10-QPeriod: Q1 FY2022

AT&T INC. Quarterly Report for Q1 Ended Mar 31, 2022

Filed May 3, 2022For Securities:TT-PCTBBT-PA

Summary

AT&T Inc. reported its first quarter 2022 financial results, showing a notable decrease in total operating revenues to $38.1 billion, down from $43.9 billion in the prior year's quarter. This decline was primarily attributed to the separation of the U.S. video business in July 2021 and the sale of Vrio in November 2021, alongside lower revenues in Business Wireline. The company's Communications segment, however, demonstrated resilience with a 2.5% increase in operating revenues, driven by growth in Mobility and Consumer Wireline, while WarnerMedia also saw a slight revenue increase. Net income attributable to AT&T common stock significantly decreased to $4.8 billion from $7.5 billion in the prior year, reflecting these business realignments and other factors. Operationally, AT&T continues to invest in its core infrastructure, particularly its 5G network, and broadband expansion. The company's cash position strengthened significantly, with cash and cash equivalents reaching $38.6 billion as of March 31, 2022, up from $21.2 billion at the end of 2021. This increase was bolstered by significant debt issuances in anticipation of the WarnerMedia/Discovery transaction, which closed shortly after the quarter. Despite the revenue and net income declines, the strategic repositioning away from legacy businesses towards core connectivity and growth areas appears to be the primary focus.

Financial Highlights

46 data points
Beta

Revenue

$29.71B

Net Income

$4.81B

16.2% Net Margin

EPS (Diluted)

$0.65

Total Assets

$577.20B

Cash & Equivalents

$17.08B

Free Cash Flow

$5.73B

Financial Statements
Beta
Revenue$29.71B
SG&A Expenses$6.98B
Operating Expenses$24.18B
Operating Income$5.54B
Interest Expense$1.63B
Net Income$4.81B
EPS (Basic)$0.66
EPS (Diluted)$0.65
Shares Outstanding (Basic)7.18B
Shares Outstanding (Diluted)7.56B

Key Highlights

  • 1Total operating revenues decreased by 13.3% to $38.1 billion in Q1 2022 compared to $43.9 billion in Q1 2021, largely due to divestitures.
  • 2Net Income Attributable to AT&T decreased by 36.3% to $4.8 billion in Q1 2022 from $7.5 billion in Q1 2021.
  • 3The Communications segment saw a 2.5% increase in operating revenues to $28.9 billion, driven by growth in Mobility and Consumer Wireline.
  • 4WarnerMedia's operating revenues grew by 2.5% to $8.7 billion, supported by subscription and content revenues.
  • 5Latin America segment revenues declined significantly by 49.8% due to the divestiture of Vrio.
  • 6Cash and cash equivalents increased substantially to $38.6 billion as of March 31, 2022, from $21.2 billion at December 31, 2021, partly due to financing activities related to the WarnerMedia separation.
  • 7The company continues to invest in its 5G network and broadband expansion, with capital expenditures of $4.7 billion in Q1 2022.

Frequently Asked Questions

The primary drivers for the 13.3% decrease in total operating revenues were the separation of the U.S. video business (completed July 31, 2021) and the sale of the Vrio business unit (completed November 2021). Lower revenues in the Business Wireline segment also contributed to the decline.

The WarnerMedia business, prior to its separation on April 8, 2022, was included in the 'continuing operations' for the first quarter of 2022. While its revenues grew slightly, its operating contribution decreased significantly year-over-year. Following the separation, WarnerMedia will be reflected as discontinued operations starting in the second quarter of 2022. The financial results for Q1 2022 reflect the operational performance of WarnerMedia before the transaction closed.

AT&T's cash and cash equivalents significantly increased to $38.6 billion as of March 31, 2022, up from $21.2 billion at the end of 2021. This increase was boosted by cash inflows from operations, debt issuances, and distributions from DIRECTV. The company utilizes various credit facilities and maintains strong liquidity to manage its short-term requirements.

AT&T is prioritizing investments in its core Communications segment, particularly in expanding its 5G network and fiber broadband capabilities. The company aims to leverage these advanced networks to offer innovative services and capture growth opportunities in areas like IoT, while strategically divesting non-core assets.