10-QPeriod: Q1 FY2019

AT&T INC. Quarterly Report for Q1 Ended Mar 31, 2019

Filed May 6, 2019For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. reported its first-quarter 2019 financial results, showing a notable increase in total operating revenues, primarily driven by the acquisition of Time Warner (now WarnerMedia) in June 2018. While consolidated revenues saw a significant rise, profitability metrics such as Net Income Attributable to AT&T experienced a decline compared to the prior year quarter. The company is actively managing its debt, with significant issuances and repayments during the period. The Communications segment remains the largest contributor to revenue, though it saw a slight year-over-year decrease, with growth in Mobility offsetting declines in Entertainment Group and Business Wireline. The integration of WarnerMedia is progressing, with its substantial revenue contribution bolstering the overall top line, though the company continues to navigate the complexities of combining these diverse operations.

Financial Highlights

48 data points
Beta

Revenue

$44.83B

Net Income

$4.10B

9.1% Net Margin

EPS (Diluted)

$0.56

Total Assets

$548.38B

Cash & Equivalents

$6.63B

Free Cash Flow

$11.05B

Financial Statements
Beta
Revenue$44.83B
SG&A Expenses$9.65B
Operating Expenses$37.59B
Operating Income$7.23B
Interest Expense$2.14B
Net Income$4.10B
EPS (Basic)$0.56
EPS (Diluted)$0.56
Shares Outstanding (Basic)7.31B
Shares Outstanding (Diluted)7.34B

Key Highlights

  • 1Total operating revenues increased by 17.8% to $44.8 billion, largely due to the inclusion of WarnerMedia's results.
  • 2Net Income Attributable to AT&T decreased by 12.1% to $4.1 billion, while Diluted Earnings Per Share attributable to AT&T fell to $0.56 from $0.75 in the prior year.
  • 3The Communications segment's operating revenues slightly decreased by 0.4% to $35.4 billion, with Mobility showing modest growth.
  • 4WarnerMedia segment revenues surged to $8.4 billion, compared to $112 million in the prior year quarter, reflecting the full impact of the acquisition.
  • 5Capital expenditures remained substantial at $5.2 billion, primarily for network upgrades and expansion.
  • 6The company's debt management included issuing $9.2 billion in long-term debt and repaying $9.8 billion.
  • 7Adoption of new lease accounting standards (ASC 842) resulted in the recognition of operating lease liabilities and right-of-use assets on the balance sheet.

Frequently Asked Questions

The primary driver for the significant increase in total operating revenues was the acquisition of Time Warner (now WarnerMedia), which was completed in June 2018. The results of WarnerMedia were included for the full first quarter of 2019, whereas only a partial period was included in the prior year's first quarter.

While WarnerMedia significantly boosted revenue, AT&T's Net Income Attributable to AT&T and Diluted Earnings Per Share declined year-over-year. This is likely due to the costs associated with integrating the new business, increased interest expenses from debt taken on for the acquisition, and higher depreciation and amortization charges.

The Communications segment, which includes Mobility, Entertainment Group, and Business Wireline, saw a slight decrease of 0.4% in operating revenues to $35.4 billion. Mobility revenue grew, driven by wireless service and data, but this was offset by declines in Entertainment Group (due to video subscriber losses) and Business Wireline (due to declining legacy services).

AT&T is actively managing its debt. In the first quarter of 2019, the company issued approximately $9.2 billion in long-term debt and repaid approximately $9.8 billion of existing debt, indicating a strategic focus on optimizing its capital structure post-acquisition.