TELUS Reports Strong Q2 2024 Results Amid Challenging Economic Environment

TELUS reports operational and financial results for second quarter 2024

Total Mobile and Fixed customer growth of 332,000, up 39,000 over last year, representing a record second quarter, driven by strong demand for our leading portfolio of Mobility and Fixed services Robust Mobile Phone net additions of 101,000, and record second quarter Connected Device net additions of 161,000; industry-leading postpaid mobile phone churn of 0.89 per cent Record second quarter Fixed customer net additions of 70,000, including 33,000 internet customer additions, driven by our leading TELUS PureFibre network, premier portfolio of bundled services across Mobile and Home, and leading household client loyalty TTech Adjusted EBITDA growth of 5.1 per cent and strong margin expansion of 150 basis points to 38.2 per cent reflecting a lower cost to serve and focus on driving higher margin per user and continued double digit momentum in health services EBITDA contribution growth Net income and earnings per share higher by 13 per cent and 7.1 per cent, respectively and on an adjusted basis increased by 34 and 32 per cent; Adjusted Consolidated EBITDA higher by 5.6 per cent and margin increased 170 basis points to 36.1 per cent; Consolidated free cash flow increased by 71 per cent Full year 2024 TTech operating revenues and Adjusted EBITDA trending to lower end of their respective original target growth ranges; Consolidated free cash flow being updated to approximately $2.1 billion fully reflecting the flow through from TELUS Digital Experience's revised EBITDA outlook; Consolidated capital expenditures of approximately $2.6 billion remains unchanged VANCOUVER, BC, Aug. 2, 2024 /PRNewswire/ - TELUS Corporation today released its unaudited results for the second quarter of 2024. Consolidated operating revenues and other income increased by 0.6 per cent over the same period a year ago to $5.0 billion. This growth was driven by higher service revenue in our TELUS technology solutions (TTech) segment offset by lower service revenue in our TELUS digital experience segment (TELUS Digital), formerly known as Digitally-led customer experiences - TELUS International. Within TTech, higher revenue from mobile network, residential internet and security services, driven largely by subscriber growth, higher organic growth across multiple lines of business in health services and higher agriculture and consumer goods service revenues related to business acquisitions and improving organic growth across certain lines of business in agriculture services was partially offset by declines in TV and fixed legacy voice services revenues due to technological substitution. The decline in TELUS Digital operating revenues were from lower external revenues reflecting macroeconomic conditions. See Second Quarter 2024 Operating Highlights within this news release for a discussion on TTech and TELUS digital experience results. "In the second quarter, our team built upon our track record of execution excellence to drive industry-leading customer growth and strong financial results, leveraging our premier portfolio of assets, coupled with a relentless pursuit to drive cost efficiency and effectiveness," said Darren Entwistle, President and CEO. "Our results demonstrate how we are delivering sustainable profitable growth, underpinned by our consistent strategic focus on margin-accretive customer expansion, globally leading broadband networks and customer-centric culture. This enabled a record second quarter, with total customer net additions of 332,000, up 13 per cent, year-over-year, including healthy mobile phone net additions of 101,000, and record second quarter customer additions for both connected devices of 161,000 and total fixed net additions of 70,000. Our team's passion for delivering customer service excellence once again contributed to leading loyalty across our key product lines. Notably, postpaid mobile phone churn was 0.89 per cent, alongside PureFibre churn circa one per cent, further showcasing the consistent potency of our unmatched bundled product offerings across Mobile and Home, over our industry-best PureFibre and wireless broadband networks." "Today, TELUS International, which will formally complete its rebranding to TELUS Digital Experience (TELUS Digital) in the third quarter, reported its second quarter results that reflect a macroeconomic and operating environment that remains challenged. Notwithstanding the persistent headwinds, TELUS Digital continues to generate consistently strong cash flows that are being leveraged to reinvest into the business to support the reacceleration of top line growth along with an ongoing focus on surfacing cost efficiency initiatives to optimize its operations. As our TELUS Digital team advances opportunities with existing and prospective clients, their comprehensive and growing suite of AI solutions is capturing customer demand as demonstrated by the double-digit revenue growth within its AI Data Solutions line of service in the first half of this year. Furthermore, the strength of the generative AI fueled solutions, and tools created for TELUS across all areas of our business, fortify their go-to-market efforts with other clients. While we are encouraged by these positive indicators of longer-term growth opportunities, the challenged near-term environment impacts the expected levels of revenue and profit for 2024, leading TELUS Digital to revise its annual outlook for the full year. Our confidence in TELUS Digital remains steadfast as the business continues its evolution to a technology-centric model with significant opportunities in respect of digital transformation. This includes driving innovative generative AI solutions for our customers to elevate leading and differentiated digital client experiences in the market, creating a positive tailwind for TELUS Digital's medium- and long-term growth." "Within TELUS Health, we are pleased with the solid performance, returning to positive top line growth of four per cent as investments in our products, sales and distribution channels deliver strong momentum across multiple lines of service. This includes MyCare, pharmacy management systems, virtual pharmacy, retirement benefits solutions, health benefits management, our precision health, and our employee assistance programmes. Our team also delivered over 33 per cent adjusted EBITDA contribution growth. This was supported by the aforementioned revenue growth along with the achievement of $297 million in combined annualized synergies since the acquisition of LifeWorks in 2022, including $248 million in cost synergies along with $49 million in cross selling, as we work towards our overall objective of $427 million by the end of 2025. Furthermore, we drove a 10 per cent year-over-year increase in our global lives covered to more than 75 million. Similarly, within TELUS Agriculture & Consumer Goods, we are yielding positive outcomes as we strengthen our market position, delivering strong revenue growth of more than 15 per cent reflecting inorganic growth from tuck-in acquisitions, and improving organic revenue performance in our consumer goods, precision agronomy, and animal agriculture businesses. This comes on the heels of continuing strong sales performance where we have more than doubled our year-to-date sales bookings versus this time last year. Our commitment to amplifying the substantial growth potential of these distinctive global businesses is underscored by harnessing the expertise, experience and high-performance culture and talent of our entire team. This includes capitalizing on the significant cross-selling opportunities across all of our businesses, showcasing the collective talent and effectiveness of our team in propelling our success." "Our TELUS team remains deeply committed to making the world a better place," added Darren. "This is reflected in the incredible work of our TELUS Community Boards, which leverage the expertise of local leaders to ensure charitable funding is directed to where it will have the most impact, as well as the TELUS Friendly Future Foundation, with a mission to help youth realize their full potential. Impressively, since 2005, our 19 TELUS Community Boards around the world and the Foundation have contributed close to $130 million in cash donations in support of 10,300 initiatives, positively impacting the lives of 33.5 million youth, globally." Doug French, Executive Vice-president and CFO said, "Our strong performance during the second quarter is a testament to our consistent track record of operational execution excellence. Despite facing a challenging competitive and macroeconomic environment, we are executing against our strategic objectives, including our significant cost efficiency programs. In the quarter, this supported strong consolidated EBITDA growth of 5.6 per cent, alongside margin expansion of 170 basis points to 36.1 per cent. Our unrelenting focus on efficiency and effectiveness is further demonstrated by surpassing our full year assumption on restructuring investments in the first half of the year as we look to maximize the in-year financial benefit. For 2024, we now anticipate restructuring expense to be $400 million as we further optimize our cost structure to drive EBITDA expansion, margin accretion and accelerated cash flow growth." "As we enter the back half of the year, our financial position remains strong. At the end of the second quarter, we had approximately $2.5 billion of available liquidity, our average cost of long-term debt was 4.42 per cent, our average term to maturity of long-term debt is 11 years and our net debt to EBITDA ratio was 3.85 times. As we progress through 2024 and into future years, we anticipate our leverage ratio to improve as we work back towards our target ratio through continued EBITDA growth, declining capital intensity toward the 10 per cent level and ongoing free cash flow expansion." "Looking ahead, in light of the highly competitive environment in mobility and fixed, we are trending to the lower end of our 2024 growth target for TTech operating revenues. Despite these industry pressures, we remain confident in our commitment to driving strong, sustainable and margin accretive growth. This will be supported by maintaining our keen focus on driving a lower cost to serve as we work towards achieving the lower end of our annual TTech Adjusted EBITDA growth target. Consolidated free cash flow is being updated to approximately $2.1 billion, fully reflecting the flow through from TELUS Digital's lower EBITDA outlook. Our confidence in the strength and resilience of our business remains unwavering, and we are excited about the future prospects that lie ahead for our organization. This includes our expectations for continued free cash flow expansion in the years ahead, driven by ongoing strong EBITDA growth and moderating capital expenditure intensity, further supporting the long-term sustainability and quality of our long-standing and leading dividend growth program," concluded Doug. As compared to the same period a year ago, net income in the quarter of $221 million was up 13 per cent and Basic earnings per share (EPS) of $0.15 increased by 7.1 per cent. These increases were driven by higher Adjusted EBITDA as detailed below, partially offset by higher financing costs, driven by increased long-term debt and higher interest rates on both floating-rate and recent fixed-rate issuances. These costs were mainly associated with investments in spectrum and fiber technology, business acquisitions, and higher restructuring costs related to efficiency programs, including workforce reductions and real estate rationalization. As it relates to EPS, the trends also reflect the effect of a higher number of Common shares outstanding. When excluding certain costs and other adjustments (see 'Reconciliation of adjusted Net income' in this news release), adjusted net income of $366 million increased by 34 per cent over the same period last year, while adjusted basic EPS of $0.25 was up 32 per cent over the same period last year. Adjusted net income is a non-GAAP financial measure and adjusted basic EPS is a non-GAAP ratio. For further explanation of these measures, see 'Non-GAAP and other specified financial measures' in this news release. Compared to the same period last year, consolidated EBITDA increased by 5.5 per cent to approximately $1.7 billion and Adjusted EBITDA increased by 5.6 per cent to approximately $1.8 billion. The growth in Adjusted EBITDA reflects: (i) broad-based cost reduction efforts, synergies achieved between LifeWorks and our legacy health business, and an increase in TTech outsourcing to TELUS Digital, as well as savings in marketing, discretionary and administrative costs; (ii) mobile network, residential internet and security subscriber growth; (iii) higher gains in other income; and (iv) growth in health services revenue. These factors were partly offset by: (i) lower mobile phone ARPU; (ii) merit-based compensation increases; (iii) lower operational growth in TELUS Digital excluding other income; (iv) higher network operations costs; (v) declining TV and fixed legacy voice margins; (vi) lower mobile equipment margins; (vii) higher bad debt expense; and (viii) higher costs related to the scaling of our digital capabilities. In the second quarter, we added 332,000 net customer additions, up 39,000 over the same period last year, and inclusive of 101,000 mobile phones and 161,000 connected devices, in addition to 33,000 internet, 25,000 TV and 20,000 security customer connections. This was partly offset by residential voice losses of 8,000. Our total TTech subscriber base of 19.5 million is up 6.9 per cent over the last twelve months, reflecting a 4.5 per cent increase in our mobile phones subscriber base to over 9.9 million and a 24 per cent increase in our connected devices subscriber base to approximately 3.4 million. Additionally, our internet connections grew by 5.3 per cent over the last twelve months to approximately 2.7 million customer connections, our TV customer base stands at more than 1.3 million customer connections, and our security subscriber base increased by 8.2 per cent to approximately 1.1 million customer connections. Lastly, our residential voice subscriber base declined slightly by 2.9 per cent to more than 1.0 million. In health services, as of the end of the second quarter of 2024, virtual care members were 6.3 million and healthcare lives covered were 75.1 million, up 19 per cent and 10 per cent over the last twelve months, respectively. Digital health transactions in the second quarter of 2024 were 163.3 million, up 6.8 per cent over the second quarter of 2023. Cash provided by operating activities of $1.4 billion increased by 24 per cent in the second quarter of 2024 and free cash flow of $478 million increased by 71 per cent compared to the same period a year ago, reflecting higher EBITDA, lower capital expenditures and lower income taxes paid. These factors were partly offset by increased restructuring disbursements and increased interest paid. Our definition of free cash flow, for which there is no industry alignment, is unaffected by accounting standards that do not impact cash. Consolidated capital expenditures of $691 million, including $23 million for real estate development, decreased by $116 million or 14 per cent in the second quarter of 2024. TTech operations drove $121 million of the decrease in the second quarter of 2024, primarily driven by the planned slowdown of our fibre and wireless network builds and systems development. By June 30, 2024, our 5G network covered approximately 32.0 million Canadians, representing over 86 per cent of the population. TTech real estate development capital expenditures increased by $11 million in the second quarter of 2024 due to an increase in capital investment to support construction of multi-year development projects, including TELUS Ocean, TELUS Living residential buildings and other commercial buildings in British Columbia. TELUS Digital capital expenditures increased by $6 million in the second quarter of 2024, primarily driven by increased software investment in our Managed Digital Solutions business and AI Data Solutions (software and application development), as well as continued expansion in Africa. Agriculture and consumer goods services revenues increased by $12 million or 15 per cent, primarily attributed to business acquisitions and improving organic growth across certain lines of business in agriculture services. This was partially tempered by an increase of agriculture customer churn and macroeconomic headwinds slowing down subscription growth and sales funnel opportunities. TELUS' financial targets for 2024 are guided by a number of long-term financial objectives, policies and guidelines, which are detailed in Section 4.3 of the 2023 annual MD&A. Full year 2024 TTech operating revenues and Adjusted EBITDA are trending to the lower end of their respective original target growth ranges, reflecting the competitive environment in mobility and fixed. Consolidated free cash flow is being updated due to the flow through from TELUS Digital Experience's revised EBITDA outlook. Consolidated capital expenditures of approximately $2.6 billion remains unchanged. TELUS' Consolidated Operating Revenues and Adjusted EBITDA are now expected to be in the low single digit range as compared to our previous expectation of being approximate to our TTech targets. Consolidated Operating Revenues and Adjusted EBITDA can be approximated when combining the lower end of our TTech targets referenced above with the revised 2024 financial targets set by TELUS Digital, as announced August 2, 2024. The preceding disclosure respecting TELUS' 2024 financial targets is forward-looking information and is fully qualified by the 'Caution regarding forward-looking statements' below and based on management's expectations and assumptions as set out below and in Section 9.3 TELUS assumptions for 2024 in the 2023 annual MD&A and updated in Sections 9 and 10 of our second quarter 2024 interim MD&A. This disclosure is presented for the purpose of assisting our investors and others in understanding certain key elements of our expected 2024 financial results as well as our objectives, strategic priorities and business outlook. Such information may not be appropriate for other purposes. TELUS Digital announces executive leadership appointments TELUS Digital today announced executive leadership appointments. Effective September 3, 2024, Jeff Puritt, President and CEO of TELUS Digital will retire from his current position, and assume a new role as Executive Vice-Chair of the Board of Directors at TELUS Digital. Supported by robust senior leadership talent succession, and in alignment with the company's strategy of bringing the best of technology to enable excellence in customer service, we are pleased to welcome Jason Macdonnell as Acting CEO of TELUS Digital and President, TELUS Digital Customer Experience. Jason is a 20-year tenured member of our TELUS senior leadership team, with core expertise and a proven track record in leading growth business and digitally enabled customer service transformation across multiple teams at TELUS. In addition, Tobias Dengel, founder and President of WillowTree, will take on the elevated role of President of TELUS Digital Solutions, to propel the continued and successful evolution of our company to the next frontier of AI enabled digital transformation in CX. Meanwhile, in Jeff's new capacity, he will be responsible for our corporate development activities, given his expertise in mergers and acquisitions. Jeff's efforts will complement and amplify the company's return to profitable growth. In his role, Jeff will also support the government and investor relations functions within TELUS Digital. This will allow Jason and Tobias to fully focus on the organic progression of our strategy and the material elevation of our operational excellence and financial performance. Dividend Declaration The TELUS Board of Directors declared a quarterly dividend of $0.3891 per share on the issued and outstanding Common Shares of the Company payable on October 1, 2024 to holders of record at the close of business on September 10, 2024. This quarterly dividend reflects an increase of 7.0 per cent from the $0.3636 per share dividend declared one year earlier and consistent with our multi-year dividend growth program. When a dividend payment date falls on a weekend or holiday, the payment shall be made on the next succeeding day that is a business day. Corporate Highlights 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: Global Social Capitalism awards and recognition 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' second quarter 2024 conference call is scheduled for Friday, August 2, 2024 at 12:30 pm ET (9:30 am 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 September 2, 2024 at 1-855-201-2300. Please quote conference access code 96045# and playback access code 0114521#. 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. 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, the Company, we, us and our refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries. This news release contains forward-looking statements about expected events and the financial and operating performance of TELUS Corporation. The terms TELUS, the Company, 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 expectations regarding trends in the telecommunications industry (including demand for data and ongoing subscriber base growth), and our financing plans (including our multi-year dividend growth program). 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 other events may differ materially from expectations expressed in or implied by the forward-looking statements. The assumptions for our 2024 outlook, as described in Section 9 in our 2023 annual MD&A, remain the same, except for the following: Risks and uncertainties that could cause actual performance or other events to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are not limited to, the following: Our goals to achieve carbon neutrality and reduce our greenhouse gas (GHG) emissions in our operations are subject to our ability to identify, procure and implement solutions to reduce energy consumption and adopt cleaner sources of energy, our ability to identify and make suitable investments in renewable energy, including in the form of virtual power purchase agreements, and our ability to continue to realize significant absolute reductions in energy use and the resulting GHG emissions in our operations. Factors that may affect TELUS Digital's financial performance are described in TELUS International (Cda) Inc. public filings available on SEDAR+ and EDGAR. TELUS Digital may choose to publicize targets or provide other guidance regarding its business and it may not achieve such targets. Failure to meet these targets could affect TELUS' ability to achieve targets for the organization as a whole and could result in a decline in the trading price of the TELUS International (Cda) Inc. subordinate voting shares or the TELUS Common Shares or both. The assumptions underlying our forward-looking statements 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 2023 annual MD&A. Those descriptions are incorporated by reference in this cautionary statement. Updates to the assumptions on which our 2024 outlook is based are presented in Section 9 Update to general trends, outlook and assumptions, and regulatory developments and proceedings of our second quarter 2024 MD&A. Many of these risks and uncertainties are beyond our control or outside of our current expectations or knowledge. Additional risks and uncertainties that are 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. This cautionary statement qualifies all of the forward-looking statements in this document. Non-GAAP and other specified 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. For certain financial metrics, there are definitional differences between TELUS and TELUS International reporting. These differences largely arise from TELUS International adopting definitions consistent with practice in its industry. 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 (EPS): These are non-GAAP measures that do not have any standardized meaning prescribed by IFRS-IASB and are therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted Net income excludes the effects of restructuring and other costs, income tax-related adjustments, other equity (income) losses related to real estate joint ventures, long-term debt prepayment premium, unrealized changes in virtual power purchase agreements forward element, and other adjustments (identified in the following tables). Adjusted basic EPS is calculated as adjusted Net income divided by the basic weighted-average number of Common Shares outstanding. These measures are used to evaluate performance at a consolidated level and exclude items that, in management's view, may obscure underlying trends in business performance or items of an unusual nature that do not reflect our ongoing operations. They should not be considered alternatives to Net income and basic EPS in measuring TELUS' performance. 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 as 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. Adjusted EBITDA less capital expenditures is calculated for our reportable segments, as it represents a performance measure that may be more comparable to other issuers. 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 as 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 that may be used to, among other things, pay dividends, repay debt, purchase shares or make other investments. We exclude impacts of accounting standards 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. Mobile phone average revenue per subscriber per month (ARPU) is calculated as network revenue derived from monthly service plan, roaming and usage charges; divided by the average number of mobile phone subscribers on the network during the period, and is expressed as a rate per month. Appendix Operating revenues and other income - TTech segment Operating revenues and other income - TELUS digital experience segment About TELUS TELUS (TSX: T, NYSE: TU) is a dynamic, world-leading communications technology company with more than $20 billion in annual revenue and over 19 million customer connections spanning wireless, data, IP, voice, television, entertainment, video, and security. Our social purpose is to leverage our global-leading technology and compassion to drive social change and 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. The numerous, sustained accolades TELUS has earned over the years from independent, industry-leading network insight firms showcase the strength and speed of TELUS' global-leading networks, 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. Operating in 32 countries around the world, TELUS Digital Experience (TSX and NYSE: TIXT) is a leading digital customer experience innovator that designs, builds, and delivers next-generation solutions, including AI and content moderation, for global and disruptive brands across strategic industry verticals, including tech and games, communications and media, eCommerce and fintech, banking, financial services and insurance, healthcare, and others. TELUS Health is a global healthcare leader, which provides employee and family primary and preventive healthcare and wellbeing solutions. Our TELUS team, along with our 100,000 health professionals, are leveraging the combination of TELUS' strong digital and data analytics capabilities with our unsurpassed client service to dramatically improve remedial, preventive and mental health outcomes covering over 75 million lives, and growing, around the world. As the largest provider of digital solutions and digital insights of its kind, TELUS Agriculture & Consumer Goods enables efficient and sustainable production from seed to store, helping improve the safety and quality of food and other goods in a way that is traceable to end consumers. Driven by our determination and vision to connect all citizens for good, our deeply meaningful and enduring philosophy to give where we live has inspired TELUS and our team to contribute $1.7 billion, including 2.2 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most giving company in the world. Together, let's make the future friendly. For more information about TELUS, please visit telus.com, follow us at @TELUSNews on X and @Darren_Entwistle on Instagram. View original content to download multimedia:https://www.prnewswire.com/news-releases/telus-reports-operational-and-financial-results-for-second-quarter-2024-302213189.html

TELUS reports operational and financial results for second quarter 2024 By Investing.com

Total Mobile and Fixed customer growth of 332,000, up 39,000 over last year, representing a record second quarter, driven by strong demand for our leading portfolio of Mobility and Fixed services Robust Mobile Phone net additions of 101,000, and record second quarter Connected Device net additions of 161,000; industry-leading postpaid mobile phone churn of 0.89 per cent Record second quarter Fixed customer net additions of 70,000, including 33,000 internet customer additions, driven by our leading TELUS PureFibre network, premier portfolio of bundled services across Mobile and Home, and leading household client loyalty TTech Adjusted EBITDA growth of 5.1 per cent and strong margin expansion of 150 basis points to 38.2 per cent reflecting a lower cost to serve and focus on driving higher margin per user and continued double digit momentum in health services EBITDA contribution growth Net income and earnings per share higher by 13 per cent and 7.1 per cent, respectively and on an adjusted basis increased by 34 and 32 per cent; Adjusted Consolidated EBITDA higher by 5.6 per cent and margin increased 170 basis points to 36.1 per cent; Consolidated free cash flow increased by 71 per cent Full year 2024 TTech operating revenues and Adjusted EBITDA trending to lower end of their respective original target growth ranges; Consolidated free cash flow being updated to approximately fully reflecting the flow through from TELUS Digital Experience's revised EBITDA outlook; Consolidated capital expenditures of approximately remains unchanged , /PRNewswire/ - TELUS Corporation today released its unaudited results for the second quarter of 2024. Consolidated operating revenues and other income increased by 0.6 per cent over the same period a year ago to . This growth was driven by higher service revenue in our TELUS technology solutions (TTech) segment offset by lower service revenue in our TELUS digital experience segment (TELUS Digital), formerly known as Digitally-led customer experiences " TELUS International. Within TTech, higher revenue from mobile network, residential internet and security services, driven largely by subscriber growth, higher organic growth across multiple lines of business in health services and higher agriculture and consumer goods service revenues related to business acquisitions and improving organic growth across certain lines of business in agriculture services was partially offset by declines in TV and fixed legacy voice services revenues due to technological substitution. The decline in TELUS Digital operating revenues were from lower external revenues reflecting macroeconomic conditions. See Second Quarter 2024 Operating Highlights within this news release for a discussion on TTech and TELUS digital experience results. "In the second quarter, our team built upon our track record of execution excellence to drive industry-leading customer growth and strong financial results, leveraging our premier portfolio of assets, coupled with a relentless pursuit to drive cost efficiency and effectiveness," said , President and CEO. "Our results demonstrate how we are delivering sustainable profitable growth, underpinned by our consistent strategic focus on margin-accretive customer expansion, globally leading broadband networks and customer-centric culture. This enabled a record second quarter, with total customer net additions of 332,000, up 13 per cent, year-over-year, including healthy mobile phone net additions of 101,000, and record second quarter customer additions for both connected devices of 161,000 and total fixed net additions of 70,000. Our team's passion for delivering customer service excellence once again contributed to leading loyalty across our key product lines. Notably, postpaid mobile phone churn was 0.89 per cent, alongside PureFibre churn circa one per cent, further showcasing the consistent potency of our unmatched bundled product offerings across Mobile and Home, over our industry-best PureFibre and wireless broadband networks." "Today, TELUS International, which will formally complete its rebranding to TELUS Digital Experience (TELUS Digital) in the third quarter, reported its second quarter results that reflect a macroeconomic and operating environment that remains challenged. Notwithstanding the persistent headwinds, TELUS Digital continues to generate consistently strong cash flows that are being leveraged to reinvest into the business to support the reacceleration of top line growth along with an ongoing focus on surfacing cost efficiency initiatives to optimize its operations. As our TELUS Digital team advances opportunities with existing and prospective clients, their comprehensive and growing suite of AI solutions is capturing customer demand as demonstrated by the double-digit revenue growth within its AI Data Solutions line of service in the first half of this year. Furthermore, the strength of the generative AI fueled solutions, and tools created for TELUS across all areas of our business, fortify their go-to-market efforts with other clients. While we are encouraged by these positive indicators of longer-term growth opportunities, the challenged near-term environment impacts the expected levels of revenue and profit for 2024, leading TELUS Digital to revise its annual outlook for the full year. Our confidence in TELUS Digital remains steadfast as the business continues its evolution to a technology-centric model with significant opportunities in respect of digital transformation. This includes driving innovative generative AI solutions for our customers to elevate leading and differentiated digital client experiences in the market, creating a positive tailwind for TELUS Digital's medium- and long-term growth." "Within TELUS Health, we are pleased with the solid performance, returning to positive top line growth of four per cent as investments in our products, sales and distribution channels deliver strong momentum across multiple lines of service. This includes MyCare, pharmacy management systems, virtual pharmacy, retirement benefits solutions, health benefits management, our precision health, and our employee assistance programmes. Our team also delivered over 33 per cent adjusted EBITDA contribution growth. This was supported by the aforementioned revenue growth along with the achievement of in combined annualized synergies since the acquisition of LifeWorks in 2022, including in cost synergies along with in cross selling, as we work towards our overall objective of by the end of 2025. Furthermore, we drove a 10 per cent year-over-year increase in our global lives covered to more than 75 million. Similarly, within TELUS Agriculture & Consumer Goods, we are yielding positive outcomes as we strengthen our market position, delivering strong revenue growth of more than 15 per cent reflecting inorganic growth from tuck-in acquisitions, and improving organic revenue performance in our consumer goods, precision agronomy, and animal agriculture businesses. This comes on the heels of continuing strong sales performance where we have more than doubled our year-to-date sales bookings versus this time last year. Our commitment to amplifying the substantial growth potential of these distinctive global businesses is underscored by harnessing the expertise, experience and high-performance culture and talent of our entire team. This includes capitalizing on the significant cross-selling opportunities across all of our businesses, showcasing the collective talent and effectiveness of our team in propelling our success." "Our TELUS team remains deeply committed to making the world a better place," added Darren. "This is reflected in the incredible work of our TELUS Community Boards, which leverage the expertise of local leaders to ensure charitable funding is directed to where it will have the most impact, as well as the TELUS Friendly Future Foundation, with a mission to help youth realize their full potential. Impressively, since 2005, our 19 TELUS Community Boards around the world and the Foundation have contributed close to in cash donations in support of 10,300 initiatives, positively impacting the lives of 33.5 million youth, globally." , Executive Vice-president and CFO said, "Our strong performance during the second quarter is a testament to our consistent track record of operational execution excellence. Despite facing a challenging competitive and macroeconomic environment, we are executing against our strategic objectives, including our significant cost efficiency programs. In the quarter, this supported strong consolidated EBITDA growth of 5.6 per cent, alongside margin expansion of 170 basis points to 36.1 per cent. Our unrelenting focus on efficiency and effectiveness is further demonstrated by surpassing our full year assumption on restructuring investments in the first half of the year as we look to maximize the in-year financial benefit. For 2024, we now anticipate restructuring expense to be as we further optimize our cost structure to drive EBITDA expansion, margin accretion and accelerated cash flow growth." "As we enter the back half of the year, our financial position remains strong. At the end of the second quarter, we had approximately of available liquidity, our average cost of long-term debt was 4.42 per cent, our average term to maturity of long-term debt is 11 years and our net debt to EBITDA ratio was 3.85 times. As we progress through 2024 and into future years, we anticipate our leverage ratio to improve as we work back towards our target ratio through continued EBITDA growth, declining capital intensity toward the 10 per cent level and ongoing free cash flow expansion." "Looking ahead, in light of the highly competitive environment in mobility and fixed, we are trending to the lower end of our 2024 growth target for TTech operating revenues. Despite these industry pressures, we remain confident in our commitment to driving strong, sustainable and margin accretive growth. This will be supported by maintaining our keen focus on driving a lower cost to serve as we work towards achieving the lower end of our annual TTech Adjusted EBITDA growth target. Consolidated free cash flow is being updated to approximately , fully reflecting the flow through from TELUS Digital's lower EBITDA outlook. Our confidence in the strength and resilience of our business remains unwavering, and we are excited about the future prospects that lie ahead for our organization. This includes our expectations for continued free cash flow expansion in the years ahead, driven by ongoing strong EBITDA growth and moderating capital expenditure intensity, further supporting the long-term sustainability and quality of our long-standing and leading dividend growth program," concluded Doug. As compared to the same period a year ago, net income in the quarter of was up 13 per cent and Basic earnings per share (EPS) of increased by 7.1 per cent. These increases were driven by higher Adjusted EBITDA as detailed below, partially offset by higher financing costs, driven by increased long-term debt and higher interest rates on both floating-rate and recent fixed-rate issuances. These costs were mainly associated with investments in spectrum and fiber technology, business acquisitions, and higher restructuring costs related to efficiency programs, including workforce reductions and real estate rationalization. As it relates to EPS, the trends also reflect the effect of a higher number of Common shares outstanding. When excluding certain costs and other adjustments (see 'Reconciliation of adjusted Net income' in this news release), adjusted net income of increased by 34 per cent over the same period last year, while adjusted basic EPS of was up 32 per cent over the same period last year. Adjusted net income is a non-GAAP financial measure and adjusted basic EPS is a non-GAAP ratio. For further explanation of these measures, see 'Non-GAAP and other specified financial measures' in this news release. Compared to the same period last year, consolidated EBITDA increased by 5.5 per cent to approximately and Adjusted EBITDA increased by 5.6 per cent to approximately . The growth in Adjusted EBITDA reflects: (i) broad-based cost reduction efforts, synergies achieved between LifeWorks and our legacy health business, and an increase in TTech outsourcing to TELUS Digital, as well as savings in marketing, discretionary and administrative costs; (ii) mobile network, residential internet and security subscriber growth; (iii) higher gains in other income; and (iv) growth in health services revenue. These factors were partly offset by: (i) lower mobile phone ARPU; (ii) merit-based compensation increases; (iii) lower operational growth in TELUS Digital excluding other income; (iv) higher network operations costs; (v) declining TV and fixed legacy voice margins; (vi) lower mobile equipment margins; (vii) higher bad debt expense; and (viii) higher costs related to the scaling of our digital capabilities. In the second quarter, we added 332,000 net customer additions, up 39,000 over the same period last year, and inclusive of 101,000 mobile phones and 161,000 connected devices, in addition to 33,000 internet, 25,000 TV and 20,000 security customer connections. This was partly offset by residential voice losses of 8,000. Our total TTech subscriber base of 19.5 million is up 6.9 per cent over the last twelve months, reflecting a 4.5 per cent increase in our mobile phones subscriber base to over 9.9 million and a 24 per cent increase in our connected devices subscriber base to approximately 3.4 million. Additionally, our internet connections grew by 5.3 per cent over the last twelve months to approximately 2.7 million customer connections, our TV customer base stands at more than 1.3 million customer connections, and our security subscriber base increased by 8.2 per cent to approximately 1.1 million customer connections. Lastly, our residential voice subscriber base declined slightly by 2.9 per cent to more than 1.0 million. In health services, as of the end of the second quarter of 2024, virtual care members were 6.3 million and healthcare lives covered were 75.1 million, up 19 per cent and 10 per cent over the last twelve months, respectively. Digital health transactions in the second quarter of 2024 were 163.3 million, up 6.8 per cent over the second quarter of 2023. Cash provided by operating activities of increased by 24 per cent in the second quarter of 2024 and free cash flow of increased by 71 per cent compared to the same period a year ago, reflecting higher EBITDA, lower capital expenditures and lower income taxes paid. These factors were partly offset by increased restructuring disbursements and increased interest paid. Our definition of free cash flow, for which there is no industry alignment, is unaffected by accounting standards that do not impact cash. Consolidated capital expenditures of , including for real estate development, decreased by or 14 per cent in the second quarter of 2024. TTech operations drove of the decrease in the second quarter of 2024, primarily driven by the planned slowdown of our fibre and wireless network builds and systems development. By , our 5G network covered approximately 32.0 million Canadians, representing over 86 per cent of the population. TTech real estate development capital expenditures increased by in the second quarter of 2024 due to an increase in capital investment to support construction of multi-year development projects, including , TELUS Living residential buildings and other commercial buildings in . TELUS Digital capital expenditures increased by in the second quarter of 2024, primarily driven by increased software investment in our Managed Digital Solutions business and AI Data Solutions (software and application development), as well as continued expansion in . Agriculture and consumer goods services revenues increased by or 15 per cent, primarily attributed to business acquisitions and improving organic growth across certain lines of business in agriculture services. This was partially tempered by an increase of agriculture customer churn and macroeconomic headwinds slowing down subscription growth and sales funnel opportunities. TELUS' financial targets for 2024 are guided by a number of long-term financial objectives, policies and guidelines, which are detailed in Section 4.3 of the 2023 annual MD&A. Full year 2024 TTech operating revenues and Adjusted EBITDA are trending to the lower end of their respective original target growth ranges, reflecting the competitive environment in mobility and fixed. Consolidated free cash flow is being updated due to the flow through from TELUS Digital Experience's revised EBITDA outlook. Consolidated capital expenditures of approximately remains unchanged. TELUS' Consolidated Operating Revenues and Adjusted EBITDA are now expected to be in the low single digit range as compared to our previous expectation of being approximate to our TTech targets. Consolidated Operating Revenues and Adjusted EBITDA can be approximated when combining the lower end of our TTech targets referenced above with the revised 2024 financial targets set by TELUS Digital, as announced . The preceding disclosure respecting TELUS' 2024 financial targets is forward-looking information and is fully qualified by the 'Caution regarding forward-looking statements' below and based on management's expectations and assumptions as set out below and in Section 9.3 TELUS assumptions for 2024 in the 2023 annual MD&A and updated in Sections 9 and 10 of our second quarter 2024 interim MD&A. This disclosure is presented for the purpose of assisting our investors and others in understanding certain key elements of our expected 2024 financial results as well as our objectives, strategic priorities and business outlook. Such information may not be appropriate for other purposes. TELUS Digital announces executive leadership appointments TELUS Digital today announced executive leadership appointments. Effective , , President and CEO of TELUS Digital will retire from his current position, and assume a new role as Executive Vice-Chair of the Board of Directors at TELUS Digital. Supported by robust senior leadership talent succession, and in alignment with the company's strategy of bringing the best of technology to enable excellence in customer service, we are pleased to welcome as Acting CEO of TELUS Digital and President, TELUS Digital Customer Experience. Jason is a 20-year tenured member of our TELUS senior leadership team, with core expertise and a proven track record in leading growth business and digitally enabled customer service transformation across multiple teams at TELUS. In addition, , founder and President of WillowTree, will take on the elevated role of President of TELUS Digital Solutions, to propel the continued and successful evolution of our company to the next frontier of AI enabled digital transformation in CX. Meanwhile, in Jeff's new capacity, he will be responsible for our corporate development activities, given his expertise in mergers and acquisitions. Jeff's efforts will complement and amplify the company's return to profitable growth. In his role, Jeff will also support the government and investor relations functions within TELUS Digital. This will allow Jason and Tobias to fully focus on the organic progression of our strategy and the material elevation of our operational excellence and financial performance. Dividend Declaration The TELUS Board of Directors declared a quarterly dividend of per share on the issued and outstanding Common Shares of the Company payable on to holders of record at the close of business on . This quarterly dividend reflects an increase of 7.0 per cent from the per share dividend declared one year earlier and consistent with our multi-year dividend growth program. When a dividend payment date falls on a weekend or holiday, the payment shall be made on the next succeeding day that is a business day. Corporate Highlights 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: Global Social Capitalism awards and recognition 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' second quarter 2024 conference call is scheduled for at () 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 at 1-855-201-2300. Please quote conference access code 96045# and playback access code 0114521#. 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. 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, the Company, we, us and our refer to TELUS Corporation and, where the context of the narrative permits or requires, its subsidiaries. This news release contains forward-looking statements about expected events and the financial and operating performance of TELUS Corporation. The terms TELUS, the Company, 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 expectations regarding trends in the telecommunications industry (including demand for data and ongoing subscriber base growth), and our financing plans (including our multi-year dividend growth program). 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 and 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 other events may differ materially from expectations expressed in or implied by the forward-looking statements. The assumptions for our 2024 outlook, as described in Section 9 in our 2023 annual MD&A, remain the same, except for the following: Risks and uncertainties that could cause actual performance or other events to differ materially from the forward-looking statements made herein and in other TELUS filings include, but are not limited to, the following: Our goals to achieve carbon neutrality and reduce our greenhouse gas (GHG) emissions in our operations are subject to our ability to identify, procure and implement solutions to reduce energy consumption and adopt cleaner sources of energy, our ability to identify and make suitable investments in renewable energy, including in the form of virtual power purchase agreements, and our ability to continue to realize significant absolute reductions in energy use and the resulting GHG emissions in our operations. Factors that may affect TELUS Digital's financial performance are described in TELUS International (Cda) Inc. public filings available on SEDAR+ and EDGAR. TELUS Digital may choose to publicize targets or provide other guidance regarding its business and it may not achieve such targets. Failure to meet these targets could affect TELUS' ability to achieve targets for the organization as a whole and could result in a decline in the trading price of the TELUS International (Cda) Inc. subordinate voting shares or the TELUS Common Shares or both. The assumptions underlying our forward-looking statements 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 2023 annual MD&A. Those descriptions are incorporated by reference in this cautionary statement. Updates to the assumptions on which our 2024 outlook is based are presented in Section 9 Update to general trends, outlook and assumptions, and regulatory developments and proceedings of our second quarter 2024 MD&A. Many of these risks and uncertainties are beyond our control or outside of our current expectations or knowledge. Additional risks and uncertainties that are 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. This cautionary statement qualifies all of the forward-looking statements in this document. Non-GAAP and other specified 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. For certain financial metrics, there are definitional differences between TELUS and TELUS International reporting. These differences largely arise from TELUS International adopting definitions consistent with practice in its industry. 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 (EPS): These are non-GAAP measures that do not have any standardized meaning prescribed by IFRS-IASB and are therefore unlikely to be comparable to similar measures presented by other issuers. Adjusted Net income excludes the effects of restructuring and other costs, income tax-related adjustments, other equity (income) losses related to real estate joint ventures, long-term debt prepayment premium, unrealized changes in virtual power purchase agreements forward element, and other adjustments (identified in the following tables). Adjusted basic EPS is calculated as adjusted Net income divided by the basic weighted-average number of Common Shares outstanding. These measures are used to evaluate performance at a consolidated level and exclude items that, in management's view, may obscure underlying trends in business performance or items of an unusual nature that do not reflect our ongoing operations. They should not be considered alternatives to Net income and basic EPS in measuring TELUS' performance. 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 as 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. Adjusted EBITDA less capital expenditures is calculated for our reportable segments, as it represents a performance measure that may be more comparable to other issuers. 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 as 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 that may be used to, among other things, pay dividends, repay debt, purchase shares or make other investments. We exclude impacts of accounting standards 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. Mobile phone average revenue per subscriber per month (ARPU) is calculated as network revenue derived from monthly service plan, roaming and usage charges; divided by the average number of mobile phone subscribers on the network during the period, and is expressed as a rate per month. Appendix Operating revenues and other income " TTech segment Operating revenues and other income " TELUS digital experience segment About TELUS TELUS (TSX: T, NYSE: TU) is a dynamic, world-leading communications technology company with more than in annual revenue and over 19 million customer connections spanning wireless, data, IP, voice, television, entertainment, video, and security. Our social purpose is to leverage our global-leading technology and compassion to drive social change and 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. The numerous, sustained accolades TELUS has earned over the years from independent, industry-leading network insight firms showcase the strength and speed of TELUS' global-leading networks, 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. Operating in 32 countries around the world, TELUS Digital Experience (TSX and NYSE: TIXT) is a leading digital customer experience innovator that designs, builds, and delivers next-generation solutions, including AI and content moderation, for global and disruptive brands across strategic industry verticals, including tech and games, communications and media, eCommerce and fintech, banking, financial services and insurance, healthcare, and others. TELUS Health is a global healthcare leader, which provides employee and family primary and preventive healthcare and wellbeing solutions. Our TELUS team, along with our 100,000 health professionals, are leveraging the combination of TELUS' strong digital and data analytics capabilities with our unsurpassed client service to dramatically improve remedial, preventive and mental health outcomes covering over 75 million lives, and growing, around the world. As the largest provider of digital solutions and digital insights of its kind, TELUS Agriculture & Consumer Goods enables efficient and sustainable production from seed to store, helping improve the safety and quality of food and other goods in a way that is traceable to end consumers. Driven by our determination and vision to connect all citizens for good, our deeply meaningful and enduring philosophy to give where we live has inspired TELUS and our team to contribute , including 2.2 million days of service since 2000. This unprecedented generosity and unparalleled volunteerism have made TELUS the most giving company in the world. Together, let's make the future friendly. For more information about TELUS, please visit telus.com, follow us at @TELUSNews on X and @Darren_Entwistle on Instagram.

TELUS Digital reports second quarter 2024 results, delivering consistently strong cash flows despite prolonged macroeconomic pressures; revises the full-year outlook and announces executive leadership appointments

TELUS International (Cda) Inc. (NYSE and TSX: TIXT), a leading digital customer experience innovator that designs, builds, and delivers next-generation solutions, including artificial intelligence (AI) and content moderation, for global and disruptive brands, today released its results for the three- and six-month periods ended June 30, 2024. In the third quarter of 2024, we expect to formally complete the rebranding of TELUS International as TELUS Digital Experience (TELUS Digital). The legal name of the company will remain TELUS International (Cda) Inc. In this news release and related disclosure, we refer to TELUS International (Cda) Inc. as TELUS Digital. TELUS Corporation (TSX: T, NYSE: TU) is the controlling shareholder of TELUS Digital. All figures in this news release, and elsewhere in TELUS Digital disclosures, are in U.S. dollars, unless specified otherwise, and relate only to TELUS Digital results and measures. "It is with immense gratitude and appreciation for his innumerable contributions to TELUS Digital over the past two decades, and almost a quarter of a century as a TELUS team member, that we announce the retirement of Jeff Puritt, President and CEO of TELUS Digital, effective September 3rd," said Darren Entwistle, President and CEO of TELUS and Chair of the Board of TELUS Digital. "Jeff played a pivotal role in leading and shaping our TELUS Digital business since its inception. In recognition of his unwavering commitment to our global team throughout our company's journey, Jeff will be assuming the new role of Executive Vice-Chair of the Board of Directors at TELUS Digital. In alignment with the company's strategy of bringing the best of technology to enable excellence in customer service, and robust succession of the executive leadership talent, we are pleased to welcome Jason Macdonnell as Acting CEO of TELUS Digital and President, TELUS Digital Customer Experience. Jason is a 20-year tenured member of our TELUS senior leadership team, with core expertise and a proven track record in leading customer service excellence across multiple teams at TELUS. In addition, Tobias Dengel, founder and President of WillowTree, will take on the elevated role of President of TELUS Digital Solutions, to propel the continued and successful evolution of our company to the next frontier of technology in CX. Meanwhile, in Jeff's new capacity, he will be responsible for our corporate development activities, given his expertise in mergers and acquisitions. Jeff's efforts will complement and amplify the company's return to profitable growth. In his role, Jeff will also support the government and investor relations functions within TELUS Digital. This will allow Jason and Tobias to fully focus on the organic progression of our strategy and the material elevation of our operational excellence and financial performance." Jeff Puritt, President and CEO of TELUS Digital said, "TELUS Digital's second quarter results reflected a macroeconomic and operating environment that remains challenged and is felt by all peers across our industry. Notwithstanding the persistent headwinds, we continue to generate consistently strong cash flows, which we reinvest into the business. Along with good momentum with our two largest clients, TELUS Corporation and Google, we saw further stabilization in revenue with our third largest client, a leading social media network, albeit at the cost of a meaningful re-rating of that account's margin, which added pressure to our overall profitability in the quarter and for the near term. With a delay in broader demand recovery, we continue to face intensified price competition this year, even though we pivoted toward a revenue growth focus, while carefully recalibrating our margin expectations, to help us support the top line growth in the near term. In another more fundamental pivot, we continue to grow our AI-related business, which generated ~15% of our overall revenue in the first half of 2024, growing 13% year-over-year. Currently, AI-related opportunities represent approximately 10% of our overall sales funnel." Jeff continued, "Building upon the early success within our AI funnel, in the second quarter of 2024, our WillowTree sales team won GenAI Jumpstart mandates with one of the largest non-profit organizations in the world, as well as with one of Canada's provincial government departments and with the Agriculture and Consumer Goods business at TELUS, while opportunity exploration engagements are also underway with other clients. Among other notable new logo wins in the quarter, our WillowTree team partnered with a well-known New York business-focused daily publication, and with Wiley, one of the world's largest publishers and a global leader in research and learning, specifically to modernize their marketing technology stack. The WillowTree team further expanded their engagement with Inspira Financial - an American financial services company - in addition to winning more business with CEATI, a membership-based provider of shared cost R&D, training and networking services for power industry professionals, as well as with a large marine boat and propulsion manufacturer and one of the world's largest hospitality brands, among others. At the same time, our global TELUS Digital sales team won new clients across several diverse sectors, including healthcare, transportation and consumer packaged goods. We expanded engagements across our existing client base, not least as we seek to stabilize volumes with our third largest client, a leading social media network. Our relationship with Google remains strong, driven by AI Data Solutions in particular; and we continue to grow our meaningful and diversified workstreams with TELUS Corporation, as we enable our parent company's success in digital transformation across all areas of their unique business portfolio." Jeff added: "Our efforts to position TELUS Digital as the AI-fueled customer experience partner of choice continues to attract notable recognition in the market. For the fourth consecutive year, TELUS Digital won the Best Informational Bot Solution award from AI Breakthrough, in a nod to the advanced capabilities of our intelligent bot platform. In May, our parent company TELUS made history by becoming the first in the world to be internationally certified in Privacy by Design for its GenAI customer support tool, powered by Fuel iX. And more recently, IDC in collaboration with Foundry's CIO, selected the Single Point of Contact (SPOC) Copilot, that operates on the Fuel iX platform at TELUS, as a recipient of a 2024 CIO of the Year Award for Canada; the copilot revolutionizes the IT support experience through AI-driven automation and self-service capabilities that enhance employee experience, drive cost savings and instill a digital-first mindset across the organization. Proven success of these real use cases, and the value we are creating for TELUS, serve as direct testimonials for our other clients across various industries." Gopi Chande, CFO said, "From a financial performance view, earlier in the year we saw solid signs of the demand recovery on the horizon, including a record in new client bookings in the first quarter, but the pace of new client bookings slowed in the second quarter, despite continued strength in the sales funnel. At the same time, there are many cost efficiency and transformation initiatives underway across our global footprint and all levels of the enterprise to help us transform our delivery costs. However, these will need more time to yield meaningful results to help offset the impact of softer revenue and margin pressures in the near term. Similar to our peers not seeing improvement in the macroeconomic environment, we no longer expect the magnitude of recovery previously expected for the second half of this year. As a result, our financial outlook for the full year 2024 is revised to better reflect the current balance of risks and opportunities." Gopi concluded: "Even though overall demand volumes have not yet returned at the levels previously anticipated, we continue to be encouraged by the composition of our sales funnel and expect stabilization over the next two quarters, also supported by further recovery in the demand for WillowTree services. Our revised outlook implies stability and incremental improvement in the sequential half-year revenue and stabilization in margins aligned with the second quarter, when normalized for impacts associated with the WillowTree earnout. At the same time, we continue to push forward with targeted investments in sales and marketing, further strengthening our efforts to rejuvenate growth in certain larger accounts and across our broader client base. While adding some incremental pressure on our margins, these are the right investments to support our ongoing efforts to diversify and grow our revenues prospectively. Importantly, cash flows generated by our business will continue to support our debt repayment and reinvestment into the technology-centric evolution and longer-term growth of TELUS Digital." Provided below are financial and operating highlights that include certain non-GAAP measures and ratios. See the Non-GAAP section of this news release for a discussion on such measures and ratios. Q2 2024 vs. Q2 2023 summary Revenue growth on a constant currency basis, Adjusted EBITDA Margin, Adjusted Diluted EPS and Net Debt to Adjusted EBITDA Leverage Ratio are non-GAAP ratios, while Adjusted Net Income, Adjusted EBITDA and Free Cash Flow are non-GAAP financial measures. See the Non-GAAP section of this news release. YTD Q2 2024 vs. YTD Q2 2023 summary A discussion of our results of operations is included in our Management's Discussion and Analysis for the three- and six-month periods ended June 30, 2024, which is filed on SEDAR+ and as Exhibit 99.2 to our Form 6-K filed on EDGAR. Such materials and additional information are also provided at telusinternational.com/investors. Outlook For the full-year 2024, management now expects the following ranges for revenue, Adjusted EBITDA and Adjusted EBITDA Margin, and Adjusted Diluted EPS. These outlook ranges reflect three key assumptions: (1) we no longer assume the magnitude of the broader demand recovery, specifically as it relates to previously expected upside in the second half of the year; (2) we expect our margins to stabilize in the second half aligned with the second quarter of 2024, at the same time, we don't expect to record any material amounts for other income arising from business combination-related provisions in the next two quarters and expect incrementally higher share-based compensation as a result of the WillowTree earnout renegotiation; and (3) we have reduced the in-year financial benefit from our ongoing cost efficiency and transformation initiatives to reflect our revised expectations for what can be achieved in 2024. More details on the executive leadership appointments Consistent with TELUS' best-in-class commitment to robust succession planning, Jason Macdonnell, a 20-year tenured member of the TELUS leadership team, will succeed Jeff as Acting CEO of TELUS Digital, as well as take on the role of President, TELUS Digital Customer Experience. Most recently, Jason served as Senior Vice-president of Customer Service Excellence, leading the organization responsible for providing customer support for millions of TELUS' mobile and residential customers. Since joining TELUS in 2002, Jason has held a variety of key senior leadership roles, demonstrating a passion for thoughtfully leading business transformation, developing team members and growing and scaling businesses at an exceptional rate. In addition to leading the operations for Consumer Solutions, he also concurrently led the operations for TELUS Health Solutions, responsible for providing support to healthcare customers, including patients and providers. Prior to that, Jason served as the President of TELUS Security and Automation, where he led the team responsible for implementing security and automation into TELUS' suite of home and business solutions services. Jason holds a Bachelor of Commerce degree from the University of British Columbia and an MBA with distinction from Ivey Business School at Western University. He is currently the executive sponsor for the TELUS MBA program in partnership with the University of Victoria's Gustavson School of Business and a director on the board of BC Tech Association, the largest member-led technology non-profit in British Columbia. Tobias Dengel, founder and President of WillowTree, will take on the elevated role of President of TELUS Digital Solutions. Tobias joined TELUS Digital in January 2023, as part of the WillowTree acquisition, the company that unifies the often disparate disciplines of strategy, design and engineering to partner with clients to meet their most ambitious digital transformation goals. Tobias started his career in digital media at AOL, holding a variety of leadership roles, including General Manager of AOL Local and Vice President of AOL International, based in London. Following AOL and prior to co-founding WillowTree in 2009, Tobias co-founded Leads.com, a search agency that was acquired by Web.com. Tobias holds a BSE in Finance (Wharton) and a BSE in Systems Engineering, both from the University of Pennsylvania. He also serves as the Chair of the Thomas Jefferson Foundation Board, which manages Monticello in Charlottesville, as well as on the Board of WillowTree. Both Jason and Tobias will report directly to the TELUS Digital Board of Directors. Q2 2024 investor call TELUS Digital will host a conference call today, August 2, 2024 at 10:30 a.m. (ET) / 7:30 a.m. (PT), where the chair of the board will comment on the executive leadership team's appointments, followed by the management's review of the second quarter results and a question and answer session with analysts. A webcast of the conference call will be streamed live on the TELUS Digital Investor Relations website at: https://www.telusinternational.com/investors/news-events and a replay will also be available on the website following the conference call. Non-GAAP This news release includes non-GAAP financial information, with reconciliation to GAAP measures presented at the end of this news release. We report certain non-GAAP measures used in the management analysis of our performance, but these do not have standardized meanings under International Financial Reporting Standards as issued by the International Accounting Standards Board (IFRS-IASB). These non-GAAP financial measures and non-GAAP ratios may not be comparable to GAAP measures or ratios and may not be comparable to similarly titled non-GAAP financial measures or non-GAAP ratios reported by other companies, including those within our industry and TELUS Corporation, our controlling shareholder. Adjusted EBITDA, Adjusted Net Income, Free Cash Flow, revenue on a constant currency basis, and Net Debt are non-GAAP financial measures, while Adjusted EBITDA Margin, Adjusted Diluted EPS, revenue growth on a constant currency basis and Net Debt to Adjusted EBITDA Leverage Ratio are non-GAAP ratios. Adjusted EBITDA is commonly used by our industry peers and provides a measure for investors to compare and evaluate our relative operating performance. We use it to assess our ability to service existing and new debt facilities, and to fund accretive growth opportunities and acquisition targets. In addition, certain financial debt covenants associated with our credit facility, including Net Debt to Adjusted EBITDA Leverage Ratio, are based on Adjusted EBITDA, which requires us to monitor this non-GAAP financial measure in connection with our financial covenants. Adjusted EBITDA should not be considered an alternative to net income in measuring our financial performance, and it should not be used as a replacement measure of current and future operating cash flows. However, we believe a financial measure that presents net income adjusted for these items provides a more consistent measure for management to evaluate period-over-period performance and would enable an investor to better evaluate our underlying business trends, our operational performance and overall business strategy. We exclude items from Adjusted Net Income and Adjusted EBITDA, such as acquisition, integration and other, foreign exchange gains or losses and, additionally, with respect to Adjusted Net Income, the interest accretion on written put options, amortization of purchased intangible assets, and the related tax effect of these adjustments. Full reconciliations of Adjusted EBITDA and Adjusted Net Income to the comparable GAAP measures are included at the end of this news release. We calculate Free Cash Flow by deducting capital expenditures from our cash provided by operating activities, as we believe capital expenditures are a necessary ongoing cost to maintain our existing productive capital assets and support our organic business operations. We use Free Cash Flow to evaluate the cash flows generated from our ongoing business operations that can be used to meet our financial obligations, service debt facilities, reinvest in our business, and to fund, in part, potential future acquisitions. Adjusted EBITDA Margin is calculated by dividing Adjusted EBITDA by consolidated revenue. We regularly monitor Adjusted EBITDA Margin to evaluate our operating performance compared to established budgets, operational goals and the performance of industry peers. Adjusted Diluted EPS is used by management to assess the profitability of our business operations on a per share basis. We regularly monitor Adjusted Diluted EPS as it provides a more consistent measure for management and investors to evaluate our period-over-period operating performance, to better understand our ability to manage operating costs and to generate profits. Adjusted Diluted EPS is calculated by dividing Adjusted Net Income by the weighted average number of diluted equity shares outstanding during the period. Revenue on a constant currency basis is used by management to assess revenue, the most directly comparable GAAP measure, excluding the effect of foreign currency fluctuations. Revenue on a constant currency basis is calculated as current period revenue translated using average foreign exchange rates in the comparable prior period. Revenue growth on a constant currency basis is used by management to assess the growth of revenue, the most directly comparable GAAP measure, excluding the effect of foreign currency fluctuations. Revenue growth on a constant currency basis is calculated as current period revenue growth translated using average foreign exchange rates in the comparable prior period. Net Debt to Adjusted EBITDA Leverage Ratio as per our credit agreement is calculated based on Net Debt and Adjusted EBITDA, both as per our credit agreement. We seek to maintain a Net Debt to Adjusted EBITDA Leverage Ratio in the range of 2-3x. We may deviate from our target Net Debt to Adjusted EBITDA Leverage Ratio as per our credit agreement to pursue acquisitions and other strategic opportunities that may require us to borrow additional funds and, additionally, our ability to maintain this targeted ratio depends on our ability to continue to grow our business, general economic conditions, industry trends and other factors. We have not provided a quantitative reconciliation of our full-year 2024 outlook for Adjusted EBITDA Margin and Adjusted Diluted EPS to our full-year 2024 outlook for net income margin and diluted EPS because we are unable, without making unreasonable efforts, to calculate certain reconciling items with confidence, which could materially affect the computation of these financial ratios and measures. Cautionary note regarding forward-looking statements This news release contains forward-looking statements concerning our business, operations and financial performance and condition, as well as our plans, objectives and expectations for our business operations and financial performance and condition. Any statements contained herein that are not statements of historical facts may be deemed to be forward-looking statements. In some cases, you can identify forward-looking statements by terminology such as "aim", "anticipate", "assume", "believe", "contemplate", "continue", "could", "due", "estimate", "expect", "goal", "intend", "may", "objective", "plan", "predict", "potential", "positioned", "seek", "should", "target", "will", "would" and other similar expressions that are predictions of or indicate future events and future trends, or the negative of these terms or other comparable terminology. These forward-looking statements are based on our current expectations, estimates, forecasts and projections about our business and the industry in which we operate, and management's beliefs and assumptions, and are not guarantees of future performance or development and involve known and unknown risks, uncertainties and other factors that are in some cases beyond our control. We assume no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, uncertainties or otherwise, except as required by law. Specifically, we made several assumptions underlying our financial outlook for the full-year 2024 results, including key assumptions in relation to: our ability to mitigate pricing pressures, the impact of weaker client demand and competitive pressures in our industry, and execute our growth strategy, including by expanding services offered to existing clients and attracting new clients; our ability to grow our AI business; our ability to maintain our corporate culture and competitiveness of our service offerings; our ability to attract and retain talent; our ability to realize the benefits of our acquisition of WillowTree; the relative growth rate and size of our target industry verticals; our projected operating and capital expenditure requirements, and our ability to manage costs and adjust cost structure as needed; and the impact of global conditions on our and our clients' businesses, including a potential economic recession, inflation, interest rates fluctuations, the Russia-Ukraine conflict and other geopolitical tensions. Our financial outlook provides management's best judgement of how trends will impact the business and may not be appropriate for other purposes. Risk factors that may cause actual results to differ materially from current expectations include, among other things: These risk factors, as well as other risk factors that may impact our business, financial condition and results of operation, are also described in our "Risk Factors" section of our Annual Report available on SEDAR+ and in "Item 3D -- Risk Factors" of our Annual Report on Form 20-F filed on February 9, 2024 and available on EDGAR, as updated by our management's discussion and analysis for the three- and six-month periods ended June 30, 2024, which is filed on SEDAR and as Exhibit 99.2 to our Form 6-K filed on EDGAR. Reflects the undiscounted amount payable in cash on the estimated provisions for written put options arising from our acquisition of WillowTree. During the second quarter of 2024, we amended the provisions for written put options and eliminated the requirement to settle a portion in cash. See Note 12 -- Provisions in our condensed interim consolidated financial statements for the three and six months ended June 30, 2024 for additional details on the amendments. Maximum cash balance permitted as a reduction to net debt, as per the credit agreement, is $150 million. About TELUS Digital In the third quarter of 2024, we expect to formally announce the rebranding of TELUS International as TELUS Digital Experience (TELUS Digital). The legal name of the company will remain TELUS International (Cda) Inc. In this news release and related disclosure, we refer to TELUS International as TELUS Digital. TELUS Digital (NYSE & TSX: TIXT), designs, builds and delivers next-generation digital solutions to enhance the customer experience (CX) for global and disruptive brands. The company's services support the full lifecycle of its clients' digital transformation journeys, enabling them to more quickly embrace next-generation digital technologies to deliver better business outcomes. TELUS Digital's integrated solutions span digital strategy, innovation, consulting and design, IT lifecycle including managed solutions, intelligent automation and end-to-end AI data solutions including computer vision capabilities, as well as omnichannel CX and trust and safety solutions including content moderation. Fueling all stages of company growth, TELUS Digital partners with brands across strategic industry verticals, including tech and games, communications and media, ecommerce and fintech, banking, financial services and insurance, healthcare, and others. TELUS Digital's unique caring culture promotes diversity and inclusivity through its policies, team member resource groups and workshops, and equal employment opportunity hiring practices across the regions where it operates. Since 2007, the company has positively impacted the lives of more than 1.2 million citizens around the world, building stronger communities and helping those in need through large-scale volunteer events and charitable giving. Five TELUS Digital Community Boards have provided $5.6 million in funding to grassroots charitable organizations since 2011. Learn more at: telusinternational.com.