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Verizon Reports Strong 2Q And H1 2019 Results

Financial results News - Published on Fri, 02 Aug 2019

Image Source: The Motley Fool
Verizon Communications Inc reported strong second-quarter 2019 results highlighted by an increase in net wireless customer additions, continued customer loyalty and industry-leading wireless products and services.

Chairman and CEO Hans Vestberg said that "Verizon finished strong in the first half of 2019 by delivering solid financial results while transforming the business under the new operating structure and advancing our leadership in 5G. Verizon made history this quarter by becoming the first carrier in the world to launch 5G mobility. We are focused on optimizing our next-generation networks and enhancing the customer experience while we head into the second half of the year with great momentum."

For second-quarter 2019, Verizon reported EPS of 95 cents, compared with USD 1.00 in second-quarter 2018. On an adjusted basis (non-GAAP), second-quarter 2019 EPS, excluding a special item, was USD 1.23, compared with adjusted EPS of USD 1.20 in second-quarter 2018. Verizon’s second-quarter 2019 EPS included 28 cents in early debt redemption costs.

In second-quarter 2019, Verizon's results included the effects 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 net impact was a 4 cent year over year headwind, which is included in the year-over-year increase in adjusted EPS.

Consolidated results
Total consolidated operating revenues in second-quarter 2019 were USD 32.1 billion, down 0.4% from second-quarter 2018. Wireless service revenue growth was offset by lower wireless equipment revenue and wireline service revenue.
Cash flow from operations totaled USD 15.8 billion in second-quarter 2019, a decline of approximately USD 600 million year over year. Operational improvements in Verizon's businesses were offset by higher cash taxes and cash payments related to the Voluntary Separation Program.
First half 2019 capital expenditures totaled USD 8.0 billion. Verizon's capital expenditures continue to support the launch and 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 architecture.
In 2018, Verizon announced a goal to achieve USD 10 billion in cumulative cash savings by 2021. This initiative has yielded USD 4.1 billion of cumulative cash savings since this program began. At the end of second-quarter 2019, Verizon completed the third and final phase of its Voluntary Separation Program and has realized approximately USD 480 million of expense savings year-to-date. The company expects additional incremental savings in third-quarter 2019, and is on track to achieve its cumulative cash savings goal.
Net income was USD 4.1 billion in second-quarter 2019. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled approximately USD 10.8 billion. Consolidated operating income margin was 24.5% in second-quarter 2019, compared with 20.5% in second-quarter 2018. Consolidated EBITDA margin (non-GAAP) was 33.5% in second-quarter 2019, compared with 34.5% in second-quarter 2018. Adjusted EBITDA margin (non-GAAP) in second-quarter 2019 was 37.7%. Consolidated adjusted EBITDA (non-GAAP) in second-quarter 2019 was USD 12.1 billion, an increase of approximately USD 200 million year over year.
Consumer results
Total Verizon Consumer revenues were USD 22.0 billion, flat year over year, reflecting continued strong growth in wireless service revenue and Fios service offerings, offset by declines in wireless equipment and legacy wireline services.
Verizon Consumer Group reported 126,000 wireless retail postpaid net additions in second-quarter 2019, consisting of 73,000 phone net additions and tablet net losses of 134,000, offset by 187,000 other connected device net additions, primarily wearables. Postpaid smartphone net additions were 209,000, up 17% year over year, driven by a 5% year over year increase in phone gross additions.
Consumer wireless service revenues increased 2.5% in second-quarter 2019, driven by customer step-ups to higher-priced plans and an increase in connections per account.
Total retail postpaid churn was 0.97% in second-quarter 2019, and retail postpaid phone churn was 0.72%.
In second-quarter 2019, Verizon Consumer Group reported 28,000 Fios Internet net additions and 52,000 Fios Video net losses, reflecting the ongoing shift from traditional linear video to over-the-top offerings. Fios revenues increased by 1.2%, primarily due to the demand for broadband offerings.
Segment operating income was USD 7.3 billion, an increase of 3.9% year over year, and segment operating income margin was 33.4%. Segment EBITDA (non-GAAP) totaled USD 10.2 billion in second-quarter 2019, an increase of 1.6% year over year. Segment EBITDA margin (non-GAAP) was 46.5%, including approximately 100 basis points in headwinds from the deferral of commission expense and the lease accounting standard.
Business results
Total Verizon Business revenues were USD 7.8 billion, down 1.1% year over year, as growth in wireless services and high quality fiber products was offset by declines in legacy products.
Verizon Business Group reported 325,000 wireless retail postpaid net additions in second-quarter 2019, consisting of 172,000 phone net additions, 90,000 tablet net additions and 63,000 other connected device additions.
Total retail postpaid churn was 1.21% in second-quarter 2019, and retail postpaid phone churn was 0.97%.
Segment operating income was USD 1.1 billion, a decrease of 2.7% year over year, and segment operating income margin was 13.8%. Segment EBITDA (non-GAAP) totaled USD 2.1 billion in second-quarter 2019, a decrease of 2.0% year over year. Segment EBITDA margin (non-GAAP) was 27.3%, down 20 basis points year over year due to declines in legacy wireline product revenues.

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Posted By : TelecomGuru on Fri, 02 Aug 2019
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