TELUS Reports Operational and Financial Results for First Quarter 2021, Q1 Revenue up 8.1%Tuesday, May 11, 2021
Burnaby, BC, May 11, 2021--(T-Net)--TELUS Corporation today released its unaudited results for the first quarter of 2021. Consolidated operating revenues and other income increased by 8.9 per cent over the same period a year ago to $4.0 billion.
Earnings before interest, income taxes, depreciation and amortization (EBITDA) increased by 3.7 per cent to $1.5 billion while Adjusted EBITDA was higher by 1.9 per cent.
This growth reflects: i) higher fixed data service margins resulting from subscriber base growth and expanded services; ii) growth in the company's mobile subscriber base and mobile equipment margins; iii) growth from business acquisitions (net of associated support costs); iv) an increased contribution from our Digitally-led customer experiences - TELUS International (DLCX) segment from business acquisitions and expanded services; and v) enhanced cost efficiency programs.
This growth was partly offset by the non-recurrence of the comparative period's decrease of a provision related to written put options to acquire the remaining non-controlling interest of an acquired subsidiary, the lingering impacts of the COVID-19 pandemic, lower legacy fixed voice and legacy fixed data services, and higher employee benefits expense.
"TELUS once again achieved strong operational and financial results in the first quarter, in both of our operating segments of TELUS Technology Solutions (TTech) and Digitally-Led Customer Experiences - TELUS International (DLCX)," said Darren Entwistle, President and CEO. "Our continued execution excellence, realized against the backdrop of an unprecedented operating environment, was characterized by the ongoing combination of robust, high-quality and profitable customer growth, alongside strong financial results across our business. This solid performance reflects the effectiveness of our world-leading performance culture, underpinned by our highly engaged team, and their dedication and passion for delivering outstanding connected experiences. This contributed to industry-leading customer net additions of 145,000 and leading customer loyalty across our key mobile and fixed product lines. Notably, mobile phone, internet, Optik TV and Smart Home Security churn were all once again below one per cent in the first quarter, whilst postpaid churn is now in its eighth consecutive year of industry-best churn below one per cent."
"Furthermore, our results are buttressed by our highly differentiated and potent asset mix geared towards high-growth, technology-oriented verticals. Indeed, for the full year 2021, TELUS International today announced that it is targeting double-digit revenue and EBITDA growth, showcasing the significant global opportunities it has to drive digital transformation journeys for its existing and prospective clients, and enable them to more quickly embrace next-generation digital technologies to deliver better business outcomes."
"Meanwhile, within our health portfolio, we are leveraging our technology leadership to deliver improved health outcomes for citizens through access to better health information. While the pandemic has disrupted the operations of our TELUS Health Care Centres since March 2020, our diversified virtual care offerings continue to grow to meet the healthcare needs of Canadians, including the accelerated adoption of virtual consultations as reflected in our growing virtual care user base. In the first quarter, Health services revenue was up a robust 10 per cent, driven by accelerated demand for virtual care, which has seen its number of members nearly triple over the past 12 months to 2 million, whilst clinic visits and preventative health services moderated substantially through pandemic-related lockdowns. We are confident that the increased healthcare related disclosure, which we are introducing today, will provide meaningful insight into the valuable asset we are creating as a world-leading provider of digital healthcare technology solutions."
"Our first quarter performance was backed by strong digital capabilities and superior service offerings over our world-leading wireless and fibre broadband networks," added Darren. "At a time when network connectivity is more important than ever, TELUS was again recognized as the best mobile network in Canada for the ninth time in UK-based Opensignal's Mobile Network Experience Report February 2021. TELUS took first place for Video Experience, Voice App Experience, Download Speed Experience, Upload Speed Experience, and tied for first in 4G Availability, 4G Coverage Experience, and Games Experience. Opensignal further acknowledged our next-generation 5G network with six awards for superiority in respect of speed and coverage in their Canada 5G User Experience Report. Similarly, Canada-based Tutela named TELUS the best mobile experience provider in Canada in their Canada: State of Mobile Network March 2021 report. In addition, Seattle-based Ookla subsequently named TELUS the fastest mobile operator in Canada for the third quarter in a row in their Global Index Market Analysis for Q1 2021."
"TELUS' network leadership will be significantly bolstered by our accelerated broadband investment program, announced in March," further commented Darren. "Our successful $1.3 billion equity offering will underpin the unique strategic opportunity we have to pull-forward the expansion of TELUS' leading PureFibre network in Alberta, British Columbia and Eastern Quebec, as well as an accelerated roll-out of our national 5G network and digital experience. Investing from a position of strength and leadership, these transformational investments will significantly bolster TELUS' leading customer experience and competitive position, including the enablement of up to 225,000 additional rural and urban premises with fibre technology, and enhancing the speed and coverage of our world-leading wireless network. These generational investments will fuel enhanced customer growth and operating efficiencies, supported by the accelerated de-commissioning of our copper infrastructure. This will drive positive cash flow benefits as TELUS completes the expedited build, alongside a faster than expected reduction in capital expenditures beginning in 2023. Importantly, this initiative will further support the advancement of our financial and operational performance, strengthening our confidence in the robust outlook for our business and the long-term sustainability of our industry-leading dividend growth program, now in its eleventh year."
"Our TELUS team continues to give, with their hearts and their hands, to support Canada's COVID-19 relief efforts," expressed Darren. "By way of example, nearly 1,800 TELUS team members are supporting the health and well-being of our fellow citizens through the Government of B.C.'s Immunize B.C. initiative. Due in part to our team's efforts, we have been able to significantly accelerate the phased vaccination rollout, including more than one million vaccination appointment bookings for eligible British Columbians, providing hope of better days ahead. We are offering further support through eight of our 13 Health for Good mobile clinics across Canada, which provided over 500 vaccinations in the first quarter, as well as close to 18,000 COVID-19 assessments for marginalized populations since the start of the pandemic. Similarly, through our Mobility for Good program, we are providing wireless connectivity to youth leaving foster care and low-income seniors, two groups within our community that continue to be disproportionately impacted by the pandemic. Since its inception, the program has supported 24,000 Canadians, further demonstrating that Canadians can count on the TELUS team, day-in and day-out."
Doug French, Executive Vice-president and CFO said, "Our first quarter results announced today demonstrate the resiliency of our business, our leading execution and the critical importance of providing world-leading broadband experiences along with superior bundled solutions. These results are further enhanced by the strength and diversity of our fast-growing asset mix centred around higher-valued technology oriented sectors. In that regard, our TELUS International, TELUS Health and TELUS Agriculture assets all delivered strong revenue growth driven in part by recent acquisitions, as well as organic growth, as those businesses successfully drive new customer growth."
Doug added "With our strategic decision to pull forward capital expenditures to accelerate our broadband build program, focused on enhancing our fibre and 5G network coverage over the next 18 months, today we are increasing our capital expenditure guidance for 2021 by $750 million to approximately $3.5 billion. As a result of this pull forward of capital investments, we now expect free cash flow to be approximately $750 million in 2021, while our growth targets for consolidated revenue and Adjusted EBITDA for the full year remain unchanged. Additionally, upon completion of our accelerated broadband build in 2022, we anticipate capital expenditures to decline to $2.5 billion or less, beginning in 2023."
"Based on our healthy balance sheet position, combined with confidence in our sustainable future free cash flow growth, today we announced a dividend increase to $0.3162 per share. We are excited for the long-term outlook of our business. Indeed, in Canada, we have exciting opportunities in front of us to support the economic recovery, leveraging our world-leading networks that will enable new growth opportunities and unlock new revenue streams. Furthermore, our international businesses are benefiting from a growing global economy and have significant opportunities to drive technology innovation as they look to deliver superior customer experiences and digitize workflows," concluded Doug.
In the quarter, we added 145,000 new customer additions, up 39,000 over last year, and inclusive of 31,000 mobile phones, 63,000 connected devices, in addition to 33,000 internet, 11,000 TV and 17,000 security customer connections. This was partly offset by low residential voice losses of 10,000. Our total TTech subscriber base of 16.1 million is up 5.5 per cent over the last twelve months, reflecting a 3.3 per cent increase in our mobile phones subscriber base to approximately 9.0 million, and a 17 per cent increase to our connected devices subscriber base to approximately 1.9 million. Additionally, our internet connections grew by 7.4 per cent over the last twelve months to approximately 2.2 million customers, our TV subscriber base increased by 5 per cent to approximately 1.2 million, and our security customer base expanded by 16 per cent to 724,000.
Free cash flow of $321 million decreased by $224 million or 41 per cent over the same period a year ago, resulting primarily from: i) increased income tax payments, as income tax instalment payments in the first quarter of 2020 were deferred into the third quarter of 2020 as permitted by several government jurisdictions as part of their COVID-19 pandemic responses; ii) the timing related to device subsidy repayments and associated revenue recognition and our TELUS Easy Payment device financing program; iii) higher lease principal payments; iv) higher restructuring and other costs disbursements; v) higher interest paid; and vi) higher capital expenditures. These factors were partly offset by higher EBITDA. Excluding cash taxes, free cash flow of $541 million decreased by $128 million or 19 per cent.
Consolidated capital expenditures increased by $20 million in the first quarter of 2021, due to increased investments in our 5G network, the accelerated purchase of equipment and higher capital expenditures to support subscriber growth, and accelerated investments to increase system capacity and reliability. These increases were partially offset by the timing of our fibre build activities. With our ongoing investments, we are advancing wireless speeds and coverage that enabled our 5G network launch, continuing to connect additional homes and businesses directly to our fibre-optic technology, and supporting systems reliability and operational efficiency and effectiveness efforts. These investments also support our internet, TV and security subscriber growth, address our customers' demand for faster internet speeds, and extend the reach and functionality of our business, healthcare and agriculture solutions.
At the end of the quarter, our TELUS PureFibre network covered over 2.5 million premises, reflecting an increase of approximately 240,000 fibre premises over the last twelve months. By March 31, 2021, our 5G network covered more than 10.6 million Canadians, representing over 28 per cent of the population.
For the quarter, net income of $333 million decreased by 5.7 per cent over the same period last year and Basic earnings per share (EPS) of $0.25 decreased by 11 per cent. These declines are driven by increased depreciation and amortization; non-recurrence of the comparative period's decrease of a provision related to written put options to acquire the remaining non-controlling interest of an acquired subsidiary; the lingering impacts of the COVID-19 pandemic; lower legacy fixed voice and legacy fixed data services; higher employee benefits expense; and, as it relates to EPS, higher shares outstanding.
When excluding the effects of restructuring and other costs, income tax-related adjustments, other equity losses related to real estate joint ventures, and non-controlling interests, adjusted net income of $359 million decreased by $41 million or 10 per cent in the first quarter of 2021, while adjusted basic EPS of $0.27 was down 16 per cent.
|Consolidated Financial Highlights|
|C$ millions, except footnotes and unless noted otherwise||Three months ended
|Operating revenues and other income||4,024||3,694||8.9|
|Operating expenses before depreciation and amortization||2,563||2,285||12.2|
|Adjusted net income(1)||359||400||(10.3||)|
|Net income attributable to common shares||331||350||(5.4||)|
|Basic EPS ($)||0.25||0.28||(10.7||)|
|Adjusted basic EPS(1) ($)||0.27||0.32||(15.6||)|
|Free cash flow(1)||321||545||(41.1||)|
|Total subscriber connections(4) (thousands)||16,072||15,241||5.5|
|(1)||EBITDA, Adjusted EBITDA, Adjusted net income, Adjusted basic EPS and Free cash flow are non-GAAP measures and do not have any standardized meaning prescribed by IFRS-IASB. For further definitions and explanations of these measures, see 'Non-GAAP and other financial measures' in this news release.|
|(2)||Adjusted EBITDA for the first quarters of 2021 and 2020 excludes restructuring and other costs of $41 million and $60 million respectively, and other equity losses related to real estate joint ventures of $1 million and $6 million respectively.|
|(3)||Capital expenditures include assets purchased, excluding right-of-use lease assets, but not yet paid for, and consequently differ from Cash payments for capital assets, excluding spectrum licences, as reported in the interim consolidated financial statements. Refer to Note 31 in our interim consolidated financial statements for further information.|
|(4)||The sum of active mobile phone subscribers, connected device subscribers, internet subscribers, residential voice subscribers, TV subscribers and security subscribers, measured at the end of the respective periods based on information in billing and other source systems. During the third quarter of 2020, we adjusted cumulative subscriber connections to add approximately 31,000 security subscribers as a result of a business acquisition. Effective January 1, 2021 with retrospective application to January 1, 2020, in alignment with our segment reporting changes, we made a retroactive adjustment to remove internal network service revenue and approximately 29,000 subscribers from our mobile phone subscriber base and associated operating statistics (ABPU/ARPU and churn). Effective January 1, 2021 on a prospective basis, following an in-depth review of customer accounts within a legacy subscriber provisioning system to be decommissioned, we adjusted our internet subscriber base to remove 16,000 subscribers.|
First Quarter 2021 Operating Highlights
Commencing with the three-month period ended March 31, 2021, we have now transitioned to our new segment reporting structure and have recast comparative amounts on a comparable basis.
The TELUS technology solutions (TTech) segment includes: network revenues and equipment sales arising from mobile technologies; data revenues (which include internet protocol; television; hosting, managed information technology and cloud-based services; software, data management and data analytics-driven smart food-chain technologies; and home and business security); certain healthcare software and technology solutions; voice and other telecommunications services revenues; and equipment sales.
The Digitally-led customer experiences - TELUS International (DLCX) segment is comprised of digital customer experience and digital-enablement transformation, including artificial intelligence and content management solutions, provided by TELUS International.
As noted in Section 1.2 of our 2020 annual MD&A, the COVID-19 pandemic, which emerged in the first quarter of 2020, continued to have a pervasive global impact throughout the balance of 2020 and into 2021. The nature of the pandemic and the uncertainty of its magnitude, length and the time to recovery are not currently able to be estimated. Therefore, results described below may not be indicative of future trends, as the COVID-19 pandemic prevents us and our customers from operating in the normal course of business in certain areas while we continue to adjust our mode of operations to continue delivering on our customers first priorities and social purpose. Our results discussed below are compared to the equivalent period in 2020 unless otherwise indicated.
TELUS technology solutions (TTech)
Mobile products and services
Fixed products and services
Digitally-led customer experiences - TELUS International (DLCX)
Financial targets for 2021
TELUS' consolidated financial targets for 2021 are guided by a number of long-term financial objectives, policies and guidelines, which are detailed in Section 4.3 of the 2020 annual MD&A.
As announced on March 25, 2021, TELUS intends to strategically bring forward transformational capital investments in broadband connectivity, including fibre and 5G, to enhance our industry-best customer experience, leading networks and competitive position. Investing from a position of strength and leadership, this accelerated broadband expansion program will significantly enhance TELUS' fibre buildout across key markets in British Columbia, Alberta and Eastern Quebec, as well as advance investments related to the expansion of our 5G footprint, including network readiness for 5G spectrum and system upgrades. Approximately $750 million of the accelerated capital investments has been earmarked for 2021, over and above our previous target of $2.75 billion, dependent upon our ability to ramp-up resources and suppliers.
As shown in the table below, TELUS' 2021 consolidated financial targets for Free cash flow and Capital expenditures have been updated to reflect this capital acceleration program.
|Original 2021 targets
|Updated 2021 targets
|Revenues and other income||8 to 10 per cent||8 to 10 per cent
|Adjusted EBITDA(1)||6 to 8 per cent||6 to 8 per cent
|Free cash flow(2)||Approximately 1,500||Approximately 750
|Capital expenditures(3)||Approximately 2,750||Approximately 3,500
|(1)||Adjusted EBITDA excludes the following: restructuring and other costs, and other equity losses related to real estate joint ventures, as well as a retirement of a provision arising from business acquisition-related written put options within DLCX. In 2021, total restructuring and others costs are expected to be approximately $150 million, as compared to $259 million in 2020.|
|(2)||Before dividends paid.|
|(3)||Excludes expenditures for spectrum licences.|
In 2021, we expect the COVID-19 pandemic to continue to have significant impacts on our business, primarily in the first half of the year, attributed to economic factors such as continued travel advisories and border restrictions, decreasing business and consumer travel continuing to impact our roaming revenues and subsequent business lockdowns, and/or reduced scope of operations impacting our TELUS Health Care Centres. We expect that the availability, distribution and effectiveness of COVID-19 vaccinations to the general population will occur by the second half of 2021, which will allow for the gradual re-opening of the global economy and areas where we conduct business. We expect that the COVID-19 pandemic impacts in 2021 will be similar to 2020. Our assumptions for 2021 are set out in Section 9.3 TELUS assumptions for 2021 in the 2020 annual MD&A.
The preceding disclosure respecting TELUS' 2021 financial targets is forward-looking information and is fully qualified by the 'Caution regarding forward-looking statements' in the 2020 annual MD&A filed on February 11, 2021 on SEDAR, especially Section 10 Risks and Risk Management thereof which is hereby incorporated by reference, and is based on management's expectations and assumptions as set out in Section 9.3 TELUS assumptions for 2021 in the 2020 annual MD&A.
TELUS International announces annual guidance
TELUS International (TI) today announced its annual financial targets for 2021. Please refer to TI's first quarter of 2021 earnings release dated May 7, 2021 for additional details.
The TELUS Board of Directors has declared a quarterly dividend of $0.3162 per share on the issued and outstanding Common Shares of the Company payable on July 2, 2021 to holders of record at the close of business on June 10, 2021. This second quarter dividend for 2021 reflects an increase of 8.6 per cent from the $0.29125 per share dividend declared one year earlier.
Approval of transfer of 3500 MHz spectrum licences
During the quarter, TELUS acquired 3500 MHz spectrum licences via commercial transactions. TELUS acquired 50 MHz in the urban cores of Edmonton, Guelph/Kitchener, London, Ottawa, and Winnipeg, as well as 50 MHz in East Kootenay and 25 MHz in Whistler. The acquisition of 3500 MHz spectrum augments TELUS' current portfolio of spectrum holdings.
Hazel Claxton and Sean Willy to join TELUS Board of Directors
TELUS is pleased to announce Hazel Claxton and Sean Willy as new nominees to our Board of Directors, to be elected at the TELUS annual general meeting held today, May 7, 2021, further broadening the experience, skills and diversity of our Board.
Hazel is a corporate director. She served as Executive Vice President and Chief Human Resources Officer with Morneau Shepell Inc. from 2013 to 2018. Prior to that, Hazel spent 29 years at PwC Canada where she held several leadership roles including Canadian Leadership Group member, Human Capital leader, and Partner within the Corporate Advisory and Restructuring Group, an area she practiced in for 20 years. Hazel currently sits on the boards of the University Pension Plan Ontario, Unity Health Toronto, and Queen's University where she is Vice Chair. Previously, she was on the boards of St. Michael's Hospital and the Shaw Festival Theatre. Hazel holds a Bachelor of Commerce (Honours) from Queen's University and the ICD.D designation from the Institute of Corporate Directors. She is a Chartered Professional Accountant.
Sean is President and Chief Executive Officer of Des Nedhe Development, the economic development entity for English River First Nation, which includes a broad portfolio of businesses and investments that range from construction and mining to retail and communications, a role he has held since August 2017, and prior thereto he was a Vice-President of Des Nedhe Development since June 2016. From 2010 to 2016, Sean was the Director of Corporate Responsibility for Cameco Corporation, a publicly traded uranium producer. Sean is an experienced business executive, with a 25-year history of creating, developing and leading inclusive practices in the resource sector and building opportunities with Indigenous communities. In his career, Sean has developed and implemented progressive and innovative Indigenous inclusion and value-added corporate social responsibility strategies for two leading resource companies, Rio Tinto and Cameco Corporation. Sean has always worked to ensure Indigenous Peoples are seen as full partners in long-term relationships, and this has led to Sean building partnerships in Australia, the United States and throughout Canada. Sean is currently a member of the Canadian Government's Indigenous Innovation Housing Committee. In the past, he has served as Chair of the Mining Association of Canada's Indigenous Affairs Committee, Co-Chair of the Canadian Council for Aboriginal Business, Chair of the successful Northern Career Quest and a board member of Indigenous Works. Sean holds a Bachelor of Commerce from the Edwards School of Business of the University of Saskatchewan.
TELUS makes significant contributions and investments in the communities where team members live, work and serve and to the Canadian economy on behalf of customers, shareholders and team members. These include:
Continuing our COVID-19 response
Prioritizing health and wellbeing
Ensuring access to vital connectivity
Driving social innovation
Evolving our brand promise
Access to Quarterly results information
Interested investors, the media and others may review this quarterly earnings news release, management's discussion and analysis, quarterly results slides, audio and transcript of the investor webcast call, supplementary financial information at telus.com/investors.
TELUS' first quarter 2021 conference call is scheduled for Friday, May 7, 2021 at 1:30pm ET (10:30am PT) and will feature a presentation followed by a question and answer period with investment analysts. Interested parties can access the webcast at telus.com/investors. An audio recording will be available approximately 60 minutes after the call until June 7, 2021 at 1-855-201-2300. Please use reference number 1253050# and access code 77377#. An archive of the webcast will also be available at telus.com/investors and a transcript will be posted on the website within a few business days.
TELUS (TSX: T, NYSE: TU) is a dynamic, world-leading communications technology company with $16 billion in annual revenue and 16 million customer connections spanning wireless, data, IP, voice, television, entertainment, video, and security. We leverage our global-leading technology and compassion to enable remarkable human outcomes. Our longstanding commitment to putting our customers first fuels every aspect of our business, making us a distinct leader in customer service excellence and loyalty. In 2020, TELUS was recognized as having the fastest wireless network in the world, reinforcing our commitment to provide Canadians with access to superior technology that connects us to the people, resources and information that make our lives better. TELUS Health is Canada's leader in digital health technology, improving access to health and wellness services and revolutionizing the flow of health information across the continuum of care. TELUS Agriculture provides innovative digital solutions throughout the agriculture value chain, supporting better food outcomes from improved agri-business data insights and processes. TELUS International (TSX and NYSE: TIXT) is a leading digital customer experience innovator that delivers next-generation AI and content management solutions for global brands across the technology and games, ecommerce and FinTech, communications and media, healthcare, travel and hospitality sectors. TELUS and TELUS International operate in 25+ countries around the world.
Driven by our passionate social purpose to connect all citizens for good, our deeply meaningful and enduring philosophy to give where we live has inspired TELUS, our team members and retirees to contribute more than $820 million and 1.6 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most giving company in the world.
For more information about TELUS, please visit telus.com
Caution regarding forward-looking statements
This news release contains forward-looking statements about expected events and the financial and operating performance of TELUS Corporation. The terms TELUS, we, us and our refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries.
Forward-looking statements include any statements that do not refer to historical facts. They include, but are not limited to, statements relating to our objectives and our strategies to achieve those objectives, our consolidated financial targets, outlook, updates, our multi-year dividend growth program and our plans and expectations regarding the impact of the COVID-19 pandemic and responses to it. Forward-looking statements are typically identified by the words assumption, goal, guidance, objective, outlook, strategy, target and other similar expressions, or future or conditional verbs such as aim, anticipate, believe, could, expect, intend, may, plan, predict, seek, should, strive and will. These statements are made pursuant to the "safe harbour" provisions of applicable securities laws in Canada and the United States Private Securities Litigation Reform Act of 1995.
By their nature, forward-looking statements are subject to inherent risks and uncertainties and are based on assumptions, including assumptions about future economic conditions and courses of action. These assumptions may ultimately prove to have been inaccurate and, as a result, our actual results or events may differ materially from our expectations expressed in or implied by the forward-looking statements.
The assumptions for our 2021 outlook, as described in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings of our 2020 annual MD&A, remain the same, except for the following updates:
The extent to which these economic growth estimates affect us and the timing of their impact will depend upon the actual experience of specific sectors of the Canadian economy.
Risks and uncertainties that could cause actual performance or events to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are not limited to, the following:
These risks are described in additional detail in Section 9 General trends, outlook and assumptions, and regulatory developments and proceedings and Section 10 Risks and risk management in our 2020 annual MD&A. Those descriptions are incorporated by reference in this cautionary statement but are not intended to be a complete list of the risks that could affect TELUS.
Many of these factors are beyond our control or our current expectations or knowledge. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial may also have a material adverse effect on our financial position, financial performance, cash flows, business or reputation. Except as otherwise indicated in this document, the forward-looking statements made herein do not reflect the potential impact of any non-recurring or special items or any mergers, acquisitions, dispositions or other business combinations or transactions that may be announced or that may occur after the date of this document.
Readers are cautioned not to place undue reliance on forward-looking statements. Forward-looking statements in this document describe our expectations and are based on our assumptions as at the date of this document and are subject to change after this date. Except as required by law, we disclaim any intention or obligation to update or revise any forward-looking statements. The forward-looking statements in this news release are presented for the purpose of assisting our investors and others in understanding certain key elements of our expected 2021 financial results as well as our objectives, strategic priorities and business outlook. Such information may not be appropriate for other purposes.
This cautionary statement qualifies all of the forward-looking statements in this document.
Non-GAAP and other financial measures
We have issued guidance on and report certain non-GAAP measures that are used to evaluate the performance of TELUS, as well as to determine compliance with debt covenants and to manage our capital structure. As non-GAAP measures generally do not have a standardized meaning, they may not be comparable to similar measures presented by other issuers. Securities regulations require such measures to be clearly defined, qualified and reconciled with their nearest GAAP measure. Certain of the metrics do not have generally accepted industry definitions.
Adjusted net income and adjusted basic earnings per share: These measures are used to evaluate performance at a consolidated level and exclude items that, in management's view, may obscure the underlying trends in business performance. These measures should not be considered alternatives to Net income and basic earnings per share in measuring TELUS' performance.
|Reconciliation of adjusted net income|
|Three months ended
|C$ and in millions||2021||2020||Change|
|Net income attributable to Common Shares||331||350||(19||)|
|Restructuring and other costs, after income taxes||27||47||(20||)|
|Income tax-related adjustments||—||(3||)||3|
|Other equity losses related to real estate joint ventures||1||6||(5||)|
|Adjusted Net income||359||400||(41||)|
|Reconciliation of adjusted basic EPS|
|Three months ended
|Restructuring and other costs, after income taxes, per share||0.02||0.04||(0.02||)|
|Adjusted basic EPS||0.27||0.32||(0.05||)|
EBITDA (earnings before interest, income taxes, depreciation and amortization): We have issued guidance on and report EBITDA because it is a key measure used to evaluate performance at a consolidated level. EBITDA is commonly reported and widely used by investors and lending institutions as an indicator of a company's operating performance and ability to incur and service debt, and as a valuation metric. EBITDA should not be considered an alternative to Net income in measuring TELUS' performance, nor should it be used as a measure of cash flow. EBITDA as calculated by TELUS is equivalent to Operating revenues and other income less the total of Goods and services purchased expense and Employee benefits expense.
We also calculate Adjusted EBITDA to exclude items of an unusual nature that do not reflect our ongoing operations and should not, in our opinion, be considered in a long-term valuation metric or should not be included in an assessment of our ability to service or incur debt.
|Three months ended
|C$ and in millions||2021||2020|
|Amortization of intangible assets||265||202|
|Add restructuring and other costs included in EBITDA||41||60|
|EBITDA - excluding restructuring and other costs||1,502||1,469|
|Add other equity losses related to real estate joint ventures||1||6|
Free cash flow: We report this measure as a supplementary indicator of our operating performance, and there is no generally accepted industry definition of free cash flow. It should not be considered an alternative to the measures in the condensed interim consolidated statements of cash flows. Free cash flow excludes certain working capital changes (such as trade receivables and trade payables), proceeds from divested assets and other sources and uses of cash, as found in the condensed interim consolidated statements of cash flows. It provides an indication of how much cash generated by operations is available after capital expenditures (excluding purchases of spectrum licences) that may be used to, among other things, pay dividends, repay debt, purchase shares or make other investments. We exclude impacts of accounting changes that do not impact cash, such as IFRS 15 and IFRS 16. Free cash flow may be supplemented from time to time by proceeds from divested assets or financing activities.
|Free cash flow calculation|
|Three months ended
|C$ and in millions||2021||2020|
|Deduct non-cash gains from the sale of property, plant and equipment||—||(3||)|
|Restructuring and other costs, net of disbursements||(12||)||12|
|Effects of contract asset, acquisition and fulfilment (IFRS 15 impact) and TELUS Easy Payment device financing||52||112|
|Effects of lease principal (IFRS 16 impact)||(123||)||(84||)|
|Leases formerly accounted for as finance leases (IFRS 16 impact)||—||27|
|Items from the condensed interim consolidated statements of cash flows:|
|Share-based compensation, net||35||23|
|Net employee defined benefit plans expense||26||27|
|Employer contributions to employee defined benefit plans||(16||)||(15||)|
|Capital expenditures (excluding spectrum licences)1||(685||)||(665||)|
|Free cash flow before income taxes||541||669|
|Income taxes paid, net of refunds||(220||)||(124||)|
|Free cash flow||321||545|
|(1)||Refer to Note 31 of the consolidated financial statements for further information.|
Burnaby, BC (InfoTech)
Other Recent Company News
TELUS Communications Inc.
Copyright © T-NET. All Rights Reserved. | https://www.bctechnology.com