Verizon Announces Fiscal-Year 2021 Fourth Quarter Results
Thursday, January 27, 2022 | Comments

Verizon Communications closed 2021 with another quarter of strong wireless service revenue growth and increased 5G phone adoption, as more than one in three consumer wireless phone customers now have a 5G-capable device.

"2021 was a transformational year for Verizon that will serve as a catalyst for us," said Verizon Chairman and CEO Hans Vestberg. "We delivered on all of our goals in 2021 and made great progress on our five paths of growth, finishing the year with strong operating and financial momentum. As we move into 2022, we have the necessary assets to realize our strategy that we laid out in 2019. We are laser focused on executing our 5G strategy and providing value to our customers, shareholders, employees and society, as 2022 will be the most exciting year yet for Verizon."

For the fourth quarter of 2021, Verizon reported earnings per share (EPS) of $1.11, the same as the fourth quarter 2020. On an adjusted basis, fourth-quarter 2021 EPS, excluding special items, was $1.31, compared with adjusted EPS of $1.21 in fourth quarter of 2020, an 8.3 % increase year over year.

Fourth-quarter 2021 EPS included a net pre-tax loss from special items of approximately $1.2 billion. This included a charge of $2.4 billion for the early extinguishment of debt, a $106 million charge related to severance, a $1.2 billion credit pertaining to annual mark-to-market for pension and other post-employment benefits liabilities, and a net gain of $131 million primarily related to the disposition of an investment. Fourth-quarter 2021 results also included the revenue associated with the acquisition of TracFone, as the deal was completed on November 23. The revenue associated with TracFone in 2021 was approximately $700 million higher than the revenue from TracFone in fourth-quarter 2020.

For full-year 2021, Verizon reported $5.32 in EPS, compared with $4.30 in full-year 2020. On an adjusted basis, excluding special items, 2021 EPS was $5.39, compared with 2020 EPS of $4.90, a 10 % increase year over year.

“Verizon delivered another strong earnings performance this quarter,” said Verizon Chief Financial Officer (CFO) Matt Ellis. "Our financial discipline enabled us to deliver attractive service revenue growth and profitability this quarter as we expanded our portfolio with the TracFone acquisition and saw strong demand for our products and services. In 2021 we delivered on raised adjusted EPS expectations, grew revenue, achieved our $10 billion cost savings goal and funded our C-Band spectrum investment."

Total consolidated operating revenues in fourth-quarter 2021 were $34.1 billion, down 1.8 % from fourth-quarter 2020. Adjusting for the sale of Verizon Media on September 1, operating revenue grew 4.8 % year over year. Strong wireless service revenue growth and wireless equipment revenues were offset by continued declines in legacy wireline products. Full-year 2021 consolidated operating revenues were $133.6 billion, up 4.1 % year over year.

Cashflow from operations totaled $39.5 billion in 2021, a decrease from $41.8 billion year over year. Continued strong performance in the business was offset by higher working capital from device payments receivables and higher cash taxes.

Full-year 2021 capital expenditures were $20.3 billion. Capital expenditures continue to support the growth in traffic on the company's 4G LTE network as the company initiates the first phase of C-band deployment covering more than 95 million people in the U.S. capital expenditures related to C-band were approximately $2.1 billion in 2021. The company ended 2021 with free cashflow of $19.3 billion, a decrease from $23.6 billion at year-end 2020.

Verizon's unsecured debt as of the end of fourth-quarter 2021 increased by $18.2 billion year over year to $136.7 billion but improved by $4.9 billion sequentially from the end of third-quarter 2021. The company's net unsecured debt balance increased year over year by $37.5 billion to $133.7 billion at the end of fourth-quarter 2021 but decreased by $3.7 billion from the end of first-quarter 2021, with its net unsecured debt to adjusted earnings before interest, depreciation and amortization (EBITDA) ratio at approximately 2.8 times at the end of fourth-quarter 2021.

Business exited 2021 with strong momentum in business activity and demand for wireless products. Fourth-quarter 2021 was highlighted by strong phone gross additions in small and medium business and the fourth consecutive quarter of wireless service revenue growth for global enterprise.

Total Verizon business revenues were $7.8 billion in fourth-quarter 2021, down 3% year over year. Wireless revenue growth continues to offset ongoing legacy wireline declines. For full-year 2021, total Verizon Business revenues were $31 billion, an increase of 0.3% from full-year 2020.

Business wireless service revenues were $3.1 billion in fourth-quarter 2021, a 1.5 % increase year over year. Full-year 2021 business wireless service revenues were $12.4 billion, an increase of 4.8% from full-year 2020. Business wireless retail postpaid churn was 1.26 % in fourth-quarter 2021, and wireless retail postpaid phone churn was 1.01%. Business reported 391,000 wireless retail postpaid net additions in fourth-quarter 2021, including 222,000 phone net additions. This was the best quarterly phone net addition performance for business since the onset of the pandemic.

In fourth-quarter 2021, business segment operating income was $796 million, a decrease of 16.2% year over year, and segment operating income margin was 10.2%, a decrease from 11.8% in fourth-quarter 2020. Full-year 2021 segment operating income margin was 11.1%, compared with 12.2% in full-year 2020. Segment EBITDA totaled $1.8 billion in fourth-quarter 2021, a decrease of 7.4% from fourth-quarter 2020. Segment EBITDA margin was 23.5%, a decrease from 24.6% in fourth-quarter 2020, driven by pressure in legacy wireline products. For the full year, segment EBITDA margin was 24.2% in 2021, a decrease from 25.4% in 2020.

For 2022, Verizon expects organic service and other revenue growth of around 3%. On a reported basis, which includes the net impact of the sale of Verizon Media and the company's ownership of TracFone, service and other revenue growth is expected to be in a range of 1.0% and 1.5%.

Reported wireless service revenue growth is expected to be in the range of 9% to 10%. Excluding the impact of the TracFone acquisition, wireless service revenue is expected to grow at least 3 %.

Adjusted EBITDA growth is expected to be in the range of 2% to 3% and adjusted EPS is expected to be from $5.40 to $5.55. The company expects adjusted EBITDA growth in 2022 to be offset by headwinds from non-cash items. Beginning in 2022, the company's adjusted EPS will exclude amortization of acquisition-related intangible assets. In 2021, intangible amortization negatively impacted adjusted EPS by approximately 11 cents. In 2022, the company anticipates the impact to be approximately 17 cents to 19 cents.

Capital spending, excluding C-band, is expected to be in the range of $16.5 billion to $17.5 billion, a decrease from $18.2 billion in 2021, as the company has started its progress towards lower capital intensity. Additional expenditures related to the deployment of the company's C-band 5G network are expected to be in the range of $5 billion to $6 billion as the company continues to build out the initial markets and begins preparations for deploying Phase 2 spectrum.

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