Summary
This 8-K filing from Verizon Communications Inc. (VZ) provides an update on the financial and operational outlook following the conclusion of a union work stoppage. The company anticipates a negative impact on second quarter 2016 earnings per share (EPS) in the range of $0.05 to $0.07, which is not expected to be fully recouped by year-end. The work stoppage also led to lower wireline capital spending and is projected to result in negative net additions for Fios Internet and Video in Q2 2016 due to installation disruptions. Furthermore, Verizon will not conduct significant securitization of device payment plan receivables in Q2 2016, impacting cash flow from operations by approximately $2 billion. Looking ahead, the company plans to shift the financing of these receivables onto its balance sheet, with a potential asset-backed securities transaction in Q3 2016. For the full year 2017, Verizon projects consolidated revenue growth to be consistent with U.S. GDP growth.
Key Highlights
- 1Anticipates a $0.05-$0.07 EPS impact in Q2 2016 due to a union work stoppage (April 1 - June 1, 2016), with no expectation of full recoupment by year-end.
- 2Expects lower wireline capital spending in Q2 2016 as a consequence of the union work stoppage.
- 3Projects negative net additions for Fios Internet and Video in Q2 2016 due to installation delays during the work stoppage.
- 4Will not conduct significant securitization of device payment plan receivables in Q2 2016, expecting a ~$2 billion negative impact on Q2 cash flow from operations.
- 5Plans to move financing of device payment plan receivables onto its balance sheet, starting with a potential 144A ABS transaction in Q3 2016.
- 6Forecasts consolidated revenue growth for full year 2017 to align with U.S. GDP growth for that year.