United States Cellular Corporation (USM) has reported 73.44 percent plunge in profit for the quarter ended Sep. 30, 2016. The company has earned $17 million, or $0.20 a share in the quarter, compared with $64 million, or $0.75 a share for the same period last year.
Revenue during the quarter dropped 5.52 percent to $1,010 million from $1,069 million in the previous year period. Gross margin for the quarter contracted 167 basis points over the previous year period to 52.87 percent. Total expenses were 99.11 percent of quarterly revenues, up from 92.70 percent for the same period last year. That has resulted in a contraction of 641 basis points in operating margin to 0.89 percent.
Operating income for the quarter was $9 million, compared with $78 million in the previous year period.
"U.S. Cellular stayed focused on achieving its long-term objectives throughout the quarter, despite an extremely competitive climate. While the year over year comparison of financial results is impacted by a couple of items, when I look past those items, I am pleased with the Company's financial performance," said Kenneth R. Meyers, U.S. Cellular president and chief executive officer. "We continue to differentiate ourselves through an unwavering commitment to an exceptional customer experience, including a high-quality network and outstanding customer service."
For financial year 2016, United States Cellular Corporation projects revenue to be in the range of $3,900 million to $4,100 million.
Operating cash flow drops significantly
United States Cellular Corporation has generated cash of $415 million from operating activities during the nine month period, down 25.23 percent or $140 million, when compared with the last year period.
The company has spent $449 million cash to meet investing activities during the nine month period as against cash outgo of $377 million in the last year period.
The company has spent $7 million cash to carry out financing activities during the nine month period as against cash inflow of $207 million in the last year period.
Cash and cash equivalents stood at $674 million as on Sep. 30, 2016, up 12.94 percent or $77.23 million from $596.77 million on Sep. 30, 2015.
Working capital increases sharply
United States Cellular Corporation has recorded an increase in the working capital over the last year. It stood at $912 million as at Sep. 30, 2016, up 29.41 percent or $207.24 million from $704.76 million on Sep. 30, 2015. Current ratio was at 2.31 as on Sep. 30, 2016, up from 1.79 on Sep. 30, 2015.
Cash conversion cycle (CCC) has decreased to 15 days for the quarter from 20 days for the last year period. Days sales outstanding went up to 57 days for the quarter compared with 51 days for the same period last year.
Days inventory outstanding has decreased to 14 days for the quarter compared with 29 days for the previous year period. At the same time, days payable outstanding went down to 56 days for the quarter from 60 for the same period last year.
Debt moves up
United States Cellular Corporation has witnessed an increase in total debt over the last one year. It stood at $1,632 million as on Sep. 30, 2016, up 18.51 percent or $254.84 million from $1,377.16 million on Sep. 30, 2015. Total debt was 22.97 percent of total assets as on Sep. 30, 2016, compared with 19.85 percent on Sep. 30, 2015. Debt to equity ratio was at 0.45 as on Sep. 30, 2016, up from 0.39 as on Sep. 30, 2015. Interest coverage ratio deteriorated to 0.32 for the quarter from 3.71 for the same period last year.
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