Why is Verizon providing so many non-GAAP financial measures?

Verizon provides these non-GAAP measures to offer investors a more detailed and comparable view of its financial performance and operational trends. They are designed to exclude the impact of specific events like business divestitures, acquisitions, and certain "special items" that can distort year-over-year comparisons. Management uses these metrics internally to assess performance, and Verizon believes they are also useful for investors and other users of financial information.

What are the key 'special items' that Verizon excludes from its non-GAAP measures?

The 'special items' excluded from certain non-GAAP measures, such as Consolidated Adjusted EBITDA and Adjusted EPS, can include a variety of factors. These often involve actuarial gains/losses on pension plans, severance costs, gains or losses on asset sales (like divested businesses or spectrum licenses), product realignment costs, acquisition and integration-related costs, early debt redemption costs, and the provisional impact of significant tax legislation like the Tax Cuts and Jobs Act.

What is the significance of the 'Net Debt to Consolidated Adjusted EBITDA Ratio'?

The Net Debt to Consolidated Adjusted EBITDA Ratio is a key leverage metric that helps investors and creditors assess Verizon's ability to repay its outstanding debt. It compares the company's total debt (net of cash) to its earnings before interest, taxes, depreciation, and amortization (adjusted for special items and divested businesses). A lower ratio generally indicates a stronger ability to service debt.

VZ 8-K: Earnings & Results

Q: How does Verizon's use of 'Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions' help investors?

This non-GAAP measure helps investors understand Verizon's underlying revenue growth trajectory without being influenced by the financial impact of companies that have been sold off (divested) or newly acquired. By removing the revenues from these transactions, investors can get a clearer picture of how the core, ongoing parts of Verizon's business are performing in terms of revenue generation.

Summary

This 8-K filing from Verizon Communications Inc. (VZ), dated January 23, 2018, primarily announces the company's financial results and provides details on its non-GAAP financial measures. The report highlights the use of various non-GAAP metrics such as Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions, Organic IoT Revenues, Wireline Operating Revenues Excluding Acquisition, Consolidated EBITDA, Consolidated Adjusted EBITDA, Net Debt, and Adjusted Earnings per Common Share (Adjusted EPS). These non-GAAP measures are presented to offer investors a clearer understanding of Verizon's operational performance and trends, particularly by excluding the impact of divested businesses, acquisitions, and certain "special items." This allows for a more comparable assessment of revenue growth, operating profitability, and earnings on a period-over-period basis, and is how management evaluates the business. Investors are encouraged to review these measures alongside their GAAP counterparts.

Key Highlights

1Verizon is reporting its financial results and accompanying financial tables via an 8-K filing, including a press release dated January 23, 2018.
2The company emphasizes the use of several non-GAAP financial measures to provide enhanced insights into its performance, including: Consolidated Operating Revenues Excluding Divested Businesses and Acquisitions, Organic IoT Revenues, Wireline Operating Revenues Excluding Acquisition, Consolidated EBITDA, Consolidated Adjusted EBITDA, Net Debt, and Adjusted EPS.
3These non-GAAP measures are intended to allow for a more comparable assessment of revenue growth, operating profitability, and earnings by excluding the impact of specific events like divestitures, acquisitions, and "special items."
4Specific acquisitions mentioned in the context of revenue adjustments include Yahoo!, XO Holdings' wireline business, Fleetmatics, and Telogis.
5Key divestitures that impact revenue comparisons include local landline businesses in California, Florida, and Texas, and data center businesses.
6The report defines how each non-GAAP measure is calculated and explains the rationale behind excluding certain items, such as acquisition and integration costs, severance costs, and impacts from tax reform.
7Verizon provides a Net Debt to Consolidated Adjusted EBITDA Ratio as a metric for evaluating its ability to service debt, using a twelve-month trailing basis for the EBITDA component.

VERIZON COMMUNICATIONS INC 8-K Report, Financial Results (Jan 23, 2018)

Summary

Key Highlights

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