Upload
rene
View
40
Download
0
Embed Size (px)
DESCRIPTION
2004 – 3rd quarter review. Robert McFarlane EVP & Chief Financial Officer October 29, 2004. Q3 highlights. TELUS Mobility excellent subscriber growth & retention record margins and significant cash flow growth TELUS Communications good quarter for ILEC performance - PowerPoint PPT Presentation
Citation preview
2004 – 3rd quarter review Robert McFarlaneEVP & Chief Financial OfficerOctober 29, 2004
2
TELUS Mobility excellent subscriber growth & retention
record margins and significant cash flow growth
TELUS Communications good quarter for ILEC performance
strong rebound in profitability for non-ILEC
TELUS Consolidated excellent revenue, profitability & cash flow growth
EPS $0.44 (normalized $0.48 up 77%)
Q3 highlights
3
consolidated results
Change
1 Incl. restructuring & workforce reduction costs of $16.2M & $2.3M for Q3-04 & Q3-03, respectively.2 Incl. impacts of interest on tax settlements of approx. nil & $0.05 in Q3-04 and Q3-03, respectively.3 Free Cash Flow defined as: EBITDA (including restructuring & workforce reduction costs) less capex, net cash interest, net cash taxes, net cash restructuring payments, and excess share
compensation expense over share compensation payments.
37%$157M$114MNet Income
38%
$0.44$0.32EPS2
7.8%$1.95B$1.81BRevenue
8.7%$818M$752MEBITDA1
Q3-04Q3-03
excellent revenue, profitability & free cash flow growth
14%$503M$440MFree Cash Flow3
4
consolidated – EPS continuity
normalized quarterly EPS increase of $0.21 or 77%
growth
$0.44
Q3-04
EPS reported
Q3-03
38%$0.32
0.03 Restr. & workforce reduction -
0.01Share-based compensation -
$0.48EPS normalized 77%$0.27
- Income tax settlement (0.05)
5outstanding results across the board
Mobility segment financial summary
1 EBITDA less capex
Mobility segment
21%747620External Revenue
32%324246EBITDA
46%220150Cash Flow1
8.7%10395Capex
Q3-04 Change($M) Q3-03
6
Wireless subscriber growth
Q3 net adds up 35%, with strong postpaid growth - net additions guidance revised upwards by 50K
Mobility segment
Total wireless subscribersWireless net additions
3.8M
17%Prepaid
83%
Postpaid
67K
2003
103K
Q1
Q2
431K
76K
2004
114K
Q1
Q2
425 to 475K
Q Actual Q Outlook
136KQ3101K
Q3
newguidance
7
communications segment financial summary
1 Incl. restructuring & workforce reduction costs of $16.2M & $2.3M for Q3-04 & Q3-03, respectively.2 EBITDA (aft. Restructuring) less capex.
Q3-04 Change($M) Q3-03
1.1%1,2001,186External Revenue
2.4%494507EBITDA (aft. restructuring)1
6.6%278298Cash Flow2
3.6%216209Capex
revenue growth reverses historical trend EBITDA flat excluding $16M in restructuring costs
Communications segment
0.3%511509EBITDA (bef. restructuring)
8
communications segment revenue profile
Communications segment
positive revenue growth driven by data growth & lower LD revenue decline
Q3-04 Change($M) Q3-03
0.8%538543Voice - Local
7.9%358332Data
1.1%1,2001,186External Revenue
4.1%7073Other
2.1%234239Voice – Long Distance
9
high-speed Internet subscriber growth
on track to achieve 2004 annual target of 125K
Communications segment
Total Internet subscribers
69%
High Speed
High-speed Internet net additions
31%Dial-up
948K
32K
2003
27K
Q1
Q2
152K
44K
2004
19K
Q1
Q2
~125K
Q Actual Q Outlook
31KQ347KQ3
10
138145
(6) (3)Revenue
Q3
non-ILEC revenue & EBITDA
Q3
EBITDA
Q3 Q3
2003
2004($M)
Communications segment
large deals and higher CPE revenue deliver improved revenue and EBITDA in Q3
11
non-ILEC revenue & EBITDA
non-ILEC delivers improved revenue and EBITDA in Q3
Communications segment
145
131128138138139141
152136
123117
(36) (30) (23) (18) (15)(6) (6) (2) (9) (14)
(3)
Core Revenue Asset Disposition EBITDA
Q1-02 Q2-02 Q3-02 Q4-02 Q1-03 Q2-03 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04
12
Operational Efficiency Program (OEP) – 2001 to 2003
Cumulative annual savings of $530 to 535M YE 2004 & onward
2004 efficiency initiatives
$16M in restruct. & workforce reduction costs in Q3 ($33M YTD)
Now expect $50M in restruct. & workforce reduction costs in 2004 up from previous guidance of $30M
Combining Business & Client Solutions into one unit to improve efficiency & effectiveness under leadership of Joe Natale
Consolidating IT operations from 15 to 2 locations
continued focus on institutionalizing cost efficiency
Communications segment
delivering operational efficiency
13
$513
28
(45)
503
12
(21)
(320)
$818
Q3-04
$520
105
(42)
440
36
(14)
(304)
$752
Q3-03
Cash avail. for debt reduction & pref. redemp.
Working Capital/Other
Cash Dividends
Free Cash Flow
Net Cash Tax Recovery
Net Cash Interest
Capex
EBITDA1
($M)
1 Includes restructuring & workforce reduction costs.2 Proceeds from Treasury shares issued under the employee share purchase and option plans.3 $37M of preference & preferred shares were redeemed during Q3-04 (nil in Q3-03).
strong consolidated free cash flow
6(30)Cash Restructuring Payments (net of expense)
7-Non-Cash Share Based Compensation
-(4)Acc. Rec. Securitization Program reduction
2721Share Issuance2 (non-public)
(248)(434)Net change in LTD & Preferred share redemption3
$265$86Net Change in Cash
14
long-term financial policy targets
long-term de-leveraging targets achieved 15 mos ahead of plan
45 to 50% (long term)
49.7%53.7%Net Debt : Capital
Q3-04 GuidanceQ3-03
<2.3X1 (end of 2004)
<2.2X2 (new target for
end of 2004)
2.2X2.7XNet Debt : EBITDA
1 As provided August 6, 20042 As provided October 29, 2004
15
Maintaining net-debt to EBITDA & capitalization targets
TELUS continues to target credit ratings of BBB+ to A- further debt reduction expected given strong FCF
generation
Today announcing several shareholder value enhancing initiatives
long-term financial policy targets
balanced approach to debt holders and shareholders
16
Quarterly dividend increased by 5¢ to 20¢ for Jan. 1, 2005 payment
Dividend increase moves TELUS into top quartile among dividend paying S&P/TSX companies for both yield & payout ratio
Consistent with a dividend growth approach, targeting a dividend payout ratio guideline of 45 to 55% of net earnings
dividend increase
quarterly dividend increased by 33%
17
Board approval for NCIB to repurchase up to 10% of public float or 25.5M shares upon obtaining regulatory approval
14.0M common shares & 11.5M non-voting shares
Maximum shares to be purchased over rolling 30 day period is 2% of outstanding shares
Expect de-levering to continue despite NCIB due to strong free cash flow generation
Capital flexibility maintained with NCIB
normal course issuer bid (NCIB)
normal course issuer bid for up to 10% of float
18
DRIP amended to allow purchase on open market as well as issue from Treasury
Effective January 1, 2005 open market purchases
3% discount on DRIP discontinued
Puts TELUS in line with other NA telcos
changes to Dividend Reinvestment Plan (DRIP)
19
425 to 475K375 to 425KWireless net adds
no change
$1.1 to 1.125B
$2.775 to 2.8B
updated 2004 guidance
approx. $350M
$1.05 to 1.1B
$2.675 to 2.725B
previous 2004 guidance1
Capex
EBITDA
Revenue (external)
revised 2004 guidance - Mobility
1 Previously updated August 6, 2004.
20
$(30) to (35)M$(30) to (40)M Non-ILEC EBITDA
no change
$1.925 to 1.95B
no change
$4.725 to 4.775B
updated 2004 guidance
approx. $950M
$1.925 to 1.975B
$525 to 550M
$4.7 to 4.8B
previous 2004 guidance1
EBITDA
Capex
Non-ILEC revenue
Revenue (external)
no changeapprox. 125KHigh-speed net adds
revised 2004 guidance - Communications
1 Previously updated August 6, 2004.
21
no changeapprox. $1.3BCapex
$1.25 to 1.3B
$1.40 to 1.50
$3.025 to 3.075B
$7.5 to 7.575B
updated 2004 guidance
$1.15 to 1.25B
$1.30 to 1.50
$2.975 to 3.075B
$7.45 to 7.55B
previous 2004 guidance1
EPS
Free Cash Flow
EBITDA
Revenue
2.2X or less2.3X or lessNet Debt : EBITDA
revised 2004 guidance - consolidated
1 Previously updated August 6, 2004.
positive guidance changes reflect strong performance at both TELUS Communications & TELUS Mobility
Questions?