difference between either of these measures and Net income is variable.
Adjusted EBITDA and Core Adjusted EBITDA are reconciled to Net income as follows:
| Quarter | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in millions) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||
| Net income | $ | 1,940 | $ | 2,221 | $ | 2,142 | $ | 2,014 | $ | 2,374 |
| Adjustments: | ||||||||||
| Interest expense, net | 835 | 861 | 790 | 849 | 880 | |||||
| Other income, net | (9) | (6) | (41) | (12) | (20) | |||||
| Income tax expense | 631 | 717 | 705 | 629 | 764 | |||||
| Operating income | 3,397 | 3,793 | 3,596 | 3,480 | 3,998 | |||||
| Depreciation and amortization | 3,203 | 3,110 | 3,187 | 3,318 | 3,371 | |||||
| Stock-based compensation (1) | 173 | 155 | 152 | 164 | 140 | |||||
| Merger-related costs | 358 | 276 | 152 | 248 | 130 | |||||
| Legal-related (recoveries) expenses, net (2) | (43) | — | — | 1 | — | |||||
| (Gain) loss on disposal group held for sale | (42) | 17 | — | — | — | |||||
| Other, net (3) | 153 | 54 | 513 | 13 | 13 | |||||
| Adjusted EBITDA | 7,199 | 7,405 | 7,600 | 7,224 | 7,652 | |||||
| Lease revenues | (147) | (69) | (53) | (43) | (35) | |||||
| Core Adjusted EBITDA | $ | 7,052 | $ | 7,336 | $ | 7,547 | $ | 7,181 | $ | 7,617 |
(1)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.
(2)Legal-related (recoveries) expenses, net consists of the settlement of certain litigation associated with the August 2021 cyberattack, net of insurance recoveries.
(3)Other, net, primarily consists of certain severance, restructuring and other expenses, gains and losses, including severance and related costs associated with the August 2023 workforce reduction, not directly attributable to the Merger, which are not reflective of T-Mobile’s core business activities and are, therefore, excluded from Adjusted EBITDA and Core Adjusted EBITDA.
Adjusted EBITDA represents earnings before Interest expense, net of Interest income, Income tax expense, Depreciation and amortization, stock-based compensation and certain expenses, gains and losses, which are not reflective of our ongoing operating performance (“Special Items”). Special Items include Merger-related costs, gain on disposal groups held for sale, certain legal-related recoveries and expenses, restructuring costs not directly attributable to the Merger (including severance), and other non-core gains and losses. Core Adjusted EBITDA represents Adjusted EBITDA less device 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 Core 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 to facilitate comparisons with other wireless communications services 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, and Special Items. 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 device 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 substitutes for 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)
Adjusted Free Cash Flow is calculated as follows:
| Quarter | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except percentages) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||
| Net cash provided by operating activities | $ | 4,051 | $ | 4,355 | $ | 5,294 | $ | 4,859 | $ | 5,084 | |||||
| Cash purchases of property and equipment, including capitalized interest | (3,001) | (2,789) | (2,424) | (1,587) | (2,627) | ||||||||||
| Proceeds from sales of tower sites | 6 | 2 | 2 | 2 | — | ||||||||||
| Proceeds related to beneficial interests in securitization transactions | 1,345 | 1,309 | 1,131 | 1,031 | 890 | ||||||||||
| Adjusted Free Cash Flow | $ | 2,401 | $ | 2,877 | $ | 4,003 | $ | 4,305 | $ | 3,347 | |||||
| Net cash provided by operating activities margin (Net cash provided by operating activities divided by Service revenues) | 26.1 | % | 27.7 | % | 33.3 | % | 30.3 | % | 31.6 | % | |||||
| Adjusted Free Cash Flow margin (Adjusted Free Cash Flow divided by Service revenues) | 15.4 | % | 18.3 | % | 25.2 | % | 26.8 | % | 20.8 | % |
Adjusted Free Cash Flow - Net cash provided by operating activities less Cash purchases of property and equipment, plus Proceeds from sales of tower sites and Proceeds related to beneficial interests in securitization transactions and less Cash payments for debt prepayment or debt extinguishment costs. Adjusted Free Cash Flow is utilized by T-Mobile’s management, investors and analysts to evaluate cash available to pay debt, repurchase shares, pay dividends and provide further investment in the business.
Adjusted Free Cash Flow margin - Adjusted Free Cash Flow divided by Service revenues. Adjusted Free Cash Flow Margin is utilized by T-Mobile’s management, investors, and analysts to evaluate the company’s ability to convert service revenue efficiently into cash available to pay debt, repurchase shares and provide further investment in the business.
The guidance range for Adjusted Free Cash Flow is calculated as follows:
| FY 2024 | ||||
|---|---|---|---|---|
| (in millions) | Guidance Range | |||
| Net cash provided by operating activities | $ | 21,600 | $ | 22,300 |
| Cash purchases of property and equipment, including capitalized interest | (8,600) | (9,400) | ||
| Proceeds related to beneficial interests in securitization transactions (1) | 3,400 | 4,000 | ||
| Adjusted Free Cash Flow | $ | 16,400 | $ | 16,900 |
(1)Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2024.
The previous guidance range for Adjusted Free Cash Flow was calculated as follows:
| FY 2024 | ||||
|---|---|---|---|---|
| (in millions) | Guidance Range | |||
| Net cash provided by operating activities | $ | 21,500 | $ | 22,300 |
| Cash purchases of property and equipment, including capitalized interest | (8,600) | (9,400) | ||
| Proceeds related to beneficial interests in securitization transactions (1) | 3,400 | 4,000 | ||
| Adjusted Free Cash Flow | $ | 16,300 | $ | 16,900 |
(1)Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2024.
T-Mobile US, Inc.
Operating Measures
(Unaudited)
The following table sets forth company operating measures ARPA and ARPU:
| Quarter | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in dollars) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||
| Postpaid ARPA | $ | 138.04 | $ | 138.94 | $ | 139.83 | $ | 140.23 | $ | 140.88 |
| Postpaid phone ARPU | 48.63 | 48.84 | 48.93 | 48.91 | 48.79 | |||||
| Prepaid ARPU | 37.98 | 37.98 | 38.18 | 37.55 | 37.18 |
Postpaid Average Revenue Per Account (Postpaid ARPA) - Average monthly postpaid service revenue earned per account. Postpaid service revenues for the specified period divided by the average number of postpaid accounts during the period, further divided by the number of months in the period.
Average Revenue Per User (ARPU) - Average monthly service revenue earned per customer. Service revenues for the specified period divided by the average number of customers during the period, further divided by the number of months in the period.
Postpaid phone ARPU excludes postpaid other customers and related revenues.
9
Document
EXHIBIT 99.2
| 2 | |
|---|---|
| 3 | Highlights |
| --- | --- |
| 4 | Customer Metrics |
| 7 | Financial Metrics |
| 13 | Capital Structure |
| 14 | Guidance |
| 15 | Contacts |
| 16 | Financial and Operational Tables |
| 3 | |
| --- |
(1)AT&T Inc. historically does not disclose postpaid net account additions. Comcast and Charter do not disclose postpaid phone net customer additions. Industry leading claims are based on consensus expectations if results are not yet reported.
(2)Core Adjusted EBITDA and Adjusted Free Cash Flow are non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations for these non-GAAP financial measures to the most directly comparable GAAP financial measures are provided in the Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures tables. We are not able to forecast Net income on a forward-looking basis without unreasonable efforts due to the high variability and difficulty in predicting certain items that affect Net income, including, but not limited to, Income tax expense and Interest expense. Core Adjusted EBITDA should not be used to predict Net income as the difference between this measure and Net income is variable.
| 4 |
|---|
| Postpaid Accounts<br><br>(in thousands) |
| --- |
| Year-Over-Year |
|---|
Continued growth in Postpaid net accounts with a decrease in net additions primarily due to:
■Fewer High Speed Internet only additions due to the sunsetting of promotional pricing, as well as a higher mix of high speed internet customers from existing accounts
| Sequential |
|---|
Continued growth in Postpaid net accounts with a decrease in net additions primarily due to:
■Seasonally lower industry switching activity
| Year-Over-Year |
|---|
Postpaid ARPA increased 2% primarily due to:
■Higher premium services, primarily high-end rate plans, net of contra revenues for content included in such plans, and discounts for specific affinity groups (55+, military, and first responders)
■An increase in customers per account, including continued adoption of High Speed Internet
■Partially offset by increased promotional activity and an increase in High Speed Internet only accounts
Postpaid phone ARPU was relatively flat due to:
■Higher premium services, primarily high-end rate plans, net of contra revenues for content included in such plans, and discounts for specific affinity groups (55+, military, and first responders)
■Offset by increased promotional activity and growth in business customers with lower ARPU given larger account sizes
| Sequential |
|---|
Postpaid ARPA was relatively flat due to:
■An increase in customers per account, including continued adoption of High Speed Internet
■Higher premium services, primarily high-end rate plans, net of contra revenues for content included in such plans, and discounts for specific affinity groups (55+, military, and first responders)
■Mostly offset by increased promotional activity and an increase in High Speed Internet only accounts
| Sequential |
|---|
Postpaid phone ARPU was relatively flat due to:
■Increased promotional activity and growth in business customers with lower ARPU given larger account sizes
■Offset by higher premium services, primarily high-end rate plans, net of contra revenues for content included in such plans, and discounts for specific affinity groups (55+, military, and first responders)
| Postpaid ARPA & Postpaid Phone ARPU |
|---|
| 5 |
|---|
| Postpaid Customers<br><br>(in thousands) |
| --- |
| Year-Over-Year |
|---|
Postpaid phone net customer additions slightly decreased primarily due to:
■Higher deactivations from a growing customer base
■Mostly offset by a lower churn rate and higher gross additions
Postpaid other net customer additions decreased primarily due to:
■Lower net additions from High Speed Internet and wearables
■Partially offset by higher net additions from other connected devices
| Sequential |
|---|
Postpaid phone net customer additions decreased due to:
■Seasonally lower gross additions
■Partially offset by seasonally lower churn
Postpaid other net customer additions increased primarily due to:
■Higher prior quarter deactivations of lower ARPU mobile internet devices in the educational sector
■Partially offset by seasonally lower net additions from wearables and lower High Speed Internet net additions
| Year-Over-Year |
|---|
Postpaid phone churn decreased 3 basis points primarily due to:
■Improved customer retention driven by value and network leadership
| Sequential |
|---|
Postpaid phone churn decreased 10 basis points primarily due to:
■Seasonally lower switching activity
■Rate plan optimizations in the prior quarter
| Postpaid Phone Churn |
|---|
| 6 |
|---|
| Prepaid Customers<br><br>(in thousands) |
| --- |
| Year-Over-Year |
|---|
Prepaid net customer additions (losses) decreased primarily due to:
■Lower gross additions, driven by continued moderation of prepaid industry growth and lower High Speed Internet additions
| Sequential |
|---|
Prepaid net customer additions (losses) decreased primarily due to:
■Lower gross additions
| Year-Over-Year |
|---|
High Speed Internet net customer additions decreased primarily due to:
■Increased deactivations from a growing customer base
■Lower gross additions driven by sunsetting of promotional pricing in order to maximize long-term value creation
■Partially offset by a lower churn rate
| Sequential |
|---|
High Speed Internet net customer additions decreased primarily due to:
■Lower gross additions driven by seasonality and the sunsetting of promotional pricing in order to maximize long-term value creation
| High Speed Internet Customers<br><br>(in thousands) |
|---|
| 7 |
|---|
| Service Revenues<br><br>($ in millions) |
| --- |
| Year-Over-Year |
|---|
Service revenues increased 4% primarily due to:
■Increase in Postpaid service revenues
■Partially offset by a decrease in Wholesale and other service revenues, including the impact from the sale of the Wireline Business
| Sequential |
|---|
Service revenues were relatively flat primarily due to:
■Increase in Postpaid service revenues
■Mostly offset by a decrease in Wholesale and other service revenues
| Year-Over-Year |
|---|
Postpaid service revenues increased 6% primarily due to:
■Higher average postpaid accounts
■Higher postpaid ARPA
| Sequential |
|---|
Postpaid service revenues increased 1% primarily due to:
■Higher average postpaid accounts
■Higher postpaid ARPA
| Postpaid Service Revenues<br><br>($ in millions) |
|---|
| 8 |
|---|
| Equipment Revenues<br><br>($ in millions) |
| --- |
| Year-Over-Year |
|---|
Equipment revenues decreased 13% primarily due to:
■A decrease in the number of postpaid and prepaid devices sold, including lower upgrades
■Partially offset by a slightly higher average revenue per device sold, primarily driven by a shift in the high-end phone mix, which was mostly offset by an increase in promotions per postpaid device
■Additionally partially offset by higher liquidation revenue primarily due to a higher number of in-house liquidated devices, which included the transition of certain device recovery programs from external sources to in-house processing resulting in a change in presentation from Other revenues to Equipment revenues
■Lower lease revenues
| Sequential |
|---|
Equipment revenues decreased 22% primarily due to:
■Seasonally lower number of devices sold
■A lower average revenue per device sold due to a decrease in the high-end phone mix
| Year-Over-Year |
|---|
Cost of equipment sales, exclusive of Depreciation and Amortization (D&A), decreased 4% primarily due to:
■A decrease in the number of postpaid and prepaid devices sold, including lower upgrades
■Partially offset by a higher average cost per device sold, primarily driven by a shift in the high-end phone mix
■Additionally partially offset by higher liquidation costs primarily due to a higher number of in-house liquidated devices, including the impact from the transition of certain device recovery programs from external sources to in-house processing
| Sequential |
|---|
Cost of equipment sales, exclusive of D&A, decreased 22% primarily due to:
■Seasonally lower number of devices sold
■A lower average cost per device sold due to a decrease in the high-end phone mix
| Cost of Equipment Sales, exclusive of D&A<br><br>($ in millions) |
|---|
| 9 |
|---|
| Cost of Services, exclusive of D&A<br><br>($ in millions, % of Service revenues) |
| --- |
| Year-Over-Year |
|---|
Cost of services, exclusive of D&A, decreased 12% primarily due to:
■Lower costs due to the sale of the Wireline Business
■Lower employee costs primarily related to reduced headcount
■Lower Merger-related costs related to network decommissioning and integration, as well as higher Merger synergies
| Sequential |
|---|
Cost of services, exclusive of D&A, decreased 4% primarily due to:
■Lower Merger-related costs related to network decommissioning and integration
| Year-Over-Year |
|---|
SG&A expense decreased 5% primarily due to:
■Lower Merger-related costs, as well as higher Merger synergies
■Lower employee costs primarily related to reduced headcount
■Higher severance and restructuring expenses in the prior year
■Partially offset by higher legal expenses
| Sequential |
|---|
SG&A expense decreased 3% primarily due to:
■Seasonally lower advertising and other selling expenses
■Lower Merger-related costs
■Partially offset by higher legal expenses
| Selling, General and Administrative (SG&A) Expense<br><br>($ in millions, % of Service revenues) |
|---|
| 10 |
|---|
| Net Income<br><br>($ in millions, % of Service revenues) |
| --- |
| Diluted Earnings Per Share<br><br>(Diluted EPS) |
|---|
| Year-Over-Year |
|---|
Net income was $2.4 billion and Diluted earnings per share was $2.00 in Q1 2024, compared to $1.9 billion and $1.58 in Q1 2023, primarily due to the factors described above and included the following, net of tax:
■Merger-related costs in Q1 2024 of $97 million, or $0.08 per share, compared to $268 million, or $0.22 per share, in Q1 2023
| Sequential |
|---|
Net income was $2.4 billion and Diluted earnings per share was $2.00 in Q1 2024, compared to $2.0 billion and $1.67 in Q4 2023, primarily due to the factors described above and included the following, net of tax:
■Merger-related costs in Q1 2024 of $97 million, or $0.08 per share, compared to $186 million, or $0.15 per share, in Q4 2023
| 11 |
|---|
| Core Adjusted EBITDA*<br><br>($ in millions, % of Service revenues) |
| --- |
*Excludes Special Items (see detail on page 23)
| Year-Over-Year |
|---|
Core Adjusted EBITDA increased 8% primarily due to:
■Higher Service revenues
■Lower Cost of services, excluding Special Items
■Lower Cost of equipment sales, excluding Special Items
■Partially offset by lower Equipment revenues, excluding Lease revenues, and lower Other revenues
| Sequential |
|---|
Core Adjusted EBITDA increased 6% primarily due to:
■Lower Cost of equipment sales
■Partially offset by lower Equipment revenues, excluding Lease revenues
| Year-Over-Year |
|---|
Net cash provided by operating activities increased 25% primarily due to:
■Higher Net income, adjusted for non-cash income and expenses
■Lower net cash outflows from changes in working capital
| Sequential |
|---|
Net cash provided by operating activities increased 5% primarily due to:
■Higher Net income, adjusted for non-cash income and expenses
■Partially offset by higher net cash outflows from changes in working capital
The impact of net payments for Merger-related costs on Net cash provided by operating activities was $293 million in Q1 2024 compared to $416 million in Q4 2023 and $484 million in Q1 2023.
| Net Cash Provided by Operating Activities<br><br>($ in millions) |
|---|
| 12 |
|---|
| Cash Purchases of Property and Equipment, incl. Capitalized Interest<br><br>($ in millions, % of Service revenues) |
| --- |
| Year-Over-Year |
|---|
Cash purchases of property and equipment, including capitalized interest, decreased 12% primarily due to:
■Increased capital efficiencies from accelerated investments in our nationwide 5G network build-out in previous years
| Sequential |
|---|
Cash purchases of property and equipment, including capitalized interest, increased 66% primarily due to:
■Planned timing of capital purchases
| Year-Over-Year |
|---|
Adjusted Free Cash Flow increased 39% primarily due to:
■Higher Net cash provided by operating activities
■Lower Cash purchases of property and equipment
■Partially offset by lower proceeds related to securitization transactions, which were offset in Net cash provided by operating activities. There were no significant net cash proceeds during the quarter from securitization.
| Sequential |
|---|
Adjusted Free Cash Flow decreased 22% primarily due to:
■Higher Cash purchases of property and equipment
■Lower proceeds related to securitization transactions, which were offset in Net cash provided by operating activities. There were no significant Net cash proceeds during the quarter from securitization.
■Partially offset by higher Net cash provided by operating activities
The impact of net payments for Merger-related costs on Adjusted Free Cash Flow was $293 million in Q1 2024 compared to $416 million in Q4 2023 and $484 million in Q1 2023.
| Adjusted Free Cash Flow<br><br>($ in millions) |
|---|
| 13 |
|---|
| Net Debt (Excluding Tower Obligations) & Net Debt to LTM Net Income and Core Adj. EBITDA Ratios<br><br>($ in billions) |
| --- |
| Stockholder Returns<br><br>($ in millions) |
|---|
Total debt, excluding tower obligations, at the end of Q1 2024 was $80.6 billion.
Net debt, excluding tower obligations, at the end of Q1 2024 was $73.9 billion.
■On September 6, 2023, the Board of Directors authorized a stockholder return program for up to $19.0 billion that will run through December 31, 2024, consisting of additional repurchases of shares and payment of cash dividends.
■During Q1 2024, 21.9 million shares were repurchased for $3.6 billion.
■On a cumulative basis, as of March 31, 2024, a total of 136.2 million shares were repurchased for approximately $19.8 billion.
■During Q1 2024, the company paid a cash dividend of $0.65 per each share of common stock, or approximately $769 million, on March 14, 2024.
■The remaining authorization for stock repurchases and quarterly cash dividends through December 2024 is $11.7 billion, with the next dividend payable on June 13, 2024.
| 14 |
|---|
2024 Outlook
| Metric | Previous | Revised | Change at Midpoint |
|---|---|---|---|
| Postpaid net customer additions | 5.0 to 5.5 million | 5.2 to 5.6 million | 150 thousand |
| Net income (1) | N/A | N/A | N/A |
| Effective tax rate | 24% to 26% | 24% to 26% | No change |
| Core Adjusted EBITDA (2) | $31.3 to $31.9 billion | $31.4 to $31.9 billion | $50 million |
| Net cash provided by operating activities | $21.5 to $22.3 billion | $21.6 to $22.3 billion | $50 million |
| Capital expenditures (3) | $8.6 to $9.4 billion | $8.6 to $9.4 billion | No change |
| Adjusted Free Cash Flow (4) | $16.3 to $16.9 billion | $16.4 to $16.9 billion | $50 million |
(1)We are not able to forecast Net income on a forward-looking basis without unreasonable efforts due to the high variability and difficulty in predicting certain items that affect GAAP Net income, including, but not limited to, Income tax expense and Interest expense. Core Adjusted EBITDA should not be used to predict Net income as the difference between this measure and Net income is variable.
(2)Management uses Core Adjusted EBITDA as a measure to monitor the financial performance of our operations, excluding the impact of lease revenues from our related device financing programs. Our guidance ranges assume lease revenues of approximately $100 million for 2024.
(3)Capital expenditures means cash purchases of property and equipment, including capitalized interest.
(4)Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2024.
| 15 |
|---|
Investor Relations
| Cathy Yao | Justin Taiber | Rob Brust |
|---|---|---|
| Senior Vice President | Senior Director | Senior Director |
| Investor Relations | Investor Relations | Investor Relations |
| Zach Witterstaetter | Rose Kopecky | Jacob Marks |
| --- | --- | --- |
| Investor Relations | Investor Relations | Investor Relations |
| Manager | Manager | Manager |
investor.relations@t-mobile.com
https://investor.t-mobile.com
| 16 |
|---|
T-Mobile US, Inc.
Condensed Consolidated Balance Sheets
(Unaudited)
| (in millions, except share and per share amounts) | March 31,<br>2024 | December 31,<br>2023 | ||
|---|---|---|---|---|
| Assets | ||||
| Current assets | ||||
| Cash and cash equivalents | $ | 6,708 | $ | 5,135 |
| Accounts receivable, net of allowance for credit losses of $161 and $161 | 4,253 | 4,692 | ||
| Equipment installment plan receivables, net of allowance for credit losses and imputed discount of $614 and $623 | 4,059 | 4,456 | ||
| Inventory | 1,521 | 1,678 | ||
| Prepaid expenses | 715 | 702 | ||
| Other current assets | 2,039 | 2,352 | ||
| Total current assets | 19,295 | 19,015 | ||
| Property and equipment, net | 39,286 | 40,432 | ||
| Operating lease right-of-use assets | 26,766 | 27,135 | ||
| Financing lease right-of-use assets | 3,180 | 3,270 | ||
| Goodwill | 12,234 | 12,234 | ||
| Spectrum licenses | 97,154 | 96,707 | ||
| Other intangible assets, net | 2,445 | 2,618 | ||
| Equipment installment plan receivables due after one year, net of allowance for credit losses and imputed discount of $143 and $150 | 1,908 | 2,042 | ||
| Other assets | 4,000 | 4,229 | ||
| Total assets | $ | 206,268 | $ | 207,682 |
| Liabilities and Stockholders' Equity | ||||
| Current liabilities | ||||
| Accounts payable and accrued liabilities | $ | 7,720 | $ | 10,373 |
| Short-term debt | 5,356 | 3,619 | ||
| Deferred revenue | 846 | 825 | ||
| Short-term operating lease liabilities | 3,443 | 3,555 | ||
| Short-term financing lease liabilities | 1,265 | 1,260 | ||
| Other current liabilities | 1,933 | 1,296 | ||
| Total current liabilities | 20,563 | 20,928 | ||
| Long-term debt | 71,361 | 69,903 | ||
| Long-term debt to affiliates | 1,496 | 1,496 | ||
| Tower obligations | 3,751 | 3,777 | ||
| Deferred tax liabilities | 14,187 | 13,458 | ||
| Operating lease liabilities | 27,827 | 28,240 | ||
| Financing lease liabilities | 1,163 | 1,236 | ||
| Other long-term liabilities | 3,846 | 3,929 | ||
| Total long-term liabilities | 123,631 | 122,039 | ||
| Commitments and contingencies | ||||
| Stockholders' equity | ||||
| Common stock, par value $0.00001 per share, 2,000,000,000 shares authorized; 1,266,294,032 and 1,262,904,154 shares issued, 1,177,240,110 and 1,195,807,331 shares outstanding | — | — | ||
| Additional paid-in capital | 67,786 | 67,705 | ||
| Treasury stock, at cost, 89,053,922 and 67,096,823 shares issued | (12,982) | (9,373) | ||
| Accumulated other comprehensive loss | (926) | (964) | ||
| Retained earnings | 8,196 | 7,347 | ||
| Total stockholders' equity | 62,074 | 64,715 | ||
| Total liabilities and stockholders' equity | $ | 206,268 | $ | 207,682 |
| 17 | ||||
| --- |
T-Mobile US, Inc.
Consolidated Statements of Comprehensive Income
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (in millions, except share and per share amounts) | March 31,<br>2024 | December 31,<br>2023 | March 31,<br>2023 | |||
| Revenues | ||||||
| Postpaid revenues | $ | 12,631 | $ | 12,472 | $ | 11,862 |
| Prepaid revenues | 2,403 | 2,433 | 2,417 | |||
| Wholesale and other service revenues | 1,062 | 1,138 | 1,267 | |||
| Total service revenues | 16,096 | 16,043 | 15,546 | |||
| Equipment revenues | 3,251 | 4,174 | 3,719 | |||
| Other revenues | 247 | 261 | 367 | |||
| Total revenues | 19,594 | 20,478 | 19,632 | |||
| Operating expenses | ||||||
| Cost of services, exclusive of depreciation and amortization shown separately below | 2,688 | 2,792 | 3,061 | |||
| Cost of equipment sales, exclusive of depreciation and amortization shown separately below | 4,399 | 5,608 | 4,588 | |||
| Selling, general and administrative | 5,138 | 5,280 | 5,425 | |||
| Gain on disposal group held for sale | — | — | (42) | |||
| Depreciation and amortization | 3,371 | 3,318 | 3,203 | |||
| Total operating expenses | 15,596 | 16,998 | 16,235 | |||
| Operating income | 3,998 | 3,480 | 3,397 | |||
| Other expense, net | ||||||
| Interest expense, net | (880) | (849) | (835) | |||
| Other income, net | 20 | 12 | 9 | |||
| Total other expense, net | (860) | (837) | (826) | |||
| Income before income taxes | 3,138 | 2,643 | 2,571 | |||
| Income tax expense | (764) | (629) | (631) | |||
| Net income | $ | 2,374 | $ | 2,014 | $ | 1,940 |
| Net income | $ | 2,374 | $ | 2,014 | $ | 1,940 |
| Other comprehensive income, net of tax | ||||||
| Reclassification of loss from cash flow hedges, net of tax effect of $15, $14 and $14 | 43 | 42 | 40 | |||
| Unrealized gain on foreign currency translation adjustment, net of tax effect of $0, $0 and $0 | — | — | 2 | |||
| Actuarial loss, net of amortization, on pension and other postretirement benefits, net of tax effect of $(2), $(20) and $0 | (5) | (57) | — | |||
| Other comprehensive income (loss) | 38 | (15) | 42 | |||
| Total comprehensive income | $ | 2,412 | $ | 1,999 | $ | 1,982 |
| Earnings per share | ||||||
| Basic | $ | 2.00 | $ | 1.74 | $ | 1.59 |
| Diluted | $ | 2.00 | $ | 1.67 | $ | 1.58 |
| Weighted-average shares outstanding | ||||||
| Basic | 1,185,298,497 | 1,157,313,367 | 1,219,608,362 | |||
| Diluted | 1,189,092,019 | 1,205,014,105 | 1,224,604,698 | |||
| 18 | ||||||
| --- |
T-Mobile US, Inc.
Condensed Consolidated Statements of Cash Flows
(Unaudited)
| Three Months Ended | ||||||||
|---|---|---|---|---|---|---|---|---|
| (in millions) | March 31,<br>2024 | December 31,<br>2023 | March 31,<br>2023 | |||||
| Operating activities | ||||||||
| Net income | $ | 2,374 | $ | 2,014 | $ | 1,940 | ||
| Adjustments to reconcile net income to net cash provided by operating activities | ||||||||
| Depreciation and amortization | 3,371 | 3,318 | 3,203 | |||||
| Stock-based compensation expense | 140 | 167 | 177 | |||||
| Deferred income tax expense | 715 | 615 | 611 | |||||
| Bad debt expense | 282 | 235 | 222 | |||||
| Losses from sales of receivables | 21 | 30 | 38 | |||||
| Gain on remeasurement of disposal group held for sale | — | — | (13) | |||||
| Changes in operating assets and liabilities | ||||||||
| Accounts receivable | (416) | (1,210) | (1,268) | |||||
| Equipment installment plan receivables | 277 | (393) | 152 | |||||
| Inventory | 170 | 15 | 129 | |||||
| Operating lease right-of-use assets | 856 | 898 | 1,008 | |||||
| Other current and long-term assets | 160 | (435) | (142) | |||||
| Accounts payable and accrued liabilities | (1,734) | 412 | (882) | |||||
| Short- and long-term operating lease liabilities | (1,017) | (901) | (1,009) | |||||
| Other current and long-term liabilities | (172) | 70 | (183) | |||||
| Other, net | 57 | 24 | 68 | |||||
| Net cash provided by operating activities | 5,084 | 4,859 | 4,051 | |||||
| Investing activities | ||||||||
| Purchases of property and equipment, including capitalized interest of $(9), $(10) and $(14) | (2,627) | (1,587) | (3,001) | |||||
| Purchases of spectrum licenses and other intangible assets, including deposits | (61) | (785) | (73) | |||||
| Proceeds from sales of tower sites | — | 2 | 6 | |||||
| Proceeds related to beneficial interests in securitization transactions | 890 | 1,031 | 1,345 | |||||
| Other, net | 11 | 118 | (5) | |||||
| Net cash used in investing activities | (1,787) | (1,221) | (1,728) | |||||
| Financing activities | ||||||||
| Proceeds from issuance of long-term debt | 3,473 | — | 3,013 | |||||
| Repayments of financing lease obligations | (327) | (313) | (306) | |||||
| Repayments of long-term debt | (223) | (223) | (131) | |||||
| Repurchases of common stock | (3,594) | (2,183) | (4,619) | |||||
| Dividends on common stock | (769) | (747) | — | |||||
| Tax withholdings on share-based awards | (192) | (30) | (187) | |||||
| Other, net | (34) | (34) | (43) | |||||
| Net cash used in financing activities | (1,666) | (3,530) | (2,273) | |||||
| Change in cash and cash equivalents, including restricted cash and cash held for sale | 1,631 | 108 | 50 | |||||
| Cash and cash equivalents, including restricted cash and cash held for sale | ||||||||
| Beginning of period | 5,307 | 5,199 | 4,674 | |||||
| End of period | $ | 6,938 | $ | 5,307 | $ | 4,724 | 19 | |
| --- |
T-Mobile US, Inc.
Condensed Consolidated Statements of Cash Flows (Continued)
(Unaudited)
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (in millions) | March 31,<br>2024 | December 31,<br>2023 | March 31,<br>2023 | |||
| Supplemental disclosure of cash flow information | ||||||
| Interest payments, net of amounts capitalized | $ | 896 | $ | 895 | $ | 840 |
| Operating lease payments | 1,344 | 1,228 | 1,314 | |||
| Income tax payments | 7 | 23 | 27 | |||
| Non-cash investing and financing activities | ||||||
| Non-cash beneficial interest obtained in exchange for securitized receivables | $ | 661 | $ | 842 | $ | 1,119 |
| Change in accounts payable and accrued liabilities for purchases of property and equipment | (894) | 336 | (329) | |||
| Operating lease right-of-use assets obtained in exchange for lease obligations | 487 | 465 | 439 | |||
| Financing lease right-of-use assets obtained in exchange for lease obligations | 263 | 263 | 239 | |||
| 20 | ||||||
| --- |
T-Mobile US, Inc.
Supplementary Operating and Financial Data
(Unaudited)
| Quarter | |||||
|---|---|---|---|---|---|
| (in thousands) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 |
| Customers, end of period | |||||
| Postpaid phone customers (1) | 73,372 | 74,132 | 74,982 | 75,936 | 76,468 |
| Postpaid other customers (1) | 20,153 | 20,954 | 21,330 | 22,116 | 22,804 |
| Total postpaid customers | 93,525 | 95,086 | 96,312 | 98,052 | 99,272 |
| Prepaid customers | 21,392 | 21,516 | 21,595 | 21,648 | 21,600 |
| Total customers | 114,917 | 116,602 | 117,907 | 119,700 | 120,872 |
| Adjustments to customers (1) | — | — | — | 170 | — |
(1)In the fourth quarter of 2023, we recognized an additional base adjustment to increase postpaid phone customers by 20,000 and increase postpaid other customers by 150,000 due to fewer customers than expected whose service was deactivated as a result of the network shutdowns.
| Quarter | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||||
| Net customer additions (losses) | ||||||||||||
| Postpaid phone customers | 538 | 760 | 850 | 934 | 532 | |||||||
| Postpaid other customers | 755 | 801 | 376 | 636 | 688 | |||||||
| Total postpaid customers | 1,293 | 1,561 | 1,226 | 1,570 | 1,220 | |||||||
| Prepaid customers | 26 | 124 | 79 | 53 | (48) | |||||||
| Total net customer additions | 1,319 | 1,685 | 1,305 | 1,623 | 1,172 | |||||||
| Migrations from prepaid to postpaid plans | 145 | 140 | 155 | 170 | 145 | |||||||
| Quarter | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||
| Churn | ||||||||||||
| Postpaid phone churn | 0.89 | % | 0.77 | % | 0.87 | % | 0.96 | % | 0.86 | % | ||
| Prepaid churn | 2.76 | % | 2.62 | % | 2.81 | % | 2.86 | % | 2.75 | % | ||
| Quarter | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | ||
| Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||
| Postpaid upgrade rate | ||||||||||||
| Postpaid device upgrade rate | 3.2 | % | 2.6 | % | 2.7 | % | 3.2 | % | 2.4 | % | 21 | |
| --- |
T-Mobile US, Inc.
Supplementary Operating and Financial Data
(Unaudited)
| Quarter | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| (in thousands) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||
| Accounts, end of period | ||||||||||
| Total postpaid customer accounts | 28,813 | 29,112 | 29,498 | 29,797 | 30,015 | |||||
| Quarter | ||||||||||
| --- | --- | --- | --- | --- | --- | |||||
| (in thousands) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||
| Net account additions | ||||||||||
| Postpaid net account additions | 287 | 299 | 386 | 299 | 218 | |||||
| Quarter | ||||||||||
| --- | --- | --- | --- | --- | --- | |||||
| (in thousands) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||
| High speed internet customers, end of period | ||||||||||
| Postpaid high speed internet customers | 2,855 | 3,302 | 3,807 | 4,288 | 4,634 | |||||
| Prepaid high speed internet customers | 314 | 376 | 428 | 488 | 547 | |||||
| Total high speed internet customers, end of period | 3,169 | 3,678 | 4,235 | 4,776 | 5,181 | |||||
| Quarter | ||||||||||
| --- | --- | --- | --- | --- | --- | |||||
| (in thousands) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||
| High speed internet - net customer additions | ||||||||||
| Postpaid high speed internet customers | 445 | 447 | 505 | 481 | 346 | |||||
| Prepaid high speed internet customers | 78 | 62 | 52 | 60 | 59 | |||||
| Total high speed internet net customer additions | 523 | 509 | 557 | 541 | 405 | |||||
| Quarter | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in millions) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||
| Device financing - equipment installment plans | ||||||||||
| Gross EIP financed | $ | 3,335 | $ | 2,858 | $ | 3,116 | $ | 4,275 | $ | 3,218 |
| EIP billings | 3,871 | 3,732 | 3,622 | 3,829 | 3,880 | |||||
| EIP receivables, net | 7,262 | 6,745 | 6,349 | 6,498 | 5,967 | |||||
| Device financing - leased devices | ||||||||||
| Lease revenues | $ | 147 | $ | 69 | $ | 53 | $ | 43 | $ | 35 |
| Leased device depreciation | 58 | 46 | 37 | 29 | 22 | |||||
| Quarter | ||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| (in dollars) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | |||||
| Operating measures | ||||||||||
| Postpaid ARPA | $ | 138.04 | $ | 138.94 | $ | 139.83 | $ | 140.23 | $ | 140.88 |
| Postpaid phone ARPU | 48.63 | 48.84 | 48.93 | 48.91 | 48.79 | |||||
| Prepaid ARPU | 37.98 | 37.98 | 38.18 | 37.55 | 37.18 | |||||
| 22 | ||||||||||
| --- |
T-Mobile US, Inc.
Supplementary Operating and Financial Data (continued)
(Unaudited)
| Quarter | |||||||||||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except percentages) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||||||||
| Financial measures | |||||||||||||||||||||||||||
| Service revenues | $ | 15,546 | $ | 15,738 | $ | 15,914 | $ | 16,043 | $ | 16,096 | |||||||||||||||||
| Equipment revenues | $ | 3,719 | $ | 3,169 | $ | 3,076 | $ | 4,174 | $ | 3,251 | |||||||||||||||||
| Lease revenues | 147 | 69 | 53 | 43 | 35 | ||||||||||||||||||||||
| Equipment sales | $ | 3,572 | $ | 3,100 | $ | 3,023 | $ | 4,131 | $ | 3,216 | |||||||||||||||||
| Total revenues | $ | 19,632 | $ | 19,196 | $ | 19,252 | $ | 20,478 | $ | 19,594 | |||||||||||||||||
| Net income | $ | 1,940 | $ | 2,221 | $ | 2,142 | $ | 2,014 | $ | 2,374 | |||||||||||||||||
| Net income margin | 12.5 | % | 14.1 | % | 13.5 | % | 12.6 | % | 14.7 | % | |||||||||||||||||
| Adjusted EBITDA | $ | 7,199 | $ | 7,405 | $ | 7,600 | $ | 7,224 | $ | 7,652 | |||||||||||||||||
| Adjusted EBITDA margin | 46.3 | % | 47.1 | % | 47.8 | % | 45.0 | % | 47.5 | % | |||||||||||||||||
| Core Adjusted EBITDA | $ | 7,052 | $ | 7,336 | $ | 7,547 | $ | 7,181 | $ | 7,617 | |||||||||||||||||
| Core Adjusted EBITDA margin | 45.4 | % | 46.6 | % | 47.4 | % | 44.8 | % | 47.3 | % | |||||||||||||||||
| Cost of services, exclusive of depreciation and amortization | $ | 3,061 | $ | 2,916 | $ | 2,886 | $ | 2,792 | $ | 2,688 | |||||||||||||||||
| Merger-related costs | 208 | 178 | 120 | 146 | 107 | ||||||||||||||||||||||
| Other Special Items | 23 | 18 | 154 | — | 1 | ||||||||||||||||||||||
| Cost of services, excluding depreciation and amortization and Special Items | $ | 2,830 | $ | 2,720 | $ | 2,612 | $ | 2,646 | $ | 2,580 | |||||||||||||||||
| Cost of equipment sales, exclusive of depreciation and amortization | $ | 4,588 | $ | 4,088 | $ | 4,249 | $ | 5,608 | $ | 4,399 | |||||||||||||||||
| Merger-related recoveries | (9) | — | (3) | — | — | ||||||||||||||||||||||
| Cost of equipment sales, excluding depreciation and amortization and Special Items | $ | 4,597 | $ | 4,088 | $ | 4,252 | $ | 5,608 | $ | 4,399 | |||||||||||||||||
| Selling, general and administrative | $ | 5,425 | $ | 5,272 | $ | 5,334 | $ | 5,280 | $ | 5,138 | |||||||||||||||||
| Merger-related costs | 159 | 98 | 35 | 102 | 23 | ||||||||||||||||||||||
| Other Special Items | 87 | 36 | 359 | 14 | 12 | ||||||||||||||||||||||
| Selling, general and administrative, excluding Special Items | $ | 5,179 | $ | 5,138 | $ | 4,940 | $ | 5,164 | $ | 5,103 | |||||||||||||||||
| Total bad debt expense and losses from sales of receivables | $ | 260 | $ | 264 | $ | 274 | $ | 265 | $ | 303 | |||||||||||||||||
| Bad debt and losses from sales of receivables as a percentage of Total revenues | 1.3 | % | 1.4 | % | 1.4 | % | 1.3 | % | 1.5 | % | |||||||||||||||||
| Cash purchases of property and equipment including capitalized interest | $ | 3,001 | $ | 2,789 | $ | 2,424 | $ | 1,587 | $ | 2,627 | |||||||||||||||||
| Capitalized interest | 14 | 14 | 66 | 10 | 9 | ||||||||||||||||||||||
| Net cash proceeds from securitization | $ | (29) | $ | (31) | $ | (33) | $ | (21) | $ | (29) | |||||||||||||||||
| Net cash payments for Merger-related costs | $ | 484 | $ | 728 | $ | 345 | $ | 416 | $ | 293 | Quarter | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | |||||||||||||||||
| (in millions, except share and per share amounts) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||||||||||||||
| Stockholder returns | |||||||||||||||||||||||||||
| Total repurchases | $ | 4,766 | $ | 3,525 | $ | 2,675 | $ | 2,241 | $ | 3,568 | |||||||||||||||||
| Total shares repurchased | 32,963,940 | 25,183,838 | 19,313,159 | 15,464,107 | 21,933,790 | ||||||||||||||||||||||
| Average purchase price per share | $ | 144.57 | $ | 140.00 | $ | 138.48 | $ | 144.95 | $ | 162.69 | |||||||||||||||||
| Total dividends paid | $ | — | $ | — | $ | — | $ | 747 | $ | 769 | |||||||||||||||||
| Dividends per share | — | — | — | 0.65 | 0.65 | ||||||||||||||||||||||
| Total stockholder returns | $ | 4,766 | $ | 3,525 | $ | 2,675 | $ | 2,988 | $ | 4,337 | |||||||||||||||||
| Cumulative stockholder returns | $ | 7,766 | $ | 11,291 | $ | 13,966 | $ | 16,954 | $ | 21,291 | |||||||||||||||||
| 23 | |||||||||||||||||||||||||||
| --- |
T-Mobile US, Inc.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures
(Unaudited)
This Investor Factbook includes non-GAAP financial measures. The non-GAAP financial measures should be considered in addition to, but not as a substitute for, the information provided in accordance with GAAP. Reconciliations for the non-GAAP financial measures to the most directly comparable GAAP financial measures are provided below. T-Mobile is not able to forecast Net income on a forward-looking basis without unreasonable efforts due to the high variability and difficulty in predicting certain items that affect GAAP net income, including, but not limited to, Income tax expense and Interest expense. Adjusted EBITDA and Core Adjusted EBITDA should not be used to predict Net income, as the difference between either of these measures and Net income is variable.
Adjusted EBITDA and Core Adjusted EBITDA are reconciled to Net income as follows:
| Quarter | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except percentages) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||
| Net income | $ | 1,940 | $ | 2,221 | $ | 2,142 | $ | 2,014 | $ | 2,374 | |||||
| Adjustments: | |||||||||||||||
| Interest expense, net | 835 | 861 | 790 | 849 | 880 | ||||||||||
| Other income, net | (9) | (6) | (41) | (12) | (20) | ||||||||||
| Income tax expense | 631 | 717 | 705 | 629 | 764 | ||||||||||
| Operating income | 3,397 | 3,793 | 3,596 | 3,480 | 3,998 | ||||||||||
| Depreciation and amortization | 3,203 | 3,110 | 3,187 | 3,318 | 3,371 | ||||||||||
| Stock-based compensation (1) | 173 | 155 | 152 | 164 | 140 | ||||||||||
| Merger-related costs | 358 | 276 | 152 | 248 | 130 | ||||||||||
| Legal-related (recoveries) expenses, net (2) | (43) | — | — | 1 | — | ||||||||||
| (Gain) loss on disposal group held for sale | (42) | 17 | — | — | — | ||||||||||
| Other, net (3) | 153 | 54 | 513 | 13 | 13 | ||||||||||
| Adjusted EBITDA | 7,199 | 7,405 | 7,600 | 7,224 | 7,652 | ||||||||||
| Lease revenues | (147) | (69) | (53) | (43) | (35) | ||||||||||
| Core Adjusted EBITDA | $ | 7,052 | $ | 7,336 | $ | 7,547 | $ | 7,181 | $ | 7,617 | |||||
| Net income margin (Net income divided by Service revenues) | 12.5 | % | 14.1 | % | 13.5 | % | 12.6 | % | 14.7 | % | |||||
| Adjusted EBITDA margin (Adjusted EBITDA divided by Service revenues) | 46.3 | % | 47.1 | % | 47.8 | % | 45.0 | % | 47.5 | % | |||||
| Core Adjusted EBITDA margin (Core Adjusted EBITDA divided by Service revenues) | 45.4 | % | 46.6 | % | 47.4 | % | 44.8 | % | 47.3 | % |
(1)Stock-based compensation includes payroll tax impacts and may not agree to stock-based compensation expense in the Condensed Consolidated Financial Statements. Additionally, certain stock-based compensation expenses associated with the Sprint Merger have been included in Merger-related costs.
(2)Legal-related (recoveries) expenses, net, consists of the settlement of certain litigation associated with the August 2021 cyberattack and is presented net of insurance recoveries.
(3)Other, net, primarily consists of certain severance, restructuring and other expenses, gains and losses, including severance and related costs associated with the August 2023 workforce reduction, not directly attributable to the Merger which are not reflective of T-Mobile’s core business activities and are, therefore, excluded from Adjusted EBITDA and Core Adjusted EBITDA.
| 24 |
|---|
T-Mobile US, Inc.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures (continued)
(Unaudited)
Net debt (excluding tower obligations) to the LTM Net income, LTM Adjusted EBITDA and LTM Core Adjusted EBITDA ratios are calculated as follows:
| (in millions, except net debt ratios) | Mar 31,<br>2023 | Jun 30,<br>2023 | Sep 30,<br>2023 | Dec 31,<br>2023 | Mar 31,<br>2024 | |||||
|---|---|---|---|---|---|---|---|---|---|---|
| Short-term debt | $ | 5,215 | $ | 7,731 | $ | 3,437 | $ | 3,619 | $ | 5,356 |
| Short-term financing lease liabilities | 1,180 | 1,220 | 1,286 | 1,260 | 1,265 | |||||
| Long-term debt | 68,035 | 68,646 | 70,365 | 69,903 | 71,361 | |||||
| Long-term debt to affiliates | 1,495 | 1,495 | 1,496 | 1,496 | 1,496 | |||||
| Financing lease liabilities | 1,284 | 1,254 | 1,273 | 1,236 | 1,163 | |||||
| Less: Cash and cash equivalents | (4,540) | (6,647) | (5,030) | (5,135) | (6,708) | |||||
| Net debt (excluding tower obligations) | $ | 72,669 | $ | 73,699 | $ | 72,827 | $ | 72,379 | $ | 73,933 |
| Divided by: Last twelve months Net income | $ | 3,817 | $ | 6,146 | $ | 7,780 | $ | 8,317 | $ | 8,751 |
| Net debt (excluding tower obligations) to LTM Net income Ratio | 19.0 | 12.0 | 9.4 | 8.7 | 8.4 | |||||
| Divided by: Last twelve months Adjusted EBITDA | $ | 28,070 | $ | 28,471 | $ | 29,032 | $ | 29,428 | $ | 29,881 |
| Net debt (excluding tower obligations) to LTM Adjusted EBITDA Ratio | 2.6 | 2.6 | 2.5 | 2.5 | 2.5 | |||||
| Divided by: Last twelve months Core Adjusted EBITDA | $ | 26,980 | $ | 27,698 | $ | 28,517 | $ | 29,116 | $ | 29,681 |
| Net debt (excluding tower obligations) to LTM Core Adjusted EBITDA Ratio | 2.7 | 2.7 | 2.6 | 2.5 | 2.5 |
Adjusted Free Cash Flow is calculated as follows:
| Quarter | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except percentages) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | ||||||||||
| Net cash provided by operating activities | $ | 4,051 | $ | 4,355 | $ | 5,294 | $ | 4,859 | $ | 5,084 | |||||
| Cash purchases of property and equipment, including capitalized interest | (3,001) | (2,789) | (2,424) | (1,587) | (2,627) | ||||||||||
| Proceeds from sales of tower sites | 6 | 2 | 2 | 2 | — | ||||||||||
| Proceeds related to beneficial interests in securitization transactions | 1,345 | 1,309 | 1,131 | 1,031 | 890 | ||||||||||
| Adjusted Free Cash Flow | $ | 2,401 | $ | 2,877 | $ | 4,003 | $ | 4,305 | $ | 3,347 | |||||
| Net cash provided by operating activities margin | 26.1 | % | 27.7 | % | 33.3 | % | 30.3 | % | 31.6 | % | |||||
| Adjusted Free Cash Flow margin | 15.4 | % | 18.3 | % | 25.2 | % | 26.8 | % | 20.8 | % | |||||
| 25 | |||||||||||||||
| --- |
T-Mobile US, Inc.
Reconciliation of Non-GAAP Financial Measures to GAAP Financial Measures (continued)
(Unaudited)
The current guidance range for Adjusted Free Cash Flow is calculated as follows:
| FY 2024 | ||||
|---|---|---|---|---|
| (in millions) | Guidance Range | |||
| Net cash provided by operating activities | $ | 21,600 | $ | 22,300 |
| Cash purchases of property and equipment, including capitalized interest | (8,600) | (9,400) | ||
| Proceeds related to beneficial interests in securitization transactions (1) | 3,400 | 4,000 | ||
| Adjusted Free Cash Flow | $ | 16,400 | $ | 16,900 |
(1)Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2024.
The previous guidance range for Adjusted Free Cash Flow was calculated as follows:
| FY 2024 | ||||
|---|---|---|---|---|
| (in millions) | Guidance Range | |||
| Net cash provided by operating activities | $ | 21,500 | $ | 22,300 |
| Cash purchases of property and equipment, including capitalized interest | (8,600) | (9,400) | ||
| Proceeds related to beneficial interests in securitization transactions (1) | 3,400 | 4,000 | ||
| Adjusted Free Cash Flow | $ | 16,300 | $ | 16,900 |
(1)Adjusted Free Cash Flow guidance does not assume any material net cash inflows from securitization in 2024.
| 26 |
|---|
Definitions of Terms
Operating and financial measures are utilized by T-Mobile’s management to evaluate its operating performance and, in certain cases, its ability to meet liquidity requirements. Although companies in the wireless industry may not define measures in precisely the same way, T-Mobile believes the measures facilitate key operating performance comparisons with other companies in the wireless industry to provide management, investors and analysts with useful information to assess and evaluate past performance and assist in forecasting future performance.
1.Account - A billing account number that generates revenue. Postpaid accounts generally consist of customers that are qualified for postpaid service utilizing phones, High Speed Internet modems, mobile internet devices, including tablets and hotspots, wearables, DIGITS or other connected devices, including SyncUP and IoT, where they generally pay after receiving service.
2.Customer - A SIM number with a unique T-Mobile identifier which is associated with an account that generates revenue. Customers are qualified either for postpaid service utilizing phones, High Speed Internet modems, mobile internet devices, including tablets and hotspots, wearables, DIGITS or other connected devices, including SyncUP and IoT, where they generally pay after receiving service, or prepaid service, where they generally pay in advance of receiving service.
3.Churn - The number of customers whose service was deactivated as a percentage of the average number of customers during the specified period further divided by the number of months in the period. The number of customers whose service was deactivated is presented net of customers that subsequently have their service restored within a certain period of time and excludes customers who received service for less than a certain minimum period of time.
4.Postpaid Average Revenue Per Account (Postpaid ARPA) - Average monthly postpaid service revenue earned per account. Postpaid service revenues for the specified period divided by the average number of postpaid accounts during the period, further divided by the number of months in the period.
Average Revenue Per User (ARPU) - Average monthly service revenue earned per customer. Service revenues for the specified period divided by the average number of customers during the period, further divided by the number of months in the period.
Postpaid phone ARPU excludes postpaid other customers and related revenues.
Service revenues - Postpaid, including handset insurance, prepaid, wholesale and other service revenues.
5.Cost of services - Costs directly attributable to providing wireless service through the operation of T-Mobile’s network, including direct switch and cell site costs, such as rent, network access and transport costs, utilities, maintenance, associated labor costs, long distance costs, regulatory program costs, roaming fees paid to other carriers and data content costs.
Cost of equipment sales - Costs of devices and accessories sold to customers and dealers, device costs to fulfill insurance and warranty claims, write-downs of inventory related to shrinkage and obsolescence, and shipping and handling costs.
Selling, general and administrative expenses - Costs not directly attributable to providing wireless service for the operation of sales, customer care and corporate activities. These include all commissions paid to dealers and retail employees for activations and upgrades, labor and facilities costs associated with retail sales force and administrative space, marketing and promotional costs, customer support and billing, bad debt expense and administrative support activities.
6.Net income margin - Net income divided by Service revenues.
7.Adjusted EBITDA and Core Adjusted EBITDA - Adjusted EBITDA represents earnings before Interest expense, net of Interest income, Income tax expense, Depreciation and amortization, stock-based compensation and Special Items. Core Adjusted EBITDA represents Adjusted EBITDA less device 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 historically used Adjusted EBITDA and T-Mobile currently uses Core Adjusted EBITDA internally as a measure to evaluate and compensate its personnel and management for their performance. T-Mobile uses Adjusted EBITDA and Core Adjusted EBITDA as benchmarks to evaluate its operating performance in comparison to competitors. Management believes analysts and investors use Core Adjusted EBITDA and Adjusted EBITDA as supplemental measures to evaluate overall operating performance and to facilitate comparisons with other wireless communications services 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 and Special Items. 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 device 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”).
8.Special Items - Certain expenses, gains, and losses which are not reflective of our ongoing performance. Special Items include Merger-related costs, gain on disposal groups held for sale, certain legal-related recoveries and expenses, restructuring costs not directly attributable to the Merger (including severance), and other non-core gains and losses.
9.Adjusted EBITDA margin and Core Adjusted EBITDA margin - Adjusted EBITDA margin is calculated as Adjusted EBITDA divided by Service revenues. Core Adjusted EBITDA margin is calculated as Core Adjusted EBITDA divided by Service revenues. Adjusted EBITDA margin and Core Adjusted EBITDA margin are non-GAAP financial measures utilized by T-Mobile’s management to monitor the financial performance of our operations.
10.Net cash provided by operating activities margin - Net cash provided by operating activities margin is calculated as Net cash provided by operating activities divided by Service revenues.
11.Adjusted Free Cash Flow - Net cash provided by operating activities less cash payments for purchases of property and equipment, plus proceeds from sales of tower sites and proceeds related to beneficial interests in securitization transactions and less Cash payments for debt prepayment or debt extinguishment costs. Adjusted Free Cash Flow is utilized by T-Mobile’s management, investors, and analysts of our financial information to evaluate cash available to pay debt, repurchase shares, pay dividends and provide further investment in the business.
12.Adjusted Free Cash Flow margin - Adjusted Free Cash Flow margin is calculated as Adjusted Free Cash Flow divided by Service revenues. Adjusted Free Cash Flow Margin is utilized by T-Mobile’s management, investors, and analysts to evaluate the company’s ability to convert service revenue efficiently into cash available to pay debt, repurchase shares, pay dividends and provide further investment in the business.
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13.Net debt - Short-term debt, short-term debt to affiliates, long-term debt (excluding tower obligations), and long-term debt to affiliates, short-term financing lease liabilities and financing lease liabilities, less cash and cash equivalents.
14.Merger-related costs include:
•Integration costs to achieve efficiencies in network, retail, information technology and back office operations, migrate customers to the T-Mobile network and billing systems and the impact of legal matters assumed as part of the Merger;
•Restructuring costs, including severance, store rationalization and network decommissioning; and
•Transaction costs, including legal and professional services related to the completion of the Merger and the acquisitions of affiliates.
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Cautionary Statement Regarding Forward-Looking Statements
This communication includes forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact, including information concerning T-Mobile US, Inc.’s future results of operations, are forward-looking statements. These forward-looking statements are generally identified by the words “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “could” or similar expressions. Forward-looking statements are based on current expectations and assumptions, which are subject to risks and uncertainties and may cause actual results to differ materially from the forward-looking statements. Important factors that could affect future results and cause those results to differ materially from those expressed in the forward-looking statements include, among others, the following: competition, industry consolidation and changes in the market for wireless communications services and other forms of connectivity; criminal cyberattacks, disruption, data loss or other security breaches; our inability to take advantage of technological developments on a timely basis; our inability to retain or motivate key personnel, hire qualified personnel or maintain our corporate culture; system failures and business disruptions, allowing for unauthorized use of or interference with our network and other systems; the scarcity and cost of additional wireless spectrum, and regulations relating to spectrum use; the impacts of the actions we have taken and conditions we have agreed to in connection with the regulatory proceedings and approvals of the Transactions (as defined below), including the acquisition by DISH Network Corporation (“DISH”) of the prepaid wireless business operated under the Boost Mobile and Sprint prepaid brands (excluding the Assurance brand Lifeline customers and the prepaid wireless customers of Shenandoah Personal Communications Company LLC and Swiftel Communications, Inc.), including customer accounts, inventory, contracts, intellectual property and certain other specified assets, and the assumption of certain related liabilities (collectively, the “Prepaid Transaction”), the complaint and proposed final judgment agreed to by us, Deutsche Telekom AG (“DT”), Sprint Corporation, now known as Sprint LLC (“Sprint”), SoftBank Group Corp. (“SoftBank”) and DISH with the U.S. District Court for the District of Columbia, which was approved by the Court on April 1, 2020, the proposed commitments filed with the Secretary of the Federal Communications Commission (“FCC”), which we announced on May 20, 2019, certain national security commitments and undertakings, and any other commitments or undertakings entered into, including, but not limited to, those we have made to certain states and nongovernmental organizations (collectively, the “Government Commitments”), and the challenges in satisfying the Government Commitments in the required time frames and the significant cumulative costs incurred in tracking and monitoring compliance over multiple years; adverse economic, political or market conditions in the U.S. and international markets, including changes resulting from increases in inflation or interest rates, supply chain disruptions and impacts of geopolitical instability, such as the Ukraine-Russia war and Israel-Hamas war; sociopolitical volatility and polarization; our inability to manage the ongoing commercial services arrangements entered into in connection with the Prepaid Transaction, and known or unknown liabilities arising in connection therewith; the timing and effects of any future acquisition, divestiture, investment, or merger involving us; any disruption or failure of our third parties (including key suppliers) to provide products or services for the operation of our business; our substantial level of indebtedness and our inability to service our debt obligations in accordance with their terms; changes in the credit market conditions, credit rating downgrades or an inability to access debt markets; the risk of future material weaknesses we may identify, or any other failure by us to maintain effective internal controls, and the resulting significant costs and reputational damage; any changes in regulations or in the regulatory framework under which we operate; laws and regulations relating to the handling of privacy and data protection; unfavorable outcomes of and increased costs from existing or future regulatory or legal proceedings; difficulties in protecting our intellectual property rights or if we infringe on the intellectual property rights of others; our offering of regulated financial services products and exposure to a wide variety of state and federal regulations; new or amended tax laws or regulations or administrative interpretations and judicial decisions affecting the scope or application of tax laws or regulations; our wireless licenses, including those controlled through leasing agreements, are subject to renewal and may be revoked; our exclusive forum provision as provided in our Certificate of Incorporation; interests of DT, our controlling stockholder, which may differ from the interests of other stockholders; the dollar amount authorized for our 2023-2024 Stockholder Return Program may not be fully utilized, and our share repurchases and dividend payments pursuant thereto may fail to have the desired impact on stockholder value; future sales of our common stock by DT and SoftBank and our inability to attract additional equity financing outside the United States due to foreign ownership limitations by the FCC; and other risks as disclosed in our most recent annual report on Form 10-K, 10-Q and other filings with the Securities and Exchange Commission. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward- looking statements. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law.
About T-Mobile US, Inc.
T-Mobile US, Inc. (NASDAQ: TMUS) is America’s supercharged Un-carrier, delivering an advanced 4G LTE and transformative nationwide 5G network that will offer reliable connectivity for all. T-Mobile’s customers benefit from its unmatched combination of value and quality, unwavering obsession with offering them the best possible service experience and undisputable drive for disruption that creates competition and innovation in wireless and beyond. Based in Bellevue, Wash., T-Mobile provides services through its subsidiaries and operates its flagship brands, T-Mobile and Metro by T-Mobile. For more information please visit: http://www.t-mobile.com.