Verizon Announces Fourth-Quarter 2020 Financial Results
Wednesday, January 27, 2021 | Comments

Verizon Communications closed 2020 with fourth-quarter results highlighted by increased cash flow, wireless service revenue growth and the launch of 5G nationwide.

“Verizon finished the fourth quarter with strong financial performance," said Verizon Chairman and CEO Hans Vestberg. "2020 was marked by transformational change, including the launch of our 5G nationwide network. We witnessed a mass shift toward virtual collaboration, touchless retail and delivery, remote work, distance learning, and telemedicine. We continued to execute our multi-use network strategy; we were recognized by RootMetrics as the best overall wireless provider, undefeated in all categories; and we continue to be the partner of choice for the world’s most innovative brands. Today, we are excited to lead technological advances beyond mobile devices and create new opportunities for growth across multiple industries."

For fourth-quarter 2020, Verizon reported earnings per share (EPS) of $1.11, compared with $1.23 in fourth-quarter 2019. On an adjusted basis non-generally accepted accounting principles (GAAP) fourth-quarter 2020 EPS, excluding special items, was $1.21, compared with adjusted EPS of $1.13 in fourth-quarter 2019.

Fourth-quarter 2020 EPS included a pre-tax loss from special items of about $523 million, which consisted of a net charge of $404 million primarily related to severance, including voluntary separations under existing plans and the annual mark-to-market for pension and other post-employment benefits (OPEB) liabilities, and a net loss of $119 million primarily related to the disposition of the HuffPost business.

In fourth-quarter 2020, Verizon's results also included the continued effects of a reduction in benefit from the adoption of a revenue recognition standard, primarily due to the deferral of commission expense. The net impact was 2 cents in fourth-quarter 2020 and 9 cents for the full year. The company estimates that the net impact from COVID-19 was a 2 cent benefit in fourth-quarter 2020 and a 21 cent headwind for the full year.

For full year 2020, Verizon reported $4.30 in EPS, compared with $4.65 in full year 2019. On an adjusted non-GAAP basis, excluding special items, 2020 EPS was $4.90, compared with 2019 EPS of $4.81.

Total consolidated operating revenues in fourth-quarter 2020 were $34.7 billion, down 0.2% from fourth quarter 2019. Total wireless service revenue growth and strong results in Verizon Media were offset by lower wireless equipment revenue and ongoing declines in legacy wireline products. Full-year 2020 consolidated operating revenues were $128.3 billion, down 2.7 percent year over year.

Cash flow from operations totaled $41.8 billion in 2020, a 16.8 percent increase year over year. This growth was a result of the continued performance and strength of the business, lower tax payments due to a one-time cash tax benefit received earlier in the year, and reductions in working capital primarily due to lower wireless volumes.

Full-year 2020 capital expenditures were $18.2 billion. Capital expenditures continue to support the growth in traffic on the company's 4G LTE network and the continued buildout of the company's 5G Ultra Wideband and nationwide networks.

In 2018, Verizon announced a goal to achieve $10 billion in cumulative cash savings by the end of 2021. This initiative has yielded $9.5 billion of cumulative cash savings since the program began and is on track to achieve its target by the end of 2021. The company ended 2020 with free cash flow (non-GAAP) of $23.6 billion, a 32.4 percent increase year over year.

Verizon's unsecured debt balance increased year over year by $19.3 billion to $118.5 billion in 2020, and the company’s net unsecured debt (non-GAAP) decreased by $239 million year over year to $96.3 billion. Verizon's net income in fourth-quarter 2020 was $4.7 billion, and its adjusted non-GAAP earnings before interest debt and amortization (EBITDA) was $11.7 billion. Verizon's net unsecured debt to adjusted non-GAAP EBITDA ratio was twice its targeted range of 1.75 to 2 times. The company remains committed to its capital allocation model.

For 2021, Verizon expects service and other revenue growth of at least 2%, including total wireless service revenue growth of at least 3%, adjusted non-GAAP EPS of $5 to $5.15 and adjusted non-GAAP effective income tax rate in the range of 23 percent to 25 percent.

Capital spending is expected to be in the range of $17.5 billion to $18.5 billion, including the further expansion of 5G Ultra Wideband in new and existing markets, the densification of the wireless network to manage future traffic demands, and the continued deployment of the company's fiber infrastructure.

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