Verizon Wireless Increases Service Revenues by 7.7 Percent, Expands Margins; Demand Remains Strong for FiOS and Strategic Services
NEW YORK - Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported double-digit percentage growth in year-over-year quarterly earnings results and increased cash flow in first-quarter 2012. Verizon Wireless posted another quarter of profitable revenue growth, while Verizon’s Wireline segment posted another quarter of customer and revenue gains for FiOS fiber-optic services, and increased sales of strategic business services.
Verizon reported 59 cents in EPS in first-quarter 2012, an increase of 15.7 percent compared with first-quarter 2011 earnings of 51 cents per share. There were no adjustments in either period.
‘On Track to Continue to Deliver Strong Results’
"Verizon delivered double-digit earnings growth and strong cash flow this quarter," said Lowell McAdam, Verizon chairman and CEO. "We built momentum coming out of 2011, and our results show that we continue to execute in the key growth areas of our business. Verizon Wireless produced both great growth and great margins, and we produced another strong quarter of FiOS growth. We are confident we will improve Wireline margins for the full year. Our repositioning of Verizon Enterprise Solutions has better aligned our strengths in high-growth markets, and we expect our enterprise business to contribute even more to overall Wireline revenue growth and profitability over time."
He added: "We remain confident in our ability to take advantage of the growth opportunities we see, and we are focused on driving operating efficiencies. We are on track with our plans and expect to continue to deliver strong results."
Strong Cash Flows, Increased Capital Efficiency
In first-quarter 2012, Verizon’s total operating revenues were $28.2 billion on a consolidated basis, an increase of 4.6 percent compared with first-quarter 2011.
Consolidated operating income was $5.2 billion in first-quarter 2012, compared with $4.5 billion in first-quarter 2011. Consolidated EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $9.2 billion in first-quarter 2012, compared with $8.5 billion in first-quarter 2011.
Cash flow from operating activities totaled $6.0 billion in first-quarter 2012, an increase of $922 million compared with first-quarter 2011. Capital expenditures totaled $3.6 billion in first-quarter 2012, a decrease of $798 million compared with first-quarter 2011, as Verizon improved its capital-to-revenue efficiency. Free cash flow (non-GAAP, cash flow from operations less capex) was $2.4 billion in first-quarter 2012, compared with $672 million in first-quarter 2011. Verizon expects increasing free cash flow levels through 2012.
Verizon Wireless Delivers Strong Financial, Operational Results
In first-quarter 2012, Verizon Wireless delivered strong growth in revenues and retail customers; increased retail postpaid ARPU (average monthly service revenue per user) and smartphone penetration; and delivered a strong EBITDA margin.
Wireless Financial Highlights
Wireless Operational Highlights
FiOS Continues to Add Customers, Increase Sales Penetration
In first-quarter 2012 in the Wireline segment, continued strong demand for FiOS services led to revenue growth generated by U.S. consumer wireline customers and continued gains in FiOS sales penetration. Globally, continued strong sales of strategic services helped mitigate lower revenues resulting from Verizon’s targeted efforts to eliminate products that do not meet the company’s profitability requirements, and continued secular pressures in wholesale.
Wireline Financial Highlights
Wireline Operational Highlights
Strategic Agreements Unveiled for Global Sales
Verizon Enterprise Solutions, a sales and marketing organization that harnesses all of Verizon’s cloud, mobility and technology solutions for business and government customers globally, unveiled strategic agreements in first-quarter 2012 to develop offerings in mobile health, electronic health records management and secure e-prescribing.
The organization also announced a digital-signage solution for retail customers, powered by Verizon’s 4G LTE network and infrastructure; unveiled new telematics solutions for the automotive and transportation industries; and rolled out a cross-platform open video communications capability.
NOTE: See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.
NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. 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 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; competition in our markets; material adverse changes in labor matters, including labor negotiations or additional organizing activity, and any resulting financial and/or operational impact; material changes in available technology; any disruption of our key suppliers’ provisioning of products or services; significant increases in benefit plan costs or lower investment returns on plan assets; breaches of network or information technology security, natural disasters or terrorist attacks or existing or future litigation and any resulting financial impact not covered by insurance; technology substitution; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; any changes in the regulatory environments in which we operate, including any increase in restrictions on our ability to operate our networks; the timing, scope and financial impact of our deployment of broadband technology; changes in our 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; our ability to complete acquisitions and dispositions; and the inability to implement our business strategies.