Verizon reports strong Q3 financial results, increases guidance
21 Octobre 2020 - 1:30PM
Verizon Communications Inc. (NYSE, Nasdaq: VZ) reported
strong third-quarter results today and revised earnings guidance
upward for the year. The company's performance was highlighted by
increases in wireless service revenue and total Fios Internet net
additions.
“We continue to demonstrate our strength and resilience by
delivering very strong third quarter financial results,” said
Verizon Chairman and CEO Hans Vestberg. “We are energized by the
transformational technology that our 5G Ultra Wideband and 5G
nationwide bring. Our purpose-driven culture paired with our
network leadership will shape the future, for the better."
For third-quarter 2020, Verizon reported EPS of $1.05, compared
with $1.25 in third-quarter 2019. On an adjusted basis (non-GAAP),
third-quarter 2020 EPS, excluding a special item, was $1.25,
compared with adjusted EPS of $1.25 in third-quarter 2019. The
company estimates that third-quarter 2020 EPS and adjusted EPS
included approximately negative 5 cents of COVID-19-related net
impacts. Third-quarter 2020 EPS included a net pre-tax charge of
about $1.1 billion related to a mark-to-market adjustment for
pension liabilities.
In third-quarter 2020, Verizon's results also included the
continued effects of a reduction in benefits from the adoption of a
revenue recognition standard, primarily due to the deferral of
commission expense. The net impact was 2 cents in third-quarter
2020 and 7 cents year to date.
Consolidated results
- Total consolidated operating
revenues in third-quarter 2020 were $31.5 billion, down 4.1 percent
from third-quarter 2019. This decline was due to lower customer
activity and the timing of certain device launches.
- Year-to-date cash flow from
operations totaled $32.5 billion, an increase of $5.7 billion year
over year. This growth was a result of the continued performance
and strength of the business, a non-recurring tax item in
second-quarter 2020, improvements in working capital primarily due
to lower volumes, and payments related to the Voluntary Separation
Plan in full-year 2019 that did not repeat this year.
- Year-to-date capital expenditures
were $14.2 billion. Capital expenditures continue to support the
growth in traffic on the company's 4G LTE network, the launch and
continued build-out of the company's 5G Ultra Wideband and
nationwide networks, the upgrade to its Intelligent Edge Network
architecture, and the deployment of significant fiber in more than
60 markets.
- In 2018, Verizon announced a goal
to achieve $10 billion in cumulative cash savings by the end of
2021. This initiative has yielded $8.3 billion of cumulative cash
savings since the program began and is on track to achieve its
target. The company expects to continue its focus on operational
efficiencies after the current target is achieved to identify
additional long-term transformation initiatives and deliver the
related cost savings.
- The company ended third-quarter
2020 with free cash flow (non-GAAP) of $18.3 billion, an increase
of $3.9 billion year over year, and $9.0 billion of cash on
hand.
- Verizon's unsecured debt balance
increased year over year by $4.7 billion to $105.5 billion in
third-quarter 2020, and the company’s net unsecured debt (non-GAAP)
decreased by $1.3 billion year over year to $96.5 billion.
Verizon's net income in third-quarter 2020 was $4.5 billion, and
its adjusted EBITDA (non-GAAP) was $11.9 billion. Verizon's net
unsecured debt to adjusted EBITDA ratio (non-GAAP) was 2.1 times
versus its targeted range of 1.75 to 2.0 times. The company remains
focused on achieving its net unsecured debt to EBITDA target while
maintaining a strong financial position to give it flexibility to
invest in the business.
Consumer results
- Total Verizon Consumer revenues
were $21.7 billion, a decrease of 4.3 percent year over year,
primarily driven by a significant decrease in wireless equipment
revenue due to reduced customer activity.
- Throughout third-quarter 2020,
Verizon gradually reopened all of its company-operated retail
stores, implementing practices to reinforce social distancing such
as touch-less retail, appointment scheduling, and curbside pickup.
In third-quarter 2020, Consumer reported 136,000 wireless retail
postpaid net additions. This consisted of 142,000 phone net
additions and 113,000 tablet net losses, offset by 107,000 other
connected device net additions. Postpaid smartphone net additions
were 258,000.
- Consumer wireless service revenues
were $13.4 billion in third-quarter 2020, a 0.7 percent decrease
year over year.
- Total retail postpaid churn was
0.80 percent in third-quarter 2020, and retail postpaid phone churn
was 0.63 percent.
- Consumer reported 139,000 Fios
Internet net additions in third-quarter 2020, an increase from
30,000 Fios Internet net additions in third-quarter 2019. Consumer
and Business reported 144,000 total Fios Internet net additions,
the most Fios Internet net additions since fourth-quarter 2014.
Consumer reported 61,000 Fios Video net losses in third-quarter
2020, reflecting the ongoing shift from traditional linear video to
over-the-top offerings.
- In third-quarter 2020, segment
operating income was $7.4 billion, a decrease of 0.7 percent year
over year, and segment operating income margin was 34.2 percent, an
increase from 33.0 percent in third-quarter 2019. Segment EBITDA
(non-GAAP) totaled $10.3 billion in third-quarter 2020, flat year
over year. Segment EBITDA margin (non-GAAP) was 47.4 percent in
third-quarter 2020, up from 45.3 percent in third-quarter 2019, and
included approximately 60 basis points of headwind from the
deferral of commission expense.
Business results
- Total Verizon Business revenues
were $7.7 billion, down 1.7 percent year over year. The Business
segment continues to be resilient through a challenging environment
as the company provides critical solutions to customers across
state and local government agencies and education providers.
- Business reported 417,000 wireless
retail postpaid net additions in third-quarter 2020. This consisted
of 141,000 phone net additions, 86,000 tablet net additions, and
190,000 other connected device additions.
- Business wireless service revenues
were $3.0 billion in third-quarter 2020, a 4.9 percent increase
year over year, primarily driven by Public Sector and Small and
Medium Business.
- Total retail postpaid churn was
1.19 percent in third-quarter 2020, and retail postpaid phone churn
was 0.96 percent.
- In third-quarter 2020, segment
operating income was $923 million, a decrease of 5.5 percent year
over year, and segment operating income margin was 11.9 percent,
compared with 12.4 percent in third-quarter 2019. Segment EBITDA
(non-GAAP) totaled $2.0 billion in third-quarter 2020, a decrease
of 1.9 percent year over year. Segment EBITDA margin (non-GAAP) was
25.2 percent, which was flat year over year.
Media results
- Total Verizon Media revenues were
$1.7 billion, down 7.4 percent year over year, but an increase of
21.2 percent from second-quarter 2020. Year over year revenue
trends improved each month during third-quarter 2020. Trends
resulting from the COVID-19 pandemic continued to impact both
search and advertising in the quarter, though Media continues to
drive increased customer engagement on its owned and operated
properties.
Outlook and guidance
Based on three quarters of resilient earnings and projected
trends into fourth-quarter 2020, Verizon is updating financial
guidance for full-year 2020:
- The company now expects adjusted
EPS growth (non-GAAP) of 0 to 2 percent, an update from prior
guidance for 2020 adjusted EPS growth (non-GAAP) of -2 to 2
percent. This update includes the previously discussed accounting
headwinds, impacts from COVID-19, and new device launches in
fourth-quarter 2020.
- The company now expects total
wireless service revenue growth of at least 2 percent in
fourth-quarter 2020 compared to last year.
Verizon expects the following results for full-year 2020:
- Capital spending to now be at the
higher end of the guided range of $17.5 billion to $18.5
billion.
- Adjusted effective income tax rate
(non-GAAP) in the range of 23 percent to 25 percent.
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) was formed on
June 30, 2000 and is celebrating its 20th year as one of the
world’s leading providers of technology, communications,
information and entertainment products and services. Headquartered
in New York City and with a presence around the world, Verizon
generated revenues of $131.9 billion in 2019. The company offers
data, video and voice services and solutions on its award-winning
networks and platforms, delivering on customers’ demand for
mobility, reliable network connectivity, security and control.
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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: cyber attacks impacting our networks or
systems and any resulting financial or reputational impact; natural
disasters, terrorist attacks or acts of war or significant
litigation and any resulting financial or reputational impact; the
impact of the global outbreak of COVID-19 on our operations, our
employees and the ways in which our customers use our networks and
other products and services; disruption of our key suppliers’ or
vendors' provisioning of products or services, including as a
result of the COVID-19 outbreak; material adverse changes in labor
matters and any resulting financial or operational impact; the
effects of competition in the markets in which we operate; failure
to take advantage of developments in technology and address changes
in consumer demand; performance issues or delays in the deployment
of our 5G network resulting in significant costs or a reduction in
the anticipated benefits of the enhancement to our networks; the
inability to implement our business strategy; adverse conditions in
the U.S. and international economies; changes in the regulatory
environment in which we operate, including any increase in
restrictions on our ability to operate our business; 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;
significant increases in benefit plan costs or lower investment
returns on plan assets; changes in tax laws or treaties, or in
their interpretation; and 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.
Media contacts:
Kim Ancin908.559.3227kimberly.ancin@verizon.com
Eric Wilkens908.559.3063eric.wilkens@verizon.com
Verizon Communications (NYSE:VZ)
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