10-QPeriod: Q2 FY2019

VERIZON COMMUNICATIONS INC Quarterly Report for Q2 Ended Jun 30, 2019

Filed August 8, 2019For Securities:VZ

Summary

Verizon Communications Inc. (VZ) reported its financial results for the quarter and six months ended June 30, 2019. Total operating revenues remained relatively flat for the quarter, decreasing by 0.4%, but saw a slight increase of 0.4% for the six-month period compared to the prior year. Net income attributable to Verizon was $3,944 million for the quarter, a decrease from $4,120 million in the same period last year, and $8,976 million for the six months, an increase from $8,665 million in the prior year. Diluted earnings per share were $0.95 for the quarter and $2.17 for the six months. The company implemented a new two-segment reporting structure, comprising Verizon Consumer Group and Verizon Business Group. The Consumer segment showed stable revenues for the quarter and a 1.2% increase for the six months, driven by service and other revenues, though wireless equipment revenue declined. The Business segment experienced a slight revenue decrease in both periods, mainly due to lower revenues in Global Enterprise and Wholesale. Significant capital expenditures, totaling $7.97 billion for the first six months, were directed towards network modernization, including 4G LTE densification and 5G technology deployment.

Financial Highlights

46 data points
Beta

Revenue

$32.07B

Net Income

$3.94B

12.3% Net Margin

EPS (Diluted)

$0.95

Total Assets

$283.11B

Cash & Equivalents

$1.95B

Free Cash Flow

$8.76B

Financial Statements
Beta
Revenue$32.07B
SG&A Expenses$7.27B
Operating Expenses$24.22B
Operating Income$7.85B
Interest Expense$1.22B
Net Income$3.94B
EPS (Basic)$0.95
EPS (Diluted)$0.95
Shares Outstanding (Basic)4.14B
Shares Outstanding (Diluted)4.14B

Key Highlights

  • 1Total operating revenues for the six months ended June 30, 2019, increased slightly by 0.4% to $64.2 billion, while quarterly revenues saw a marginal decrease of 0.4% to $32.1 billion.
  • 2Net income attributable to Verizon for the second quarter of 2019 was $3,944 million, a decrease from $4,120 million in the prior year's quarter.
  • 3Diluted Earnings Per Share (EPS) was $0.95 for the quarter and $2.17 for the six months, showing an increase from $2.10 in the comparable prior year period.
  • 4The company reorganized into two reportable segments: Verizon Consumer Group and Verizon Business Group, effective April 1, 2019.
  • 5Capital expenditures for the first six months of 2019 were $7.97 billion, up from $7.84 billion in the prior year, primarily for network infrastructure and 5G deployment.
  • 6Free cash flow for the first six months of 2019 decreased to $7.87 billion from $8.60 billion in the prior year, reflecting lower operating cash flows and higher capital expenditures.
  • 7Verizon paid $5.0 billion in cash dividends during the first six months of 2019, compared to $4.8 billion in the prior year.

Frequently Asked Questions

For the three months ended June 30, 2019, total operating revenues decreased by 0.4% to $32.1 billion, compared to $32.2 billion in the prior year. For the six months ended June 30, 2019, total operating revenues increased by 0.4% to $64.2 billion, compared to $64.0 billion in the prior year. The Consumer segment revenues were relatively flat for the quarter and increased by 1.2% for the six months, while the Business segment revenues saw a slight decrease of 1.1% for the quarter and 0.9% for the six months.

Net income attributable to Verizon for the three months ended June 30, 2019, was $3,944 million, or $0.95 per diluted share. This represents a decrease from $4,120 million, or $1.00 per diluted share, in the same period of 2018. The decrease was partly due to higher 'Other income (expense), net' which included losses on early debt redemptions.

Verizon continues to invest significantly in its networks. For the six months ended June 30, 2019, capital expenditures totaled $7.97 billion, an increase from $7.84 billion in the prior year. These investments are primarily focused on network densification for 4G LTE and the deployment of 5G technology, as well as multi-use fiber assets.

Verizon adopted Topic 842 on January 1, 2019. This adoption resulted in the recognition of approximately $22.1 billion in operating lease liabilities and $23.2 billion in operating lease right-of-use assets on the balance sheet as of that date. It also led to a cumulative-effect adjustment to retained earnings of $410 million. While this standard impacts the balance sheet significantly, it does not directly alter the cash flow from operations.