10-QPeriod: Q1 FY2013

VERIZON COMMUNICATIONS INC Quarterly Report for Q1 Ended Mar 31, 2013

Filed April 25, 2013For Securities:VZ

Summary

Verizon Communications Inc. (VZ) reported strong financial results for the first quarter ended March 31, 2013. Total operating revenues increased by 4.2% year-over-year to $29.42 billion, driven primarily by robust growth in the Wireless segment. Net income attributable to Verizon significantly rose to $1.95 billion, or $0.68 per diluted share, compared to $1.69 billion, or $0.59 per diluted share, in the same period last year. The company demonstrated solid operational performance with healthy increases in both revenue and profitability, highlighting the continued strength of its core businesses and strategic investments. The company's balance sheet remains strong, with substantial liquidity and effective management of its debt. Capital expenditures were focused on network expansion, particularly the 4G LTE deployment, which positions Verizon for future growth. The company also reported a significant increase in cash flow from operations, supporting its ability to invest in growth initiatives, return capital to shareholders through dividends, and manage its debt obligations. Overall, the first quarter results indicate a positive trajectory for Verizon, with continued focus on strategic priorities and operational execution.

Financial Highlights

51 data points
Beta

Revenue

$29.42B

62.8% Gross Margin

Net Income

$1.95B

6.6% Net Margin

EPS (Diluted)

$0.68

Total Assets

$226.19B

Cash & Equivalents

$5.47B

Free Cash Flow

$7.53B

Financial Statements
Beta
Revenue$29.42B
Cost of Revenue$10.93B
Gross Profit$18.49B
SG&A Expenses$8.15B
Operating Expenses$23.20B
Operating Income$6.22B
Interest Expense$537.00M
Net Income$1.95B
EPS (Basic)$0.68
EPS (Diluted)$0.68
Shares Outstanding (Basic)2.87B
Shares Outstanding (Diluted)2.87B

Key Highlights

  • 1Total operating revenues increased by 4.2% to $29.42 billion, driven by a 6.8% increase in the Wireless segment's revenue.
  • 2Net income attributable to Verizon rose by 16% to $1.95 billion, with diluted EPS increasing to $0.68 from $0.59.
  • 3The Wireless segment saw a 6.8% revenue increase, with service revenue up 8.6% driven by retail postpaid connections and smartphone penetration.
  • 4Wireline segment revenues declined slightly by 1.2%, but Mass Markets revenue grew 3.3% due to FiOS services.
  • 5Operating income improved significantly to $6.22 billion from $5.19 billion, reflecting strong operational leverage.
  • 6Net cash provided by operating activities increased by $1.57 billion to $7.53 billion, supporting investments and shareholder returns.
  • 7The company continued its significant capital expenditures, with $3.6 billion invested primarily in 4G LTE network build-out.

Frequently Asked Questions

Verizon's total operating revenues increased by 4.2% to $29.42 billion in the first quarter of 2013 compared to $28.24 billion in the first quarter of 2012. This growth was primarily driven by the Wireless segment, which saw a 6.8% increase in revenue.

Verizon experienced a significant improvement in profitability. Net income attributable to Verizon increased by 16% to $1.95 billion, resulting in diluted earnings per share of $0.68, up from $0.59 in the prior year's quarter. Operating income also saw a substantial rise to $6.22 billion.

The Wireless segment's growth was primarily fueled by an 8.6% increase in service revenue, driven by a 5.9% rise in retail postpaid connections and a growing penetration of smartphones, which now constitute 61.4% of the retail postpaid phone base. Increased average revenue per account (ARPA) was also a contributing factor.

The Wireline segment's total operating revenues saw a slight decrease of 1.2%. However, Mass Markets revenue grew by 3.3%, largely due to the expansion of FiOS services. Strategic services within Global Enterprise also showed strong growth of 6.0%. Declines in Global Enterprise Core and Global Wholesale revenues partially offset these gains.

Verizon invested $3.6 billion in capital expenditures during the quarter, predominantly for the expansion of its 4G LTE network. The company generated $7.53 billion in net cash from operating activities, leading to a substantial increase in free cash flow to $3.93 billion. This strong cash flow generation supports ongoing investments, debt repayment, and dividend payments.