Verizon Announces Third-Quarter Financial Results
Friday, October 21, 2022 | Comments

Verizon Communications reported its third-quarter 2022 results.

"We took a number of actions in the third quarter that helped drive improved operational and financial performance, but we know there's still more work to be done," said Verizon Chairman and CEO Hans Vestberg. "The pricing actions we took earlier this year, as well as our new cost savings program, show that we are being deliberate and strategic in our decisions to strengthen our business. At the same time, we are focused on executing our 5G strategy, as we are covering every major market and accelerating our C-Band network build. We are on track to reach 200 million POPs within first-quarter 2023."

For third-quarter 2022, Verizon reported earnings per share (EPS) of $1.17, compared with $1.55 in third-quarter 2021. On an adjusted basis, excluding special items, EPS was $1.32 in third-quarter 2022, compared with adjusted EPS of $1.42 in third-quarter 2021. Third-quarter 2022 EPS included a pre-tax loss from special items of approximately $881 million. This included a net pre-tax charge of approximately $645 million primarily related to a mark-to-market adjustment for pension liabilities, and the impacts of amortization of intangible assets related to TracFone and other acquisitions of $236 million.

"The actions we have taken in the previous two quarters are gaining traction in the marketplace," said Verizon Chief Financial Officer (CFO) Matt Ellis. “We expect that we will be able to build on this momentum into the future. Our financial discipline, combined with our healthy balance sheet, enabled us to increase our dividend for a 16th consecutive year, which is the longest current streak of dividend increases in the U.S. telecom industry."

Total consolidated operating revenue in third-quarter 2022 of $34.2 billion, up 4 percent from third-quarter 2021. Wireless service revenue growth and higher wireless equipment revenue more than offset wireline declines and the net impact of merger and acquisition (M&A) activity in 2021.

Total wireless service revenue growth of 10 percent year over year, primarily driven by the company's ownership of TracFone, continued effectiveness in its premium Unlimited strategy and ongoing strength in business volumes.

Verizon is focused on continuously improving operating efficiencies and mitigating inflation impacts and has started a new cost savings program that is expected to provide a reduction in annual costs of between $2 billion and $3 billion by 2025.

Net income of $5 billion, a decrease of 23.3 percent from third-quarter 2021, and adjusted EBITDA of $12.2 billion, a decline of 0.4 percent year over year. Year-to-date cash flow from operating activities totaled $28.2 billion, compared with $31.2 billion in 2021. The reduction was primarily due to working capital impacts from higher device activations, and increased inventory levels. Capital expenditures year-to-date were $15.8 billion, including C-Band spending of $4.5 billion. Free cash flow year to date was $12.4 billion.

Verizon's unsecured debt as of the end of third-quarter 2022 decreased by $1.1 billion sequentially to $131.4 billion. The company's net unsecured debt1 balance decreased sequentially by $1.3 billion to $129.3 billion, and its net unsecured debt to adjusted EBITDA ratio1 at quarter-end was approximately 2.7 times.

Verizon continues to expect reported wireless service revenue growth of 8.5 to 9.5 percent, reported service and other revenue growth of minus 1 percent to flat, adjusted EBITDA1 growth of minus 1.5 percent to flat, adjusted EPS of $5.10 to $5.25. and adjusted effective income tax rate in the range of 23 percent to 25 percent.

Capital spending, excluding C-Band, in the range of $16.5 billion to $17.5 billion. 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.

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