Verizon reports wireless customer gains and strong loyalty in 2Q
NEW YORK, July 27, 2017 /PRNewswire/ --
2Q 2017 highlights
-- $1.07 in earnings per share (EPS), compared with 17 cents in 2Q 2016;
adjusted EPS (non-GAAP), excluding special items, of 96 cents in 2Q
2017, compared with 94 cents in 2Q 2016.
-- Wireless: 614,000 retail postpaid net additions, including 590,000
postpaid smartphone net adds; retail postpaid churn of 0.94 percent,
with strong customer loyalty demonstrated by retail postpaid phone churn
of 0.70 percent -- less than 0.90 percent for the ninth consecutive
quarter.
-- Wireline: Fios total revenue growth of 4.4 percent.
Strong operating results at Verizon Wireless highlighted second-quarter 2017 performance at Verizon Communications Inc. (NYSE, Nasdaq: VZ), which today reported EPS of $1.07 in the quarter.
This compares with 17 cents per share in second-quarter 2016. Second-quarter 2017 EPS was 96 cents on an adjusted basis (non-GAAP), excluding a net gain from the sale of certain data centers and severance charges and acquisition and integration-related charges primarily associated with Verizon's acquisition of Yahoo's operating business.
This compares with 94 cents per share in second-quarter 2016 adjusted earnings (non-GAAP), which included impacts from a work stoppage and excluded special items related to pension and benefit re-measurement, a gain on the sale of local landline businesses, early debt redemption and tender offers.
"Verizon reignited its growth engine in the quarter, both adding and retaining wireless customers while scaling our media business and continuing to invest in our superior networks," said Chairman and CEO Lowell McAdam. "With record customer loyalty and a clean sweep of third-party network quality results, we're leading the way to provide customers with next-generation broadband, smart cities, telematics, media and Internet of Things services."
Consolidated results
Total consolidated operating revenues in second-quarter 2017 were $30.5 billion, in line with second-quarter 2016. On a comparable basis excluding divestitures and acquisitions (non-GAAP), consolidated revenues declined 2.0 percent.
Net income was $4.5 billion in second-quarter 2017. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $12.4 billion. Consolidated operating income margin was 26.9 percent. Consolidated EBITDA margin (non-GAAP) was 40.6 percent -- 37.2 percent, excluding special items (non-GAAP) -- in second-quarter 2017, compared with 28.0 percent in second-quarter 2016.
Cash flow from operations totaled $9.9 billion during first-half 2017, including a net after-tax impact of $2.1 billion in discretionary pension contributions.
Capital expenditures totaled $7.0 billion through first-half 2017, in line with first-half 2016.
In Verizon's media business, AOL's revenues net of traffic acquisition costs were consistent with last year's second-quarter results. Verizon's Oath subsidiary, launched at the June 13 close of the company's acquisition of Yahoo's operating business, houses AOL and Yahoo brands serving about 1 billion unique monthly users globally and representing about $7 billion in annual revenues. Oath expects to realize more than $1 billion in cumulative operating expense synergies through 2020.
Total telematics revenues were approximately $220 million in second-quarter 2017. Organically, IoT revenues (non-GAAP), which include telematics, increased approximately 20 percent year over year.
Wireless results
-- Building on momentum since the launch of Verizon Unlimited in
mid-February, Verizon reported a net increase of 614,000 retail postpaid
connections in second-quarter 2017. Net phone additions of 358,000
included 590,000 smartphones in the quarter, compared with 86,000 net
phone additions, including 336,000 smartphones, in second-quarter 2016.
-- Verizon's retail postpaid connections base grew 1.2 percent year over
year to 109.1 million, and retail prepaid connections grew 1.4 percent
to 5.4 million.
-- Total retail postpaid churn was 0.94 percent in second-quarter 2017,
consistent year over year despite increased churn in tablets. Retail
postpaid phone churn was not only less than 0.90 percent for the ninth
consecutive quarter, but it also established a new low in the LTE era at
0.70 percent.
-- Total revenues were $21.3 billion in second-quarter 2017, a decline of
1.9 percent compared with second-quarter 2016.
-- Verizon's unsubsidized service pricing now penetrates roughly 75 percent
of its postpaid base. As the company adds new accounts and customers
step up to unlimited plans, mitigating lost overage revenues, Verizon
believes its service-revenue trend has flattened and expects an
improving trend in the second half.
-- The percentage of phone activations on device payment plans was about 77
percent in second-quarter 2017, compared with about 76 percent in
first-quarter 2017. Verizon expects this rate to remain consistent in
third-quarter 2017. Approximately 49 percent of postpaid phone customers
had a device payment plan at the end of second-quarter 2017.
-- Verizon swept the lead of third-party network performance surveys for 4G
in the quarter. As expected, the introduction of Verizon Unlimited
increased LTE network usage year over year.
-- Segment operating income in second-quarter 2017 was $7.4 billion, and
segment operating income margin on total revenues was 34.8 percent.
Segment EBITDA (non-GAAP) totaled $9.8 billion in second-quarter 2017, a
year-over-year decrease of 5.3 percent. Segment EBITDA margin on total
revenues (non-GAAP) was 45.8 percent, compared with 47.5 percent in
second-quarter 2016.
Wireline results
-- Total wireline revenues increased 1.2 percent, to $7.8 billion,
comparing second-quarter 2017 with second-quarter 2016. On a comparable
basis, excluding revenues from newly acquired XO Communications and from
newly divested data centers (non-GAAP), total wireline revenues declined
2.8 percent year over year.
-- Total Fios revenues grew 4.4 percent, to $2.9 billion, comparing
second-quarter 2017 with second-quarter 2016. There's a growing shift in
wireline revenues attributed to fiber-based products. Organic revenues
from fiber-based products grew more than 3 percent.
-- In second-quarter 2017, Verizon added a net of 49,000 Fios Internet
connections and lost a net of 15,000 Fios Video connections. At the end
of the quarter, Verizon had 5.7 million Fios Internet connections and
4.7 million Fios Video connections, year-over-year increases of 4.4
percent and 0.6 percent, respectively.
-- Verizon's emphasis on delivering value to all business customers was
recognized in a leading third-party study, as the company won the large
enterprise business award for the second consecutive year. In the second
quarter, Verizon Enterprise Solutions (VES) released its 10th annual
Data Breach Investigations Report, which combines analysis of the
biggest cybersecurity issues with key industry-specific insights. VES
also introduced Visual Interactive Calling and Software Defined
Perimeter products. Supporting the public safety community, VES convened
40 technology companies at Operation Convergent Response, demonstrating
new tech capabilities for first responders through live crisis
simulations.
-- Wireline operating income was $68 million in second-quarter 2017,
compared with a loss of $524 million in second-quarter 2016 (impacted by
a work stoppage). Segment operating income margin was 0.9 percent in
second-quarter 2017. Segment EBITDA (non-GAAP) was $1.6 billion in
second-quarter 2017. Segment EBITDA margin (non-GAAP) was 20.8 percent
in second-quarter 2017, compared with 13.3 percent in second-quarter
2016, and down from 22.0 percent in first-quarter 2017 due to the impact
of the data center transaction.
-- During second-quarter 2017, Verizon announced fiber purchase agreements
with Corning and Prysmian to extend the company's network lead and
position the company to deliver new multiuse fiber services, including
5G, while complementing small-cell deployment. In June, Verizon and the
city of Sacramento, Calif., announced a partnership to develop and
deploy smart-city services. Verizon has begun previously announced
pre-commercial 5G fixed-wireless broadband trials in 8 of 11 cities.
Outlook and forward-looking items
Verizon expects the following:
-- Full-year 2017 consolidated revenues, on an organic basis, to be fairly
consistent with 2016, with improvement in wireless service revenue and
equipment revenue trends; also, full-year 2017 consolidated adjusted EPS
trends to be similar to consolidated revenue trends;
-- Consolidated capital spending for 2017 to be in the range of $16.8
billion to $17.5 billion; and
-- The 2017 effective tax rate to be at the low end of the range of 34
percent to 36 percent, excluding impacts from potential tax reform.
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, has a diverse workforce of 163,400 and generated nearly $126 billion in 2016 revenues. Verizon operates America's most reliable wireless network and the nation's premier all-fiber network, and delivers integrated solutions to businesses worldwide. Its Oath subsidiary houses more than 50 media and technology brands that engage about 1 billion people around the world.
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 statements
In 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," "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. 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.
Condensed Consolidated Statements of Income
(dollars in millions, except per share
amounts)
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/17 6/30/16 % Change 6/30/17 6/30/16 % Change
--------- ------- ------- -------- ------- ------- --------
Operating Revenues
Service revenues and other $26,250 $26,828 (2.2) $52,300 $55,045 (5.0)
Wireless equipment revenues 4,298 3,704 16.0 8,062 7,658 5.3
----- ----- ----- -----
Total Operating Revenues 30,548 30,532 0.1 60,362 62,703 (3.7)
------ ------ ------ ------
Operating Expenses
Cost of services 7,075 7,577 (6.6) 13,933 15,191 (8.3)
Wireless cost of equipment 5,035 4,644 8.4 9,843 9,642 2.1
Selling, general and administrative expense 6,039 9,775 (38.2) 12,947 17,375 (25.5)
Depreciation and amortization expense 4,167 3,982 4.6 8,226 7,999 2.8
----- ----- ----- -----
Total Operating Expenses 22,316 25,978 (14.1) 44,949 50,207 (10.5)
------ ------ ------ ------
Operating Income 8,232 4,554 80.8 15,413 12,496 23.3
Equity in losses of unconsolidated businesses (28) (20) (40.0) (49) (40) (22.5)
Other expense, net (19) (1,826) 99.0 (865) (1,794) 51.8
Interest expense (1,218) (1,013) (20.2) (2,350) (2,201) (6.8)
------ ------ ------ ------
Income Before Provision for Income Taxes 6,967 1,695 * 12,149 8,461 43.6
Provision for income taxes (2,489) (864) * (4,118) (3,200) (28.7)
------ ---- ------ ------
Net Income $4,478 $831 * $8,031 $5,261 52.7
====== ==== ====== ======
Net income attributable to noncontrolling interests $116 $129 (10.1) $219 $249 (12.0)
Net income attributable to Verizon 4,362 702 * 7,812 5,012 55.9
----- --- ----- -----
Net Income $4,478 $831 * $8,031 $5,261 52.7
====== ==== ====== ======
Basic Earnings per Common Share
Net income attributable to Verizon $1.07 $.17 * $1.91 $1.23 55.3
Weighted average number of common shares (in millions) 4,082 4,079 4,082 4,080
Diluted Earnings per Common Share (1)
Net income attributable to Verizon $1.07 $.17 * $1.91 $1.23 55.3
Weighted average number of common
shares-assuming dilution (in millions) 4,087 4,085 4,088 4,085
Footnotes:
(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.
* Not meaningful
Verizon Communications Inc.
Condensed Consolidated Balance Sheets
(dollars in millions)
Unaudited 6/30/17 12/31/16 $ Change
--------- ------- -------- --------
Assets
Current assets
Cash and cash equivalents $4,583 $2,880 $1,703
Accounts receivable, net 19,771 17,513 2,258
Inventories 1,116 1,202 (86)
Assets held for sale - 882 (882)
Prepaid expenses and other 3,353 3,918 (565)
-----
Total current assets 28,823 26,395 2,428
------ ------ -----
Plant, property and equipment 239,226 232,215 7,011
Less accumulated depreciation 152,705 147,464 5,241
-------
86,521 84,751 1,770
------ ------ -----
Investments in unconsolidated
businesses 1,075 1,110 (35)
Wireless licenses 88,004 86,673 1,331
Goodwill 28,527 27,205 1,322
Other intangible assets, net 11,143 8,897 2,246
Non-current assets held for sale 90 613 (523)
Other assets 8,795 8,536 259
----- ----- ---
Total Assets $252,978 $244,180 $8,798
-------- -------- ------
Liabilities and Equity
Current liabilities
Debt maturing within one year $1,153 $2,645 $(1,492)
Accounts payable and accrued
liabilities 17,825 19,593 (1,768)
Other 8,780 8,102 678
-----
Total current liabilities 27,758 30,340 (2,582)
------ ------ ------
Long-term debt 116,390 105,433 10,957
Employee benefit obligations 21,775 26,166 (4,391)
Deferred income taxes 47,506 45,964 1,542
Other liabilities 12,788 12,245 543
Equity
Common stock 424 424 -
Contributed capital 11,099 11,182 (83)
Reinvested earnings 18,159 15,059 3,100
Accumulated other comprehensive
income 2,284 2,673 (389)
Common stock in treasury, at cost (7,142) (7,263) 121
Deferred compensation - employee
stock ownership plans and other 365 449 (84)
Noncontrolling interests 1,572 1,508 64
-----
Total equity 26,761 24,032 2,729
------ ------ -----
Total Liabilities and Equity $252,978 $244,180 $8,798
-------- -------- ------
Verizon - Selected Financial and Operating Statistics
Unaudited 6/30/17 12/31/16
--------- ------- ---------
Total debt (in millions) $117,543 $108,078
Net debt (in millions) $112,960 $105,198
Net debt / Adjusted EBITDA(1) 2.6x 2.4x
Common shares outstanding end of
period (in millions) 4,079 4,077
Total employees ('000) 163.4 160.9
Quarterly cash dividends declared
per common share $0.5775 $0.5775
Footnotes:
(1) Adjusted EBITDA excludes the effects of special items and operating
results of Divested Businesses, as the Company's chief operating
decision maker excludes these items in assessing business unit
performance.
Verizon Communications Inc.
Condensed Consolidated Statements of Cash Flows
(dollars in millions)
6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/17 6/30/16 $ Change
--------- ------- ------- --------
Cash Flows from Operating Activities
Net Income $8,031 $5,261 $2,770
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization expense 8,226 7,999 227
Employee retirement benefits (223) 4,021 (4,244)
Deferred income taxes 1,880 (3,085) 4,965
Provision for uncollectible accounts 632 651 (19)
Equity in losses of unconsolidated businesses, net of dividends received 67 58 9
Changes in current assets and liabilities, net of effects from
acquisition/disposition of businesses (3,094) (1,067) (2,027)
Discretionary contribution to qualified pension plans (3,411) - (3,411)
Net gain on sale of Divested Businesses (1,774) (1,007) (767)
Other, net (416) 77 (493)
Net cash provided by operating activities 9,918 12,908 (2,990)
----- ------ ------
Cash Flows from Investing Activities
Capital expenditures (including capitalized software) (7,011) (7,273) 262
Acquisitions of businesses, net of cash acquired (6,280) (178) (6,102)
Acquisitions of wireless licenses (315) (282) (33)
Proceeds from dispositions of businesses 3,512 9,882 (6,370)
Other, net 211 504 (293)
Net cash provided by (used in) investing activities (9,883) 2,653 (12,536)
------ ----- -------
Cash Flows from Financing Activities
Proceeds from long-term borrowings 16,009 - 16,009
Proceeds from asset-backed long-term borrowings 2,878 - 2,878
Repayments of long-term borrowings and capital lease obligations (10,294) (11,300) 1,006
Increase (decrease) in short-term obligations, excluding current maturities (152) 610 (762)
Dividends paid (4,710) (4,605) (105)
Other, net (2,063) (1,879) (184)
Net cash provided by (used in) financing activities 1,668 (17,174) 18,842
----- ------- ------
Increase (decrease) in cash and cash equivalents 1,703 (1,613) 3,316
Cash and cash equivalents, beginning of period 2,880 4,470 (1,590)
Cash and cash equivalents, end of period $4,583 $2,857 $1,726
------ ------ ------
Footnotes:
Certain reclassifications of prior period amounts have been made, where appropriate, to conform to current period presentation.
Verizon Communications Inc.
Wireless - Selected Financial Results
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/17 6/30/16 % Change 6/30/17 6/30/16 % Change
--------- ------- ------- -------- ------- ------- --------
Operating Revenues
Service $15,622 $16,741 (6.7) $31,400 $33,550 (6.4)
Equipment 4,298 3,704 16.0 8,062 7,658 5.3
Other 1,362 1,259 8.2 2,698 2,500 7.9
----- ----- -----
Total Operating Revenues 21,282 21,704 (1.9) 42,160 43,708 (3.5)
------ ------ ------ ------
Operating Expenses
Cost of services 1,997 1,984 0.7 3,955 3,926 0.7
Cost of equipment 5,035 4,644 8.4 9,843 9,642 2.1
Selling, general and administrative expense 4,493 4,777 (5.9) 9,191 9,668 (4.9)
Depreciation and amortization expense 2,347 2,282 2.8 4,685 4,575 2.4
----- ----- ----- -----
Total Operating Expenses 13,872 13,687 1.4 27,674 27,811 (0.5)
------ ------ ------ ------
Operating Income $7,410 $8,017 (7.6) $14,486 $15,897 (8.9)
Operating Income Margin 34.8% 36.9% 34.4% 36.4%
Segment EBITDA $9,757 $10,299 (5.3) $19,171 $20,472 (6.4)
Segment EBITDA Margin 45.8% 47.5% 45.5% 46.8%
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 6/30/17 6/30/16 % Change
--------- ------- ------- --------
Connections ('000)
Retail postpaid 109,088 107,780 1.2
Retail prepaid 5,448 5,374 1.4
-----
Total retail 114,536 113,154 1.2
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/17 6/30/16 % Change 6/30/17 6/30/16 % Change
--------- ------- ------- -------- ------- ------- --------
Net Add Detail ('000) (1)
Retail postpaid 614 615 (0.2) 307 1,255 (75.5)
Retail prepaid 19 (30) * 2 (207) *
--- --- ---
Total retail 633 585 8.2 309 1,048 (70.5)
Account Statistics
Retail Postpaid Accounts ('000) (2) 35,334 35,637 (0.9)
Retail postpaid connections per account (2) 3.09 3.02 2.3
Retail postpaid ARPA(3) 134.89 145.09 (7.0) 135.93 145.22 (6.4)
Retail postpaid I-ARPA(4) 164.94 167.18 (1.3) 165.47 166.11 (0.4)
Churn Detail
Retail postpaid 0.94% 0.94% 1.04% 0.95%
Retail 1.18% 1.19% 1.28% 1.21%
Retail Postpaid Connection Statistics
Total Smartphone postpaid % of phones activated 95.2% 92.1% 94.9% 92.4%
Total Smartphone postpaid phone base (2) 88.8% 85.5%
Total Internet postpaid base (2) 18.4% 17.7%
4G LTE devices as % of retail postpaid connections 86.7% 82.5%
Other Operating Statistics
Capital expenditures (in millions) $2,444 $2,815 (13.2) $4,275 $5,005 (14.6)
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 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.
Wireline - Selected Financial Results
(dollars in millions)
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/17 6/30/16 % Change 6/30/17 6/30/16 % Change
--------- ------- ------- -------- ------- ------- --------
Operating Revenues
Consumer Markets $3,184 $3,165 0.6 $6,385 $6,345 0.6
Enterprise Solutions 2,388 2,378 0.4 4,780 4,802 (0.5)
Partner Solutions 1,236 1,241 (0.4) 2,467 2,509 (1.7)
Business Markets 921 845 9.0 1,803 1,707 5.6
Other 73 84 (13.1) 135 164 (17.7)
--- --- --- ---
Total Operating Revenues 7,802 7,713 1.2 15,570 15,527 0.3
----- ----- ------ ------
Operating Expenses
Cost of services 4,576 5,079 (9.9) 9,027 9,696 (6.9)
Selling, general and administrative expense 1,606 1,612 (0.4) 3,214 3,379 (4.9)
Depreciation and amortization expense 1,552 1,546 0.4 3,042 3,105 (2.0)
----- ----- ----- -----
Total Operating Expenses 7,734 8,237 (6.1) 15,283 16,180 (5.5)
----- ----- ------ ------
Operating Income (Loss) $68 $(524) * $287 $(653) *
Operating Income (Loss) Margin 0.9% (6.8)% 1.8% (4.2)%
Segment EBITDA $1,620 $1,022 58.5 $3,329 $2,452 35.8
Segment EBITDA Margin 20.8% 13.3% 21.4% 15.8%
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.
Certain reclassifications have been made, where appropriate, to reflect comparable
operating results.
* Not meaningful
Verizon Communications Inc.
Wireline - Selected Operating Statistics
Unaudited 6/30/17 6/30/16 % Change
--------- ------- ------- --------
Connections ('000)
Fios Video Subscribers 4,666 4,637 0.6
Fios Internet Subscribers 5,737 5,495 4.4
Fios Digital voice residence connections 3,909 3,879 0.8
-----
Fios Digital connections 14,312 14,011 2.1
HSI 1,251 1,519 (17.6)
Total Broadband connections 6,988 7,014 (0.4)
Primary residence switched access connections 2,962 3,501 (15.4)
Primary residence connections 6,871 7,380 (6.9)
Total retail residence voice connections 7,079 7,634 (7.3)
Total voice connections 13,352 14,476 (7.8)
3 Mos. Ended 3 Mos. Ended 6 Mos. Ended 6 Mos. Ended
Unaudited 6/30/17 6/30/16 % Change 6/30/17 6/30/16 % Change
--------- ------- ------- -------- ------- ------- --------
Net Add Detail ('000)
Fios Video Subscribers (15) (41) 63.4 (28) 2 *
Fios Internet Subscribers 49 (13) * 84 77 9.1
Fios Digital voice residence connections 22 (38) * 14 7 100.0
--- --- ---
Fios Digital connections 56 (92) * 70 86 (18.6)
HSI (72) (70) (2.9) (134) (148) 9.5
Total Broadband connections (23) (83) 72.3 (50) (71) 29.6
Primary residence switched access connections (133) (142) 6.3 (268) (298) 10.1
Primary residence connections (111) (180) 38.3 (254) (291) 12.7
Total retail residence voice connections (121) (190) 36.3 (276) (315) 12.4
Total voice connections (282) (305) 7.5 (587) (559) (5.0)
Revenue Statistics
Fios revenues (in millions) $2,899 $2,776 4.4 $5,790 $5,537 4.6
Other Operating Statistics
Capital expenditures (in millions) $1,190 $814 46.2 $2,150 $1,820 18.1
Wireline employees ('000) 59.7 59.0
Fios Video Open for Sale ('000) 13,978 13,400
Fios Video penetration 33.4% 34.6%
Fios Internet Open for Sale ('000) 14,271 13,696
Fios Internet penetration 40.2% 40.1%
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 Operating Revenues Excluding Divested Businesses and Acquisitions
(dollars in millions)
3 Mos. Ended 3 Mos. Ended
Unaudited 6/30/17 6/30/16
--------- ------- -------
Consolidated Operating Revenues $30,548 $30,532
Less operating revenues from Divested Businesses 37 110
--- ---
Consolidated Operating Revenues Excluding Divested Businesses 30,511 30,422
Less operating revenues from Acquisitions 693 -
Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions $29,818 $30,422
------- -------
Year over Year Change (2.0)%
IoT Revenues Excluding Acquisitions (dollars in millions)
3 Mos. Ended 3 Mos. Ended
Unaudited 6/30/17 6/30/16
--------- ------- -------
IoT Revenues $365 $207
Less IoT revenues from Acquisitions 117 -
IoT Revenues Excluding Acquisitions $248 $207
---- ----
Year over Year Change 19.8%
Consolidated EBITDA, Consolidated EBITDA Margin, Consolidated Adjusted EBITDA and
Consolidated Adjusted EBITDA Margin
(dollars in millions)
3 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos.
Ended Ended Ended Ended Ended Ended
Unaudited 6/30/17 3/31/17 12/31/16 9/30/16 6/30/16 3/31/16
--------- ------- ------- -------- ------- ------- -------
Consolidated Net Income $4,478 $3,553 $4,600 $3,747 $831 $4,430
Add/(subtract):
Provision for income taxes 2,489 1,629 2,349 1,829 864 2,336
Interest expense 1,218 1,132 1,137 1,038 1,013 1,188
Other (income) and expense, net 19 846 (98) (97) 1,826 (32)
Equity in losses of unconsolidated businesses 28 21 35 23 20 20
--- --- --- --- --- ---
Operating Income 8,232 7,181 8,023 6,540 4,554 7,942
Add Depreciation and amortization expense 4,167 4,059 3,987 3,942 3,982 4,017
----- ----- ----- ----- ----- -----
Consolidated EBITDA $12,399 $11,240 $12,010 $10,482 $8,536 $11,959
------- ------- ------- ------- ------ -------
Add/subtract special items (before tax):
Severance, pension, and benefit charges/(credits) 607 - (1,589) 797 3,550 165
Gain on spectrum license transactions - (126) - - - (142)
Net gain on sale of Divested Businesses (1,774) - - - (1,007) -
Operating results from Divested Businesses (1) (25) (76) (84) (80) (77) (740)
Acquisition and integration related costs (1) 147
(1,045) (202) (1,673) 717 2,466 (717)
------ ---- ------ --- ----- ----
Consolidated Adjusted EBITDA $11,354 $11,038 $10,337 $11,199 $11,002 $11,242
------- ------- ------- ------- ------- -------
Consolidated Operating Revenues $30,548 $30,532
Consolidated Operating Income Margin 26.9% 14.9%
Consolidated EBITDA Margin 40.6% 28.0%
Consolidated Operating Revenues Excluding Divested Businesses $30,511
Consolidated Adjusted EBITDA Margin 37.2%
(1)Excludes depreciation and amortization expense
Verizon Communications Inc.
Non-GAAP Reconciliations - Consolidated Verizon
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio
(dollars in millions)
Unaudited 6/30/17 12/31/16
--------- ------- --------
Net Debt
Debt maturing within one year $1,153 $2,645
Long-term debt 116,390 105,433
------- -------
Total Debt 117,543 108,078
Less Cash and cash equivalents 4,583 2,880
----- -----
Net Debt $112,960 $105,198
-------- --------
Net Debt to Consolidated Adjusted EBITDA Ratio 2.6x 2.4x
---- ----
Adjusted Earnings per Common Share (Adjusted EPS) (1)
3 Mos. Ended 3 Mos. Ended
Unaudited 6/30/17 6/30/16
--------- ------- -------
. Pre-tax Tax After-Tax Pre-tax Tax After-Tax
EPS $1.07 $0.17
Net gain on sale of Divested Businesses (1,774) 843 (931) (0.23) (1,007) 868 (139) (0.03)
Severance, pension, and benefit charges $607 $(230) $377 0.09 $3,550 $(1,364) $2,186 0.54
Acquisition and integration related costs 152 (56) 96 0.02 - - - -
Early debt redemption costs(2) - - - - 1,822 (718) 1,104 0.27
---
$(1,015) $557 $(458) (0.11) $4,365 $(1,214) $3,151 0.77
----
Adjusted EPS $0.96 $0.94
----- -----
(1) Adjusted EPS may not add due to rounding
(2) Includes costs related to debt tender offers
Verizon Communications Inc.
Non-GAAP Reconciliations - Segments
Segment EBITDA and Segment EBITDA Margin
Wireless (dollars in millions)
3 Mos. Ended 3 Mos. Ended
Unaudited 6/30/17 6/30/16
--------- ------- -------
Operating Income $7,410 $8,017
Add Depreciation and amortization expense 2,347 2,282
----- -----
Segment EBITDA $9,757 $10,299
------ -------
Year over Year Change (5.3)%
Total operating revenues $21,282 $21,704
------- -------
Operating Income Margin 34.8% 36.9%
---- ----
Segment EBITDA Margin 45.8% 47.5%
---- ----
Wireline (dollars in millions)
3 Mos. Ended 3 Mos. Ended 3 Mos. Ended
Unaudited 6/30/17 6/30/16 3/31/17
--------- ------- ------- -------
Operating Income (Loss) $68 $(524) $219
Add Depreciation and amortization expense 1,552 1,546 1,490
----- ----- -----
Segment EBITDA $1,620 $1,022 $1,709
------ ------ ------
Total operating revenues $7,802 $7,713 $7,768
------ ------ ------
Operating Income (Loss) Margin 0.9% (6.8)% 2.8%
--- ----- ---
Segment EBITDA Margin 20.8% 13.3% 22.0%
---- ---- ----
Wireline Operating Revenues Excluding Acquisition
(dollars in millions)
3 Mos. Ended 3 Mos. Ended
Unaudited 6/30/17 6/30/16
--------- ------- -------
Wireline Operating Revenues $7,802 $7,713
Less operating revenues from Acquisition 304 -
Wireline Operating Revenues Excluding Acquisition $7,498 $7,713
------ ------
Year over Year Change (2.8)%
Media contact:
Bob Varettoni
908.559.6388
robert.a.varettoni@verizon.com
Related Links
http://www.verizon.com/
https://www.verizonwireless.com/
http://www.verizonenterprise.com/
http://www.verizon.com/about/
View original content with multimedia:http://www.prnewswire.com/news-releases/verizon-reports-wireless-customer-gains-and-strong-loyalty-in-2q-300494976.html
SOURCE Verizon Communications Inc.
