Verizon reports strong 1Q operational performance, while raising earnings guidance for full-year 2019
April 23 2019 - 6:30AM
1Q 2019 highlights
As the 5G mobility era begins, Verizon Communications Inc. (NYSE,
Nasdaq: VZ) today reported first-quarter 2019 results highlighted
by continued wireless service revenue growth and strong earnings
per share.
“Verizon began 2019 by extending our leadership
position in 4G, driving innovation in 5G and expanding our
high-valued customer relationships,” said Chairman and CEO Hans
Vestberg. “2019 is shaping up to be an exciting year for Verizon.
We are leading the world in the development of new technologies
with the launch of our 5G Ultra Wideband network. Our ambition
remains unchanged to provide the most advanced next-generation
networks in the world.”
For first-quarter 2019, Verizon reported EPS of
$1.22, compared with $1.11 in first-quarter 2018. On an adjusted
basis (non-GAAP), first-quarter 2019 EPS was $1.20, excluding a
special item, compared with adjusted EPS of $1.17 in first-quarter
2018. Verizon’s first-quarter 2019 EPS included a 2 cent benefit
due to a pension re-measurement triggered by the company's
Voluntary Separation Program.
In first-quarter 2019, Verizon faced headwinds as a result of a
reduction in benefits from the adoption of a revenue recognition
standard, primarily due to the deferral of commission expense, and
the adoption of a lease accounting standard. The combined impact
was a 4 cent year-over-year headwind to EPS.
Consolidated results
Total consolidated operating revenues in
first-quarter 2019 were $32.1 billion, up 1.1 percent from
first-quarter 2018, primarily driven by strong wireless service
revenue growth.
Cash flow from operations totaled $7.1 billion in
first-quarter 2019, an increase of approximately $400 million year
over year. This increase was driven by the continued momentum in
Verizon's operating businesses and lower discretionary employee
benefits contributions, partially offset by the first -- and
largest -- of three payments related to the Voluntary Separation
Program.
First-quarter 2019 capital expenditures totaled
$4.3 billion. Verizon's capital expenditures continue to support
the launch and continued build-out of its 5G Ultra Wideband
network, the growth in data and video traffic on the company's 4G
LTE network, the deployment of significant fiber in markets
nationwide and the upgrade to Verizon's Intelligent Edge
Network.
In 2018, Verizon announced a goal to achieve $10
billion in cumulative cash savings by 2021. This initiative has
yielded approximately $3.0 billion of cumulative cash savings since
this program began. By the end of first-quarter 2019, Verizon
completed the first two phases of its Voluntary Separation Program
and realized approximately $180 million of expense savings. These
savings are expected to contribute to the company's cumulative cash
savings goal.
For first-quarter 2019, Verizon Media revenues were
$1.8 billion, down 7.2 percent year over year. Declines in desktop
advertising continue to more than offset growth in mobile and
native advertising.
Net income was $5.2 billion in first-quarter 2019.
EBITDA (non-GAAP, earnings before interest, taxes, depreciation and
amortization) totaled approximately $12.2 billion. Consolidated
operating income margin was 24.0 percent. Consolidated EBITDA
margin (non-GAAP) was 38.1 percent in first-quarter 2019, compared
with 36.4 percent in first-quarter 2018. Adjusted EBITDA margin
(non-GAAP) in first-quarter 2019 was 37.2 percent.
Wireless results
- Verizon reported 61,000 retail postpaid net additions in
first-quarter 2019, consisting of 44,000 phone net losses and
tablet net losses of 156,000, offset by 261,000 other connected
device net additions, primarily wearables. Postpaid smartphone net
additions were 174,000.
- Total revenues were $22.7 billion, an increase of 3.7 percent
year over year, primarily driven by continued strong service
revenue performance.
- Service revenues increased 4.4 percent in first-quarter 2019,
driven by customer step-ups to higher-priced plans, contributions
from strong retail postpaid net additions in fourth-quarter 2018
and an increase in connections per account.
- Total retail postpaid churn was 1.12 percent in first-quarter
2019, and retail postpaid phone churn was 0.84 percent.
- Segment operating income was $8.5 billion, an increase of 5.2
percent year over year. Segment EBITDA (non-GAAP) totaled $10.8
billion in first-quarter 2019, an increase of 2.7 percent year over
year. Segment EBITDA margin (non-GAAP) was 47.4 percent, including
approximately 85 basis points in headwinds primarily from the
deferral of commission expense and the new lease accounting
standard.
Wireline results
- Total wireline revenues decreased 3.9 percent year over year in
first-quarter 2019 to $7.3 billion, as growth in high-quality fiber
products was offset by pricing pressures on legacy products and
technology shifts.
- Total Fios revenues grew 3.6 percent year over year to $3.1
billion. In first-quarter 2019, Verizon added a net of 52,000 Fios
Internet connections and lost a net of 53,000 Fios Video
connections, continuing to reflect the shift from traditional
linear video to over-the-top offerings.
- Wireline operating loss was $88 million in first-quarter 2019,
and segment operating loss margin was 1.2 percent. Segment EBITDA
(non-GAAP) was $1.5 billion in first-quarter 2019. Segment EBITDA
margin (non-GAAP) was 20.3 percent in first-quarter 2019, compared
with 21.2 percent in first-quarter 2018.
Outlook and guidance
Based on the strength of the operational trends in the
underlying business, Verizon is raising earnings guidance for
full-year 2019:
- The company expects low single-digit percentage growth in
adjusted EPS, excluding the impact of the new lease accounting
standard. This is an increase from prior guidance for 2019 adjusted
EPS to be similar to 2018, excluding the impact of the new lease
accounting standard.
Verizon also expects the following:
- Low single-digit percentage growth in full-year consolidated
revenues on a GAAP reported basis.
- The effective tax rate for full-year 2019 to be in the range of
24 percent to 26 percent.
- Cash taxes to be $2 billion to $3 billion higher than in 2018
due to benefits that were realized in 2018 that are not expected to
repeat in 2019.
- Capital spending for 2019 to be in the range of $17 billion to
$18 billion, including the expanded commercial launch of 5G.
NOTE: See the accompanying schedules and
www.verizon.com/about/investors for reconciliations to
generally accepted accounting principles (GAAP) for non-GAAP
financial measures cited in this document.
Verizon Communications Inc. (NYSE, Nasdaq: VZ), headquartered in
New York City, generated revenues of $130.9 billion in 2018. The
company operates America’s most reliable wireless network and the
nation’s premier all-fiber network, and delivers integrated
solutions to businesses worldwide. With brands like Yahoo,
TechCrunch and HuffPost, the company’s media group helps consumers
stay informed and entertained, communicate and transact, while
creating new ways for advertisers and partners to connect.
Verizon’s corporate responsibility prioritizes the environmental,
social and governance issues most relevant to its business and
impact to society.
VERIZON’S ONLINE MEDIA CENTER: News releases, stories, media
contacts and other resources are available at
www.verizon.com/about/news/. News releases are also available
through an RSS feed. To subscribe, visit
www.verizon.com/about/rss-feeds/.
Forward-looking statementsIn this communication
we have made forward-looking statements. These statements are based
on our estimates and assumptions and are subject to risks and
uncertainties. Forward-looking statements include the information
concerning our possible or assumed future results of operations.
Forward-looking statements also include those preceded or followed
by the words “anticipates,” “believes,” “estimates,” “expects,”
“hopes” or similar expressions. For those statements, we claim the
protection of the safe harbor for forward-looking statements
contained in the Private Securities Litigation Reform Act of 1995.
We undertake no obligation to revise or publicly release the
results of any revision to these forward-looking statements, except
as required by law. Given these risks and uncertainties, readers
are cautioned not to place undue reliance on such forward-looking
statements. The following important factors, along with those
discussed in our filings with the Securities and Exchange
Commission (the “SEC”), could affect future results and could cause
those results to differ materially from those expressed in the
forward-looking statements: adverse conditions in the U.S. and
international economies; the effects of competition in the markets
in which we operate; material changes in technology or technology
substitution; disruption of our key suppliers’ provisioning of
products or services; changes in the regulatory environment in
which we operate, including any increase in restrictions on our
ability to operate our networks; breaches of network or information
technology security, natural disasters, terrorist attacks or acts
of war or significant litigation and any resulting financial impact
not covered by insurance; our high level of indebtedness; an
adverse change in the ratings afforded our debt securities by
nationally accredited ratings organizations or adverse conditions
in the credit markets affecting the cost, including interest rates,
and/or availability of further financing; material adverse changes
in labor matters, including labor negotiations, and any resulting
financial and/or operational impact; significant increases in
benefit plan costs or lower investment returns on plan assets;
changes in tax laws or treaties, or in their interpretation;
changes in accounting assumptions that regulatory agencies,
including the SEC, may require or that result from changes in the
accounting rules or their application, which could result in an
impact on earnings; the inability to implement our business
strategies; and the inability to realize the expected benefits of
strategic transactions.
Verizon Communications Inc. |
|
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|
Condensed
Consolidated Statements of Income |
|
|
|
|
|
|
|
|
|
|
(dollars in millions, except per share amounts) |
|
|
|
|
|
|
|
|
|
|
3 Mos. Ended |
|
3 Mos. Ended |
|
|
|
Unaudited |
3/31/19 |
|
3/31/18 |
|
% Change |
|
|
|
|
|
|
|
|
Operating Revenues |
|
|
|
|
Service
revenues and other |
$ |
27,197 |
|
$ |
26,732 |
|
1.7 |
|
|
Wireless equipment revenues |
|
4,931 |
|
|
5,040 |
|
(2.2 |
) |
|
Total Operating Revenues |
|
32,128 |
|
|
31,772 |
|
1.1 |
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
Cost of services |
|
7,792 |
|
|
7,946 |
|
(1.9 |
) |
|
Wireless cost of equipment |
|
5,198 |
|
|
5,309 |
|
(2.1 |
) |
|
Selling, general and administrative expense |
|
7,198 |
|
|
6,844 |
|
5.2 |
|
|
Depreciation and amortization expense |
|
4,231 |
|
|
4,324 |
|
(2.2 |
) |
|
Total Operating Expenses |
|
24,419 |
|
|
24,423 |
|
— |
|
|
|
|
|
|
|
|
Operating Income |
|
7,709 |
|
|
7,349 |
|
4.9 |
|
|
Equity in
losses of unconsolidated businesses |
|
(6 |
) |
|
(19 |
) |
(68.4 |
) |
|
Other
income (expense), net |
|
295 |
|
|
(75 |
) |
* |
|
|
Interest
expense |
|
(1,210 |
) |
|
(1,201 |
) |
0.7 |
|
|
Income Before Provision For Income Taxes |
|
6,788 |
|
|
6,054 |
|
12.1 |
|
|
Provision
for income taxes |
|
(1,628 |
) |
|
(1,388 |
) |
17.3 |
|
|
Net
Income |
$ |
5,160 |
|
$ |
4,666 |
|
10.6 |
|
|
|
|
|
|
|
|
Net income
attributable to noncontrolling interests |
$ |
128 |
|
$ |
121 |
|
5.8 |
|
|
Net income
attributable to Verizon |
|
5,032 |
|
|
4,545 |
|
10.7 |
|
|
Net
Income |
$ |
5,160 |
|
$ |
4,666 |
|
10.6 |
|
|
|
|
|
|
|
|
Basic Earnings Per Common Share |
|
|
|
|
Net income
attributable to Verizon |
$ |
1.22 |
|
$ |
1.11 |
|
9.9 |
|
|
|
|
|
|
|
Weighted
average number of common shares (in millions) |
|
4,138 |
|
|
4,104 |
|
|
|
|
|
|
|
|
Diluted Earnings Per Common Share
(1) |
|
|
|
|
Net income
attributable to Verizon |
$ |
1.22 |
|
$ |
1.11 |
|
9.9 |
|
|
|
|
|
|
|
Weighted
average number of common |
|
|
|
|
|
shares-assuming
dilution (in millions) |
|
4,140 |
|
|
4,107 |
|
|
|
|
|
|
|
|
|
|
|
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Footnotes: |
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(1 |
) |
Diluted
Earnings per Common Share includes the dilutive effect of shares
issuable under our stock-based compensation plans, which represents
the only potential dilution. |
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* |
Not meaningful |
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|
Verizon Communications Inc. |
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Condensed
Consolidated Balance Sheets |
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|
|
|
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|
|
|
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(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
Unaudited |
3/31/19 |
|
|
12/31/18 |
|
|
$ Change |
|
|
|
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|
|
|
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|
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Assets |
|
|
|
|
|
|
Current assets |
|
|
|
|
|
|
Cash and cash
equivalents |
$ |
2,322 |
|
|
$ |
2,745 |
|
|
$ |
(423 |
) |
|
Accounts receivable, net |
|
24,469 |
|
|
|
25,102 |
|
|
|
(633 |
) |
|
Inventories |
|
1,417 |
|
|
|
1,336 |
|
|
|
81 |
|
|
Prepaid expenses and other |
|
5,189 |
|
|
|
5,453 |
|
|
|
(264 |
) |
|
Total current assets |
|
33,397 |
|
|
|
34,636 |
|
|
|
(1,239 |
) |
|
Property, plant and equipment |
|
254,457 |
|
|
|
252,835 |
|
|
|
1,622 |
|
|
Less accumulated depreciation |
|
166,608 |
|
|
|
163,549 |
|
|
|
3,059 |
|
|
Property, plant and equipment, net |
|
87,849 |
|
|
|
89,286 |
|
|
|
(1,437 |
) |
|
Investments in unconsolidated businesses |
|
674 |
|
|
|
671 |
|
|
|
3 |
|
|
Wireless licenses |
|
94,237 |
|
|
|
94,130 |
|
|
|
107 |
|
|
Goodwill |
|
24,635 |
|
|
|
24,614 |
|
|
|
21 |
|
|
Other intangible assets, net |
|
9,608 |
|
|
|
9,775 |
|
|
|
(167 |
) |
|
Operating lease right-of-use assets |
|
23,105 |
|
|
|
— |
|
|
|
23,105 |
|
|
Other assets |
|
10,442 |
|
|
|
11,717 |
|
|
|
(1,275 |
) |
|
Total assets |
$ |
283,947 |
|
|
$ |
264,829 |
|
|
$ |
19,118 |
|
|
|
|
|
|
|
|
|
|
Liabilities and Equity |
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
|
Debt maturing within one year |
$ |
8,614 |
|
|
$ |
7,190 |
|
|
$ |
1,424 |
|
|
Accounts payable and accrued liabilities |
|
18,664 |
|
|
|
22,501 |
|
|
|
(3,837 |
) |
|
Current operating lease liabilities |
|
2,997 |
|
|
|
— |
|
|
|
2,997 |
|
|
Other current liabilities |
|
8,332 |
|
|
|
8,239 |
|
|
|
93 |
|
|
Total current liabilities |
|
38,607 |
|
|
|
37,930 |
|
|
|
677 |
|
|
Long-term debt |
|
105,045 |
|
|
|
105,873 |
|
|
|
(828 |
) |
|
Employee benefit obligations |
|
17,888 |
|
|
|
18,599 |
|
|
|
(711 |
) |
|
Deferred income taxes |
|
34,344 |
|
|
|
33,795 |
|
|
|
549 |
|
|
Non-current operating lease liabilities |
|
18,971 |
|
|
|
— |
|
|
|
18,971 |
|
|
Other liabilities |
|
11,632 |
|
|
|
13,922 |
|
|
|
(2,290 |
) |
|
Total long-term liabilities |
|
187,880 |
|
|
|
172,189 |
|
|
|
15,691 |
|
|
|
|
|
|
|
|
|
|
Equity |
|
|
|
|
|
|
Common stock |
|
429 |
|
|
|
429 |
|
|
|
— |
|
|
Additional paid in capital |
|
13,418 |
|
|
|
13,437 |
|
|
|
(19 |
) |
|
Retained earnings |
|
46,493 |
|
|
|
43,542 |
|
|
|
2,951 |
|
|
Accumulated other comprehensive income |
|
2,216 |
|
|
|
2,370 |
|
|
|
(154 |
) |
|
Common stock in treasury, at cost |
|
(6,825 |
) |
|
|
(6,986 |
) |
|
|
161 |
|
|
Deferred compensation – employee stock ownership plans and
other |
|
125 |
|
|
|
353 |
|
|
|
(228 |
) |
|
Noncontrolling interests |
|
1,604 |
|
|
|
1,565 |
|
|
|
39 |
|
|
Total equity |
|
57,460 |
|
|
|
54,710 |
|
|
|
2,750 |
|
|
Total liabilities and equity |
$ |
283,947 |
|
|
$ |
264,829 |
|
|
$ |
19,118 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Verizon -
Selected Financial and Operating Statistics |
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
3/31/19 |
|
|
12/31/18 |
|
|
|
|
|
|
|
|
|
|
|
|
Total debt
(in millions) |
$ |
113,659 |
|
|
$ |
113,063 |
|
|
|
|
Net debt
(in millions) |
$ |
111,337 |
|
|
$ |
110,318 |
|
|
|
|
Net
unsecured debt (in millions) |
$ |
100,951 |
|
|
$ |
100,242 |
|
|
|
|
Net debt /
Consolidated Adjusted EBITDA(1) |
2.3x |
|
2.3x |
|
|
|
Net
unsecured debt / Consolidated Adjusted EBITDA(1) |
2.1x |
|
2.1x |
|
|
|
Common
shares outstanding end of period (in millions) |
|
4,136 |
|
|
|
4,132 |
|
|
|
|
Total
employees (‘000) |
|
139.4 |
|
|
|
144.5 |
|
|
|
|
Quarterly
cash dividends declared per common share |
$ |
0.6025 |
|
|
$ |
0.6025 |
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes: |
|
|
|
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|
|
(1) Consolidated adjusted EBITDA excludes the
effects of non-operational items and special items. |
|
|
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|
Verizon Communications Inc. |
|
|
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|
|
Condensed
Consolidated Statements of Cash Flows |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
3 Mos. Ended |
|
|
3 Mos. Ended |
|
|
|
|
Unaudited |
3/31/19 |
|
|
3/31/18 |
|
|
$ Change |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Operating Activities |
|
|
|
|
|
|
Net Income |
$ |
5,160 |
|
|
$ |
4,666 |
|
|
$ |
494 |
|
|
Adjustments
to reconcile net income to net cash provided by operating
activities: |
|
|
|
|
|
|
Depreciation and amortization expense |
|
4,231 |
|
|
|
4,324 |
|
|
|
(93 |
) |
|
Employee retirement benefits |
|
(195 |
) |
|
|
(151 |
) |
|
|
(44 |
) |
|
Deferred income taxes |
|
459 |
|
|
|
702 |
|
|
|
(243 |
) |
|
Provision for uncollectible accounts |
|
319 |
|
|
|
239 |
|
|
|
80 |
|
|
Equity in losses of unconsolidated businesses, net of dividends
received |
|
21 |
|
|
|
30 |
|
|
|
(9 |
) |
|
Changes in
current assets and liabilities, net of effects from
acquisition/disposition of businesses |
|
(2,702 |
) |
|
|
(2,033 |
) |
|
|
(669 |
) |
|
Discretionary employee benefits contributions |
|
(300 |
) |
|
|
(1,000 |
) |
|
|
700 |
|
|
Other,
net |
|
88 |
|
|
|
(129 |
) |
|
|
217 |
|
|
Net cash
provided by operating activities |
|
7,081 |
|
|
|
6,648 |
|
|
|
433 |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Investing Activities |
|
|
|
|
|
|
Capital
expenditures (including capitalized software) |
|
(4,268 |
) |
|
|
(4,552 |
) |
|
|
284 |
|
|
Acquisitions of businesses, net of cash acquired |
|
(25 |
) |
|
|
(32 |
) |
|
|
7 |
|
|
Acquisitions of wireless licenses |
|
(104 |
) |
|
|
(970 |
) |
|
|
866 |
|
|
Other,
net |
|
(406 |
) |
|
|
269 |
|
|
|
(675 |
) |
|
Net cash
used in investing activities |
|
(4,803 |
) |
|
|
(5,285 |
) |
|
|
482 |
|
|
|
|
|
|
|
|
|
|
Cash Flows from Financing Activities |
|
|
|
|
|
|
Proceeds
from long-term borrowings |
|
2,131 |
|
|
|
1,956 |
|
|
|
175 |
|
|
Proceeds
from asset-backed long-term borrowings |
|
1,117 |
|
|
|
1,178 |
|
|
|
(61 |
) |
|
Repayments
of long-term borrowings and finance lease obligations |
|
(2,963 |
) |
|
|
(2,984 |
) |
|
|
21 |
|
|
Repayments
of asset-backed long-term borrowings |
|
(813 |
) |
|
|
— |
|
|
|
(813 |
) |
|
Dividends
paid |
|
(2,489 |
) |
|
|
(2,407 |
) |
|
|
(82 |
) |
|
Other,
net |
|
360 |
|
|
|
941 |
|
|
|
(581 |
) |
|
Net cash
used in financing activities |
|
(2,657 |
) |
|
|
(1,316 |
) |
|
|
(1,341 |
) |
|
|
|
|
|
|
|
|
|
Increase (decrease) in cash, cash equivalents and
restricted cash |
|
(379 |
) |
|
|
47 |
|
|
|
(426 |
) |
|
Cash, cash equivalents and restricted cash, beginning of
period |
|
3,916 |
|
|
|
2,888 |
|
|
|
1,028 |
|
|
Cash, cash equivalents and restricted cash, end of
period |
$ |
3,537 |
|
|
$ |
2,935 |
|
|
$ |
602 |
|
|
|
|
|
|
|
|
|
|
Verizon Communications Inc. |
|
|
|
|
Wireless -
Selected Financial Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
3 Mos. Ended |
|
3 Mos. Ended |
|
|
|
Unaudited |
3/31/19 |
|
3/31/18 |
|
% Change |
|
|
|
|
|
|
|
|
Operating Revenues |
|
|
|
|
Service |
$ |
16,072 |
|
$ |
15,402 |
|
4.4 |
|
|
Equipment |
|
4,931 |
|
|
5,040 |
|
(2.2 |
) |
|
Other |
|
1,697 |
|
|
1,458 |
|
16.4 |
|
|
Total Operating Revenues |
|
22,700 |
|
|
21,900 |
|
3.7 |
|
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
Cost of
services |
|
2,456 |
|
|
2,215 |
|
10.9 |
|
|
Cost of equipment |
|
5,198 |
|
|
5,309 |
|
(2.1 |
) |
|
Selling, general and administrative expense |
|
4,281 |
|
|
3,899 |
|
9.8 |
|
|
Depreciation and amortization expense |
|
2,299 |
|
|
2,428 |
|
(5.3 |
) |
|
Total Operating Expenses |
|
14,234 |
|
|
13,851 |
|
2.8 |
|
|
|
|
|
|
|
|
Operating Income |
$ |
8,466 |
|
$ |
8,049 |
|
5.2 |
|
|
Operating Income Margin |
|
37.3 |
% |
|
36.8 |
% |
|
|
|
|
|
|
|
|
Segment EBITDA |
$ |
10,765 |
|
$ |
10,477 |
|
2.7 |
|
|
Segment EBITDA Margin |
|
47.4 |
% |
|
47.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes: |
|
|
|
|
|
The segment
financial results and metrics above are adjusted to exclude the
effects of special items, as the Company’s chief operating decision
maker excludes these items in assessing business unit
performance. |
|
|
|
|
|
|
|
|
Intersegment
transactions have not been eliminated. |
|
|
|
|
|
|
|
|
|
|
Verizon Communications Inc. |
|
|
|
|
Wireless -
Selected Operating Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
3/31/19 |
|
3/31/18 |
|
% Change |
|
|
|
|
|
|
|
|
Connections (‘000) |
|
|
|
|
Retail postpaid |
|
113,407 |
|
|
111,114 |
|
2.1 |
|
|
Retail prepaid |
|
4,479 |
|
|
5,068 |
|
(11.6 |
) |
|
Total retail |
|
117,886 |
|
|
116,182 |
|
1.5 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Mos. Ended |
|
3 Mos. Ended |
|
|
|
Unaudited |
3/31/19 |
|
3/31/18 |
|
% Change |
|
|
|
|
|
|
|
|
Net
Add Detail (‘000) (1) |
|
|
|
|
Retail postpaid |
|
61 |
|
|
260 |
|
(76.5 |
) |
|
Retail prepaid |
|
(176 |
) |
|
(335 |
) |
47.5 |
|
|
Total retail |
|
(115 |
) |
|
(75 |
) |
(53.3 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Account Statistics |
|
|
|
|
Retail postpaid accounts (‘000) (2) |
|
35,338 |
|
|
35,333 |
|
— |
|
|
Retail postpaid connections per account (2) |
|
3.21 |
|
|
3.14 |
|
2.2 |
|
|
Retail postpaid ARPA (3) |
|
136.68 |
|
|
131.71 |
|
3.8 |
|
|
Retail postpaid I-ARPA (4) |
|
172.09 |
|
|
164.72 |
|
4.5 |
|
|
|
|
|
|
|
|
Churn Detail |
|
|
|
|
Retail postpaid |
|
1.12 |
% |
|
1.04 |
% |
|
|
Retail |
|
1.31 |
% |
|
1.28 |
% |
|
|
|
|
|
|
|
|
Retail Postpaid Connection Statistics
(2) |
|
|
|
|
Total smartphone postpaid phone base |
|
92.7 |
% |
|
90.7 |
% |
|
|
Total Internet postpaid base |
|
19.7 |
% |
|
19.2 |
% |
|
|
|
|
|
|
|
Other Operating Statistics |
|
|
|
|
Capital expenditures (in millions) |
$ |
2,044 |
|
$ |
2,367 |
|
(13.6 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes: |
|
|
|
|
(1 |
) |
Connection net
additions exclude acquisitions and adjustments. |
|
|
|
|
|
|
|
(2 |
) |
Statistics presented as of
end of period. |
|
|
|
|
|
|
|
|
|
|
(3 |
) |
Retail
postpaid ARPA - average service revenue per account from retail
postpaid accounts. |
|
|
|
|
|
|
|
(4 |
) |
Retail
postpaid I-ARPA - average service revenue per account from retail
postpaid account plus recurring device installment billings. |
|
|
|
|
|
|
|
|
The segment
financial results and metrics above are adjusted to exclude the
effects of special items, as the Company’s chief operating decision
maker excludes these items in assessing business unit
performance. |
|
|
|
|
|
|
|
|
Intersegment transactions
have not been eliminated. |
|
|
|
|
|
|
|
|
|
|
* |
Not meaningful |
|
|
|
|
|
|
|
|
|
|
Verizon Communications Inc. |
|
|
|
|
Wireline -
Selected Financial Results |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
|
|
|
|
|
|
|
|
|
3 Mos. Ended |
|
3 Mos. Ended |
|
|
|
Unaudited |
3/31/19 |
|
3/31/18 |
|
% Change |
|
|
|
|
|
|
|
|
Operating Revenues |
|
|
|
|
Consumer Markets |
$ |
3,153 |
|
$ |
3,150 |
|
0.1 |
|
|
Enterprise Solutions |
|
2,140 |
|
|
2,240 |
|
(4.5 |
) |
|
Partner Solutions |
|
1,075 |
|
|
1,228 |
|
(12.5 |
) |
|
Business Markets |
|
828 |
|
|
871 |
|
(4.9 |
) |
|
Other |
|
68 |
|
|
68 |
|
— |
|
|
Total Operating Revenues |
|
7,264 |
|
|
7,557 |
|
(3.9 |
) |
|
|
|
|
|
|
|
Operating Expenses |
|
|
|
|
Cost of services |
|
4,186 |
|
|
4,475 |
|
(6.5 |
) |
|
Selling, general and administrative expense |
|
1,606 |
|
|
1,479 |
|
8.6 |
|
|
Depreciation and amortization expense |
|
1,560 |
|
|
1,534 |
|
1.7 |
|
|
Total Operating Expenses |
|
7,352 |
|
|
7,488 |
|
(1.8 |
) |
|
|
|
|
|
|
|
Operating Income (Loss) |
$ |
(88 |
) |
$ |
69 |
|
* |
|
|
Operating Income (Loss) Margin |
|
(1.2 |
)% |
|
0.9 |
% |
|
|
|
|
|
|
|
|
Segment EBITDA |
$ |
1,472 |
|
$ |
1,603 |
|
(8.2 |
) |
|
Segment EBITDA Margin |
|
20.3 |
% |
|
21.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes: |
|
|
|
|
|
The segment
financial results and metrics above are adjusted to exclude the
effects of special items, as the Company’s chief operating decision
maker excludes these items in assessing business unit
performance. |
|
|
|
|
|
|
|
|
Intersegment
transactions have not been eliminated. |
|
|
|
|
|
|
|
|
|
|
* |
Not meaningful |
|
|
|
|
|
|
|
|
|
|
Verizon Communications Inc. |
|
|
|
|
Wireline -
Selected Operating Statistics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
3/31/19 |
|
3/31/18 |
|
% Change |
|
|
|
|
|
|
|
|
Connections (‘000) |
|
|
|
|
Fios video connections |
|
4,398 |
|
|
4,597 |
|
(4.3 |
) |
|
Fios Internet connections |
|
6,119 |
|
|
5,916 |
|
3.4 |
|
|
Fios digital voice residence connections |
|
3,758 |
|
|
3,891 |
|
(3.4 |
) |
|
Fios digital connections |
|
14,275 |
|
|
14,404 |
|
(0.9 |
) |
|
High-speed Internet (HSI) connections |
|
854 |
|
|
1,050 |
|
(18.7 |
) |
|
Total broadband connections |
|
6,973 |
|
|
6,966 |
|
0.1 |
|
|
Total voice connections |
|
11,453 |
|
|
12,555 |
|
(8.8 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3 Mos. Ended |
|
3 Mos. Ended |
|
|
|
Unaudited |
3/31/19 |
|
3/31/18 |
|
% Change |
|
|
|
|
|
|
|
|
Net
Add Detail (‘000) |
|
|
|
|
Fios video connections |
|
(53 |
) |
|
(22 |
) |
* |
|
|
Fios Internet connections |
|
52 |
|
|
66 |
|
(21.2 |
) |
|
Fios digital voice residence connections |
|
(45 |
) |
|
(14 |
) |
* |
|
|
Fios digital connections |
|
(46 |
) |
|
30 |
|
* |
|
|
High-speed Internet (HSI) connections |
|
(40 |
) |
|
(59 |
) |
32.2 |
|
|
Total broadband connections |
|
12 |
|
|
7 |
|
71.4 |
|
|
Total voice connections |
|
(279 |
) |
|
(266 |
) |
(4.9 |
) |
|
|
|
|
|
|
|
Revenue Statistics |
|
|
|
|
Fios revenues (in millions) |
$ |
3,057 |
|
$ |
2,951 |
|
3.6 |
|
|
|
|
|
|
|
|
Other Operating Statistics |
|
|
|
|
Capital expenditures (in millions) |
$ |
1,733 |
|
$ |
1,673 |
|
3.6 |
|
|
Wireline employees (‘000) |
|
53.2 |
|
|
57.2 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Footnotes: |
|
|
|
|
|
The segment
financial results and metrics above are adjusted to exclude the
effects of special items, as the Company’s chief operating decision
maker excludes these items in assessing business unit
performance. |
|
|
|
|
|
|
|
|
Intersegment transactions
have not been eliminated. |
|
|
|
|
|
|
|
|
|
|
* |
Not meaningful |
|
|
|
|
|
|
|
|
|
|
Verizon
Communications Inc. |
|
|
|
|
|
|
|
Non-GAAP
Reconciliations - Consolidated Verizon |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consolidated EBITDA, Consolidated EBITDA Margin,
Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA
Margin |
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
|
Unaudited |
|
3 Mos. Ended3/31/19 |
|
3 Mos. Ended12/31/18 |
|
3 Mos. Ended9/30/18 |
|
3 Mos. Ended6/30/18 |
|
3 Mos. Ended3/31/18 |
|
|
|
|
|
|
|
|
|
|
Consolidated
Net Income |
|
$ |
5,160 |
|
$ |
2,065 |
|
$ |
5,062 |
|
$ |
4,246 |
|
$ |
4,666 |
|
|
Add/(subtract): |
|
|
|
|
|
|
|
Provision
(benefit) for income taxes |
|
|
1,628 |
|
|
(698 |
) |
|
1,613 |
|
|
1,281 |
|
|
1,388 |
|
|
Interest
expense |
|
|
1,210 |
|
|
1,199 |
|
|
1,211 |
|
|
1,222 |
|
|
1,201 |
|
|
Depreciation and amortization expense |
|
|
4,231 |
|
|
4,352 |
|
|
4,377 |
|
|
4,350 |
|
|
4,324 |
|
|
Consolidated
EBITDA |
|
$ |
12,229 |
|
$ |
6,918 |
|
$ |
12,263 |
|
$ |
11,099 |
|
$ |
11,579 |
|
|
|
|
|
|
|
|
|
|
Add/subtract: |
|
|
|
|
|
|
|
Other
(income) expense, net* |
|
$ |
(295 |
) |
$ |
(1,865 |
) |
$ |
(214 |
) |
$ |
(360 |
) |
$ |
75 |
|
|
Equity in
losses (earnings) of unconsolidated businesses† |
|
|
6 |
|
|
(64 |
) |
|
3 |
|
|
228 |
|
|
19 |
|
|
Oath
goodwill impairment |
|
|
— |
|
|
4,591 |
|
|
— |
|
|
— |
|
|
— |
|
|
Severance
charges |
|
|
— |
|
|
1,818 |
|
|
— |
|
|
339 |
|
|
— |
|
|
Product
realignment charges‡ |
|
|
— |
|
|
— |
|
|
— |
|
|
450 |
|
|
— |
|
|
Acquisition and integration related charges‡ |
|
|
— |
|
|
187 |
|
|
130 |
|
|
109 |
|
|
105 |
|
|
|
|
|
(289 |
) |
|
4,667 |
|
|
(81 |
) |
|
766 |
|
|
199 |
|
|
|
|
|
|
|
|
|
|
Consolidated
Adjusted EBITDA |
|
$ |
11,940 |
|
$ |
11,585 |
|
$ |
12,182 |
|
$ |
11,865 |
|
$ |
11,778 |
|
|
|
|
|
|
|
|
|
|
Consolidated
Operating Revenues - Quarter to Date |
|
$ |
32,128 |
|
|
|
|
$ |
31,772 |
|
|
|
|
|
|
|
|
|
|
Operating
Income Margin - Quarter to Date |
|
|
24.0 |
% |
|
|
|
|
23.1 |
% |
|
|
|
|
|
|
|
|
|
Consolidated
EBITDA Margin - Quarter to Date |
|
|
38.1 |
% |
|
|
|
|
36.4 |
% |
|
|
|
|
|
|
|
|
|
Consolidated
Adjusted EBITDA Margin - Quarter to Date |
|
|
37.2 |
% |
|
|
|
|
37.1 |
% |
|
|
|
|
|
|
|
|
|
*
Includes Pension and benefits mark-to-market adjustments and Early
debt redemption costs, where applicable. |
|
|
|
|
|
|
|
|
|
†
Includes Product realignment charges, where applicable. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
‡
Excludes depreciation and amortization expense, where
applicable. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Verizon
Communications Inc. |
|
|
|
|
|
|
|
|
|
Non-GAAP
Reconciliations - Consolidated Verizon |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Debt and Net Debt to Consolidated Adjusted EBITDA
Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
Unaudited |
|
|
|
|
|
|
3/31/19 |
12/31/18 |
|
|
|
|
|
|
|
|
|
|
|
Debt
maturing within one year |
|
|
|
|
|
|
$ |
8,614 |
$ |
7,190 |
|
Long-term debt |
|
|
|
|
|
|
|
105,045 |
|
105,873 |
|
Total
Debt |
|
|
|
|
|
|
|
113,659 |
|
113,063 |
|
Less Cash
and cash equivalents |
|
|
|
|
|
|
|
2,322 |
|
2,745 |
|
Net
Debt |
|
|
|
|
|
|
$ |
111,337 |
$ |
110,318 |
|
Net Debt to
Consolidated Adjusted EBITDA Ratio |
|
|
|
|
|
|
2.3x |
2.3x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted
EBITDA Ratio |
|
|
|
|
|
|
|
|
|
|
|
|
|
(dollars in millions) |
|
Unaudited |
|
|
|
|
|
|
3/31/19 |
12/31/18 |
|
|
|
|
|
|
|
|
|
|
|
Total
Debt |
|
|
|
|
|
|
$ |
113,659 |
$ |
113,063 |
|
Less
Secured debt |
|
|
|
|
|
|
|
10,386 |
|
10,076 |
|
Unsecured
debt |
|
|
|
|
|
|
|
103,273 |
|
102,987 |
|
Less Cash
and cash equivalents |
|
|
|
|
|
|
|
2,322 |
|
2,745 |
|
Net Unsecured
Debt |
|
|
|
|
|
|
$ |
100,951 |
$ |
100,242 |
|
Net
Unsecured Debt to Consolidated Adjusted EBITDA Ratio |
|
|
|
|
|
2.1x |
2.1x |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted Earnings per Common Share (Adjusted
EPS)(1) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Unaudited |
|
3 Mos. Ended 3/31/19 |
|
3 Mos. Ended3/31/18 |
|
|
Pre-tax |
Tax |
After-Tax |
|
Pre-tax |
Tax |
After-Tax |
|
|
EPS |
|
|
|
$ |
1.22 |
|
|
|
|
$ |
1.11 |
|
Pension remeasurement
credit |
$ |
(96 |
) |
$ |
25 |
$ |
(71 |
) |
|
(0.02 |
) |
$ |
— |
$ |
— |
|
$ |
— |
|
— |
|
Acquisition and integration related charges |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
107 |
|
(25 |
) |
|
82 |
|
0.02 |
|
Early
debt redemption costs |
|
— |
|
|
— |
|
— |
|
|
— |
|
|
249 |
|
(65 |
) |
|
184 |
|
0.04 |
|
|
$ |
(96 |
) |
$ |
25 |
$ |
(71 |
) |
|
(0.02 |
) |
$ |
356 |
$ |
(90 |
) |
$ |
266 |
|
0.06 |
|
Adjusted
EPS |
|
|
|
$ |
1.20 |
|
|
|
|
$ |
1.17 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted EPS
may not add due to rounding. |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Verizon
Communications Inc. |
|
|
|
|
|
Non-GAAP
Reconciliations - Segments |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Segment EBITDA and Segment EBITDA Margin |
|
|
|
|
|
|
|
|
|
|
Wireless |
|
(dollars in millions) |
|
|
|
|
|
|
|
|
Unaudited |
|
3 Mos. Ended3/31/19 |
|
|
3 Mos. Ended3/31/18 |
|
|
|
|
|
|
|
|
Operating
Income |
|
$ |
8,466 |
|
|
$ |
8,049 |
|
|
Add
Depreciation and amortization expense |
|
|
2,299 |
|
|
|
2,428 |
|
|
Segment
EBITDA |
|
$ |
10,765 |
|
|
$ |
10,477 |
|
|
|
|
|
|
|
|
Total operating
revenues |
|
$ |
22,700 |
|
|
$ |
21,900 |
|
|
Operating
Income Margin |
|
|
37.3 |
% |
|
|
36.8 |
% |
|
Segment EBITDA
Margin |
|
|
47.4 |
% |
|
|
47.8 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
Wireline |
|
(dollars in millions) |
|
|
|
|
|
|
|
|
Unaudited |
|
3 Mos. Ended 3/31/19 |
|
3 Mos. Ended 3/31/18 |
|
|
|
|
|
|
|
Operating
Income (Loss) |
|
$ |
(88 |
) |
|
$ |
69 |
|
|
Add
Depreciation and amortization expense |
|
|
1,560 |
|
|
|
1,534 |
|
|
Segment
EBITDA |
|
$ |
1,472 |
|
|
$ |
1,603 |
|
|
|
|
|
|
|
|
Total operating
revenues |
|
$ |
7,264 |
|
|
$ |
7,557 |
|
|
Operating
Income (Loss) Margin |
|
|
(1.2 |
)% |
|
|
0.9 |
% |
|
Segment EBITDA
Margin |
|
|
20.3 |
% |
|
|
21.2 |
% |
|
|
|
|
|
|
|
|
Media
contacts: |
|
Bob Varettoni |
|
908.559.6388 |
|
robert.a.varettoni@verizon.com |
|
|
|
Eric Wilkens |
|
908.559.3063 |
|
eric.wilkens@verizon.com |
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