VZ
$49.67
Verizon Communications
$1.01
2.08%
Earnings Details
1st Quarter March 2018
Tuesday, April 24, 2018 7:25:00 AM
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Summary

Verizon Communications Beats

Verizon Communications (VZ) reported 1st Quarter March 2018 earnings of $1.17 per share on revenue of $31.8 billion. The consensus earnings estimate was $1.11 per share on revenue of $31.2 billion. The Earnings Whisper number was $1.11 per share. Revenue grew 6.6% on a year-over-year basis.

Verizon Communications Inc is a provider of communications, information and entertainment products and services to consumers, businesses and governmental agencies. Its two segments are Wireless and Wireline.

Results
Reported Earnings
$1.17
Earnings Whisper
$1.11
Consensus Estimate
$1.11
Reported Revenue
$31.77 Bil
Revenue Estimate
$31.22 Bil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Verizon begins 2018 with strong momentum

1Q 2018 highlights

Consolidated:

  • $1.11 in earnings per share (EPS), compared with 84 cents in 1Q 2017; adjusted EPS (non-GAAP), excluding special items, of $1.17, compared with 95 cents in 1Q 2017.
  • Total consolidated revenue growth of 6.6 percent, or 3.2 percent on an adjusted basis (non-GAAP).

Wireless:

  • 260,000 retail postpaid net additions, including 220,000 postpaid smartphone net adds.
  • Strong customer loyalty with 0.80 percent retail postpaid phone churn, the fourth consecutive period of customer retention at 0.80 percent or better.
  • Total revenue growth of 4.7 percent, excluding the impact of the revenue recognition standard adopted on January 1, 2018.

Wireline:

  • 66,000 Fios Internet net adds.
  • Total Fios revenue growth of 1.9 percent, excluding the impact of the revenue recognition standard.

NEW YORK, April 24, 2018 (GLOBE NEWSWIRE) -- Verizon Communications Inc. (NYSE:VZ) (Nasdaq:VZ) today reported first-quarter 2018 results highlighted by consolidated revenue growth and strong Verizon Wireless customer loyalty.

“We began 2018 with strong momentum, and we expect it to continue throughout the year,” said Chairman and CEO Lowell McAdam. “We are positioning Verizon for long-term growth while executing our strategy today and leading the way for the next cycle of growth for the industry.”

For first-quarter 2018, Verizon reported EPS of $1.11, compared with 84 cents in first-quarter 2017. On an adjusted basis (non-GAAP), first-quarter 2018 EPS was $1.17, compared with 95 cents in first-quarter 2017. Verizon’s first-quarter 2018 EPS included approximately 21 cents due to tax reform and accounting changes for revenue recognition.

First-quarter 2018 earnings also included a pre-tax charge of about $249 million related to early debt extinguishment and approximately $107 million of acquisition and integration costs related primarily to Oath. The net impact of these items, after tax, was approximately 6 cents per share.

Consolidated results

Total consolidated operating revenues in first-quarter 2018 were $31.8 billion, up 6.6 percent from first-quarter 2017. On a comparable basis excluding the impact of Oath and divested businesses and the impact of the revenue recognition standard (non-GAAP), consolidated revenues were $29.9 billion, which grew approximately 3.2 percent. The primary driver was solid performance in the wireless business with improved service revenue results.  

Net income was $4.7 billion in first-quarter 2018. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled approximately $11.7 billion. Consolidated operating income margin was 23.1 percent. Consolidated EBITDA margin (non-GAAP) was 36.7 percent in first-quarter 2018, compared with 37.0 percent in first-quarter 2017. Adjusted EBITDA margin (non-GAAP) in first-quarter 2018 was 37.1 percent. Excluding the impact of the revenue recognition standard, adjusted EBITDA margin (non-GAAP) was 35.8 percent, which was down 70 basis points year over year due to higher wireless equipment revenue and the inclusion of Yahoo in the year’s results. Adjusted EBITDA, excluding the impact of the revenue recognition standard, improved by $0.5 billion year over year due to steady improvement in operating efficiencies and increased penetration across the company’s high-quality customer base.

Cash flow from operations totaled $6.6 billion during first-quarter 2018, up $5.3 billion year over year. Total capital expenditures in the first quarter were $4.6 billion.

As part of its commitment to strengthening the balance sheet and providing financial flexibility to grow the business, Verizon made a discretionary contribution of $1.0 billion to improve the funded status of its pension plans. As a result, Verizon does not project to have any mandatory pension contributions until approximately 2026.

Last year Verizon announced a goal to achieve $10 billion in cumulative cash savings from the business over the next four years. The company’s business excellence initiative, which includes implementing zero-based budgeting, yielded positive results in the first quarter, realizing approximately $200 million of savings so far. The program is on track to deliver against Verizon’s goals over the four-year period.

In Verizon’s media business, Oath, gross revenues, excluding the impact of the revenue recognition standard, decreased sequentially, as expected, about 13 percent from fourth-quarter 2017, to $1.9 billion, due to seasonally lower display advertising performance. The integration of the Oath assets is accelerating Verizon’s mobile-first media strategy and positioning it for global reach and future growth from premium content distribution and programmatic advertising capabilities across key verticals.

In the telematics business, as part of the ongoing integration of the Fleetmatics and Telogis acquisitions, Verizon has created the new Verizon Connect organization. Total Verizon Connect revenues, excluding the impact of the revenue recognition standard, were $234 million in first-quarter 2018. IoT (Internet of Things) revenues, including Verizon Connect, increased approximately 13 percent year over year.

Wireless results

  • Total revenues, excluding the impact of the revenue recognition standard, were $21.9 billion in first-quarter 2018, an increase of 4.7 percent compared with first-quarter 2017.

  • Service revenues for the quarter on a reported basis were down 2.4 percent. Excluding the impact from the revenue recognition standard, service revenues were flat. Service revenues improved year over year throughout the quarter, with results turning positive in the month of March when excluding the impact from the revenue recognition standard.

  • Verizon now has 81 percent of its postpaid phone base on unsubsidized plans, compared with 72 percent for the same period last year.

  • Verizon reported a net increase of 260,000 retail postpaid connections in first-quarter 2018, consisting of net phone losses of 24,000 and tablet losses of 75,000, offset by 359,000 other connected devices gains, primarily wearables. Postpaid smartphone net additions for the quarter were 220,000.

  • Total retail postpaid churn was 1.04 percent in first-quarter 2018, a year-over-year improvement. Retail postpaid phone churn of 0.80 percent was the fourth consecutive quarter of retail postpaid phone churn of 0.80 percent or better.

  • Segment operating income in first-quarter 2018 was $8.0 billion, and segment operating income margin on total revenues was 36.8 percent. Segment EBITDA (non-GAAP) totaled $10.5 billion in first-quarter 2018. Segment EBITDA margin on total revenues (non-GAAP) was 47.8 percent, compared with 45.1 percent in first-quarter 2017. Excluding the impact of the revenue recognition standard, segment EBITDA margin was 46.3 percent, an improvement of 120 basis points year over year.

Wireline results

  • Total wireline revenues, excluding the impact of the revenue recognition standard, decreased 1.8 percent year over year in first-quarter 2018. Total Fios revenues, excluding the impact of the revenue recognition standard, grew 1.9 percent year over year, driven by growing demand for high-quality broadband service.

  • In first-quarter 2018, Verizon added a net of 66,000 Fios Internet connections and lost 22,000 Fios Video connections, indicative of the continued cord-cutting trend regarding traditional linear video bundles.

  • Wireline operating income was $69 million in first-quarter 2018, and segment operating income margin was 0.9 percent. Segment EBITDA (non-GAAP) was $1.6 billion in first-quarter 2018. Segment EBITDA margin (non-GAAP) was 21.2 percent in first-quarter 2018, compared with 21.9 percent in first-quarter 2017. Excluding the impact of the revenue recognition standard, segment EBITDA margin was 20.4 percent.

Outlook and guidance

Verizon expects the following:

  • Full-year consolidated revenue growth at low single-digit percentage rates on a GAAP reported basis. Verizon expects service revenue growth on a GAAP reported basis to turn positive by the end of 2018.

  • Low single-digit percentage growth in adjusted EPS in 2018 before the impact of tax reform and the revenue recognition standard.

  • Capital spending for 2018 will be in the range of $17.0 billion to $17.8 billion, including the commercial launch of 5G.

  • The expected savings from tax reform will generate a net $3.5 billion to $4 billion uplift to cash flow from operations in 2018. This is expected to yield a 55 to 65 cent increase in 2018 EPS, net of impacts from employee and Verizon Foundation initiatives. The resulting 2018 effective tax rate is projected to be in the range of 24 to 26 percent. 

NOTE: See the accompanying schedules and www.verizon.com/about/investors for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.

Verizon Communications Inc. (NYSE:VZ) (Nasdaq:VZ), headquartered in New York City, generated $126 billion in 2017 revenues. The company operates America’s most reliable wireless network and the nation’s premier all-fiber network, and delivers integrated solutions to businesses worldwide. Its Oath subsidiary reaches about one billion people around the world with a dynamic house of media and technology brands.  

VERIZON’S ONLINE MEDIA CENTER: News releases, stories, media contacts and other resources are available at www.verizon.com/about/news/. News releases are also available through an RSS feed. To subscribe, visit www.verizon.com/about/rss-feeds/.

Forward-looking statements
In this communication we have made forward-looking statements. These statements are based on our estimates and assumptions and are subject to risks and uncertainties. Forward-looking statements include the information concerning our possible or assumed future results of operations. Forward-looking statements also include those preceded or followed by the words “anticipates,” “believes,” “estimates,” “expects,” “hopes” or similar expressions. For those statements, we claim the protection of the safe harbor for forward-looking statements contained in the Private Securities Litigation Reform Act of 1995. We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements. The following important factors, along with those discussed in our filings with the Securities and Exchange Commission (the “SEC”), could affect future results and could cause those results to differ materially from those expressed in the forward-looking statements: adverse conditions in the U.S. and international economies; the effects of competition in the markets in which we operate; material changes in technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks; breaches of network or information technology security, natural disasters, terrorist attacks or acts of war or significant litigation and any resulting financial impact not covered by insurance; our high level of indebtedness; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets affecting the cost, including interest rates, and/or availability of further financing; material adverse changes in labor matters, including labor negotiations, and any resulting financial and/or operational impact; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or treaties, or in their interpretation; changes in accounting assumptions that regulatory agencies, including the SEC, may require or that result from changes in the accounting rules or their application, which could result in an impact on earnings; the inability to implement our business strategies; and the inability to realize the expected benefits of strategic transactions.

 

 
Verizon Communications Inc.?
Condensed Consolidated Statements of Income
  
     
  (dollars in millions, except per share amounts)
     
  3 Mos. Ended 3 Mos. Ended   
Unaudited3/31/18 3/31/17 % Change 
     
Operating Revenues   
Service revenues and other$  26,732 $  26,050  2.6 
Wireless equipment revenues  5,040   3,764  33.9 
Total Operating Revenues  31,772   29,814  6.6 
     
Operating Expenses   
Cost of services  7,946   7,239  9.8 
Wireless cost of equipment  5,309   4,808  10.4 
Selling, general and administrative expense  6,844   6,746  1.5 
Depreciation and amortization expense  4,324   4,059  6.5 
Total Operating Expenses  24,423   22,852  6.9 
     
Operating Income  7,349   6,962  5.6 
Equity in losses of unconsolidated businesses  (19)  (21) 9.5 
Other expense, net  (75)  (627) 88.0 
Interest expense  (1,201)  (1,132) (6.1)
Income Before Provision For Income Taxes  6,054   5,182  16.8 
Provision for income taxes  (1,388)  (1,629) (14.8)
Net Income$  4,666 $  3,553  31.3 
     
Net income attributable to noncontrolling interests$  121 $  103  17.5 
Net income attributable to Verizon  4,545   3,450  31.7 
Net Income$  4,666 $  3,553  31.3 
     
Basic Earnings Per Common Share   
Net income attributable to Verizon$  1.11 $  0.85  30.6 
    
Weighted average number of common shares (in millions)  4,104    4,082   
    
Diluted Earnings Per Common Share (1)   
Net income attributable to Verizon$  1.11 $  0.84  32.1 
    
Weighted average number of common   
 shares-assuming dilution (in millions)  4,107    4,087   
     
     
Footnotes:   
(1)  Diluted Earnings per Common Share includes the dilutive effect of shares issuable under our stock-based compensation plans, which represents the only potential dilution. 
     
 Certain amounts have been reclassified to conform to the current period presentation. 
     

 

   
Verizon Communications Inc.  
Condensed Consolidated Balance Sheets  
      
      
     (dollars in millions) 
      
Unaudited3/31/18  12/31/17  $ Change 
      
Assets     
Current assets     
Cash and cash equivalents$  1,923  $  2,079  $  (156)
Accounts receivable, net  22,595    23,493    (898)
Inventories  1,285    1,034    251 
Prepaid expenses and other  5,222    3,307    1,915 
Total current assets  31,025    29,913    1,112 
Property, plant and equipment  246,877    246,498    379 
Less accumulated depreciation  158,955    157,930    1,025 
Property, plant and equipment, net  87,922    88,568    (646)
Investments in unconsolidated businesses  994    1,039    (45)
Wireless licenses  93,677    88,417    5,260 
Goodwill  29,121    29,172    (51)
Other intangible assets, net  10,014    10,247    (233)
Other assets  11,763    9,787    1,976 
Total assets$  264,516  $  257,143  $  7,373 
      
Liabilities and Equity     
Current liabilities     
Debt maturing within one year$  6,323  $  3,453  $  2,870 
Accounts payable and accrued liabilities  17,052    21,232    (4,180)
Other current liabilities  8,240    8,352    (112)
Total current liabilities  31,615    33,037    (1,422)
Long-term debt  112,734    113,642    (908)
Employee benefit obligations  20,689    22,112    (1,423)
Deferred income taxes  34,414    31,232    3,182 
Other liabilities  12,719    12,433    286 
Total long-term liabilities  180,556    179,419    1,137 
      
Equity     
Common stock  429    424    5 
Additional paid in capital  13,437    11,101    2,336 
Retained earnings  39,974    35,635    4,339 
Accumulated other comprehensive income  3,705    2,659    1,046 
Common stock in treasury, at cost  (6,992)   (7,139)   147 
Deferred compensation – employee stock ownership plans and other  228    416    (188)
Noncontrolling interests  1,564    1,591    (27)
Total equity  52,345    44,687    7,658 
Total liabilities and equity$  264,516  $  257,143  $  7,373 
      
      
Verizon - Selected Financial and Operating Statistics  
      
Unaudited3/31/18  12/31/17   
      
Total debt (in millions)$  119,057  $  117,095   
Net debt (in millions)$  117,134  $  115,016   
Net debt / Consolidated adjusted EBITDA(1) 2.6x   2.6x   
Common shares outstanding end of period (in millions)  4,132    4,079   
Total employees (‘000)  154.7    155.4   
Quarterly cash dividends declared per common share$  0.59  $  0.59   
      
Footnotes:     
(1)

Consolidated adjusted EBITDA excludes the effects of special items and operating results of divested businesses, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
      

 

      
Verizon Communications Inc.     
Condensed Consolidated Statements of Cash Flows  
       
       
    (dollars in millions)
       
  3 Mos. Ended  3 Mos. Ended   
Unaudited3/31/18  3/31/17  $ Change 
       
Cash Flows from Operating Activities     
Net Income$  4,666  $  3,553  $  1,113 
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization expense  4,324    4,059    265 
Employee retirement benefits  (151)   (111)   (40)
Deferred income taxes  702    2,025    (1,323)
Provision for uncollectible accounts  239    330    (91)
Equity in losses of unconsolidated businesses, net of dividends received  30    28    2 
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses  (2,033)   (4,998)   2,965 
Discretionary contributions to qualified pension plans  (1,000)   (3,411)   2,411 
Other, net  (129)   (99)   (30)
Net cash provided by operating activities  6,648    1,376    5,272 
       
Cash Flows from Investing Activities     
Capital expenditures (including capitalized software)  (4,552)   (3,067)   (1,485)
Acquisitions of businesses, net of cash acquired  (32)   (1,746)   1,714 
Acquisitions of wireless licenses  (970)   (196)   (774)
Other, net  269    459    (190)
Net cash used in investing activities  (5,285)   (4,550)   (735)
       
Cash Flows from Financing Activities     
Proceeds from long-term borrowings  1,956    13,054    (11,098)
Proceeds from asset-backed long-term borrowings  1,178    1,283    (105)
Repayments of long-term borrowings and capital lease obligations  (2,984)   (5,592)   2,608 
Increase (decrease) in short-term obligations, excluding current maturities  1,222    (52)   1,274 
Dividends paid  (2,407)   (2,354)   (53)
Other, net  (281)   (1,674)   1,393 
Net cash provided by (used in) financing activities  (1,316)   4,665    (5,981)
       
Increase in cash, cash equivalents and restricted cash  47    1,491    (1,444)
Cash, cash equivalents and restricted cash, beginning of period  2,888    3,177    (289)
Cash, cash equivalents and restricted cash, end of period$  2,935  $  4,668  $  (1,733)
       
Footnotes:     
Certain amounts have been reclassified to conform to the current period presentation.
       

 

    
Verizon Communications Inc.   
Wireless - Selected Financial Results   
     
     
   (dollars in millions)
     
  3 Mos. Ended 3 Mos. Ended   
Unaudited3/31/18 3/31/17 % Change 
     
Operating Revenues   
Service$  15,402 $  15,778  (2.4)
Equipment  5,040   3,764  33.9 
Other  1,458   1,336  9.1 
Total Operating Revenues  21,900   20,878  4.9 
     
Operating Expenses   
Cost of services  2,215   2,187  1.3 
Cost of equipment  5,309   4,808  10.4 
Selling, general and administrative expense  3,899   4,469  (12.8)
Depreciation and amortization expense  2,428   2,338  3.8 
Total Operating Expenses  13,851   13,802  0.4 
     
Operating Income$  8,049 $  7,076  13.8 
Operating Income Margin 36.8% 33.9% 
     
Segment EBITDA$  10,477 $  9,414  11.3 
Segment EBITDA Margin 47.8% 45.1% 
     
     
Footnotes:   
 The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
     
 Intersegment transactions have not been eliminated.   
     
 Certain amounts have been reclassified to conform to the current period presentation.
     

 

    
Verizon Communications Inc.   
Wireless - Selected Operating Statistics 
     
     
Unaudited3/31/18 3/31/17 % Change 
     
Connections (‘000)   
Retail postpaid   111,114    108,483  2.4 
Retail prepaid   5,068    5,430  (6.7)
Total retail   116,182    113,913  2.0 
     
     
  3 Mos. Ended 3 Mos. Ended  
Unaudited3/31/18 3/31/17 % Change 
     
Net Add Detail (‘000) (1)   
Retail postpaid   260    (307)* 
Retail prepaid   (335)   (17)* 
Total retail   (75)   (324) 76.9 
     
     
Account Statistics   
Retail postpaid accounts (‘000) (2)   35,333    35,270  0.2 
Retail postpaid connections per account (2)   3.14    3.08  1.9 
Retail postpaid ARPA (3) (5)$  131.71 $  136.98  (3.8)
Retail postpaid I-ARPA (4) (5)$  164.72 $  166.01  (0.8)
     
Churn Detail   
Retail postpaid 1.04% 1.15% 
Retail 1.28% 1.39% 
     
Retail Postpaid Connection Statistics   
Total smartphone postpaid phone base (2) 90.7% 88.1% 
Total Internet postpaid base (2) 19.2% 18.3% 
    
Other Operating Statistics   
Capital expenditures (in millions)$  2,367 $  1,831  29.3 
     
     
Footnotes:   
(1)Connection net additions exclude acquisitions and adjustments.
     
(2)Statistics presented as of end of period.   
     
(3)Retail postpaid ARPA - average service revenue per account from retail postpaid accounts.
     
(4) Retail postpaid I-ARPA - average service revenue per account from retail postpaid account plus recurring device installment billings.
     
(5)


ARPA and I-ARPA for periods beginning after January 1, 2018 reflect the adoption of Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)”.  ARPA and I-ARPA for periods ending prior to January 1, 2018 were calculated based on the guidance per ASC Topic 605, "Revenue Recognition".  Accordingly, amounts are not calculated on a comparative basis.
     
 The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
     
 Intersegment transactions have not been eliminated.   
     
*Not meaningful   
     

 

    
Verizon Communications Inc.   
Wireline - Selected Financial Results   
    
    
  (dollars in millions) 
    
 3 Mos. Ended 3 Mos. Ended  
Unaudited3/31/18 3/31/17 % Change 
    
Operating Revenues   
Consumer Markets$  3,150 $  3,201  (1.6)
Enterprise Solutions  2,240   2,311  (3.1)
Partner Solutions  1,228   1,229  (0.1)
Business Markets  871   879  (0.9)
Other  68   62  9.7 
Total Operating Revenues  7,557   7,682  (1.6)
    
Operating Expenses   
Cost of services  4,475   4,419  1.3 
Selling, general and administrative expense  1,479   1,582  (6.5)
Depreciation and amortization expense  1,534   1,475  4.0 
Total Operating Expenses  7,488   7,476  0.2 
    
Operating Income$  69 $  206  (66.5)
Operating Income Margin 0.9% 2.7% 
    
Segment EBITDA$  1,603 $  1,681  (4.6)
Segment EBITDA Margin 21.2% 21.9% 
    
    
Footnotes:   
The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
    
Intersegment transactions have not been eliminated.   
    

 

    
Verizon Communications Inc.   
Wireline - Selected Operating Statistics 
     
     
Unaudited3/31/18 3/31/17 % Change 
     
Connections (‘000)   
Fios video connections   4,597    4,681  (1.8)
Fios Internet connections   5,916    5,688  4.0 
Fios digital voice residence connections   3,891    3,887  0.1 
Fios digital connections   14,404    14,256  1.0 
High-speed Internet (HSI) connections   1,050    1,323  (20.6)
Total broadband connections   6,966    7,011  (0.6)
Total voice connections   12,555    13,634  (7.9)
     
     
  3 Mos. Ended 3 Mos. Ended  
Unaudited3/31/18 3/31/17 % Change 
     
Net Add Detail (‘000)   
Fios video connections   (22)   (13) (69.2)
Fios Internet connections   66    35  88.6 
Fios digital voice residence connections   (14)   (8) (75.0)
Fios digital connections   30    14 * 
High-speed Internet (HSI) connections   (59)   (62) 4.8 
Total broadband connections   7    (27)* 
Total voice connections   (266)   (305) 12.8 
     
Revenue Statistics   
Fios revenues (in millions)$  2,951 $  2,891  2.1 
     
Other Operating Statistics   
Capital expenditures (in millions)$  1,673 $  960  74.3 
Wireline employees (‘000)   57.2    59.4  
     
     
Footnotes:   
 The segment financial results and metrics above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
     
 Intersegment transactions have not been eliminated.   
     
*Not meaningful   
     

 

             
Verizon Communications Inc.            
Supplemental Information - Impacts from the adoption of Topic 606
 
We adopted Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)” on January 1, 2018, using the modified retrospective application. This method does not impact the prior periods, which continue to reflect the accounting treatment prior to the adoption of Topic 606. As a result, for items that were affected by our adoption of Topic 606, financial results of periods prior to January 1, 2018 are not comparable to the current period financial results.  To provide comparability to our results, we provide the following supplemental schedule which contains certain financial information on a pre adoption of Topic 606 basis.
  
             
Consolidated(3)            
  3/31/2018 3/31/2017 YoY
Unaudited As reported Balances without adoption of Topic 606 Adjustments As reported  $ Change % Change
             
Operating Revenues            
Service revenues and other $  26,732 $  27,133 $  (401) $  26,050 $  1,083   4.2 
Wireless equipment revenues   5,040   4,594   446    3,764   830   22.1 
Total Operating Revenues   31,772   31,727   45    29,814   1,913   6.4 
             
Operating Expenses            
Cost of services   7,946   7,956   (10)   7,239   717   9.9 
Wireless cost of equipment   5,309   5,287   22    4,808   479   10.0 
Selling, general and administrative expense   6,844   7,234   (390)   6,746   488   7.2 
Depreciation and amortization expense   4,324   4,324   —    4,059   265   6.5 
Total Operating Expenses   24,423   24,801   (378)   22,852   1,949   8.5 
             
Operating Income $  7,349 $  6,926 $  423  $  6,962 $  (36)  (0.5)
 
 
Wireless(1)(2)(3) 
  3/31/2018 3/31/2017 YoY
Unaudited As reported Balances without adoption of Topic 606 Adjustments As reported $ Change % Change
             
Operating Revenues            
Service $  15,402 $  15,782 $  (380) $  15,778 $  4  0.0 
Equipment   5,040   4,594   446    3,764   830    22.1 
Other   1,458   1,489   (31)   1,336   153    11.5 
Total Operating Revenues   21,900   21,865   35    20,878   987    4.7 
             
Operating Expenses            
Cost of services   2,215   2,215   —    2,187   28    1.3 
Cost of equipment   5,309   5,287   22    4,808   479    10.0 
Selling, general and administrative expense   3,899   4,248   (349)   4,469   (221)   (4.9)
Depreciation and amortization expense   2,428   2,428   —    2,338   90    3.8 
Total Operating Expenses   13,851   14,178   (327)   13,802   376    2.7 
             
Operating Income $  8,049 $  7,687 $  362  $  7,076 $  611    8.6 
 
 
Wireline(1)(2) 
  3/31/2018 3/31/2017 YoY
Unaudited As reported Balances without adoption of Topic 606 Adjustments As reported $ Change % Change
             
Operating Revenues            
Consumer Markets $  3,150 $  3,146 $  4  $  3,201 $  (55)  (1.7)
Enterprise Solutions   2,240   2,240   —    2,311   (71)  (3.1)
Partner Solutions   1,228   1,228   —    1,229   (1)  (0.1)
Business Markets   871   870   1    879   (9)  (1.0)
Other   68   56   12    62   (6)  (9.7)
Total Operating Revenues   7,557   7,540   17    7,682   (142)  (1.8)
             
Operating Expenses            
Cost of services   4,475   4,485   (10)   4,419   66   1.5 
Selling, general and administrative expense   1,479   1,516   (37)   1,582   (66)  (4.2)
Depreciation and amortization expense   1,534   1,534   —    1,475   59   4.0 
Total Operating Expenses   7,488   7,535   (47)   7,476   59   0.8 
             
Operating Income $  69 $  5 $  64  $  206 $  (201)  (97.6)
 
 
Fios Revenues 
  3/31/2018 3/31/2017 YoY
Unaudited As reported Balances without adoption of Topic 606 Adjustments As reported $ Change % Change
             
Fios Revenues $  2,951 $  2,945 $  6  $  2,891 $  54   1.9 
  
 
Footnotes:            
             
(1)  The financial results above are adjusted to exclude the effects of special items, as the Company’s chief operating decision maker excludes these items in assessing business unit performance.
             
(2)  Intersegment transactions have not been eliminated.
             
(3)  Certain amounts have been reclassified to conform to the current period presentation.
 

 

    
Verizon Communications Inc.   
Non-GAAP Reconciliations - Consolidated Verizon   
    
    
Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard 
  (dollars in millions)
  3 Mos. Ended 3 Mos. Ended
Unaudited 3/31/18 3/31/17
    
Consolidated Operating Revenues $  31,772 $  29,814
Less impacts of adoption of Topic 606   45   —
Less operating revenues from divested businesses   —   194
Less Oath revenues   1,875   703
Consolidated Operating Revenues Excluding Oath, Divested Businesses and the Revenue Recognition Standard$  29,852 $  28,917
Year over year change  3.2% 
    

 

      
Verizon Communications Inc.     
Non-GAAP Reconciliations - Consolidated Verizon   
      
      
Consolidated EBITDA, Consolidated EBITDA Margin, Consolidated Adjusted EBITDA,
Consolidated Adjusted EBITDA Margin and Consolidated Adjusted EBITDA Excluding
Operating Results from Divested Businesses
        (dollars in millions) 
 3 Mos. 3 Mos. 3 Mos. 3 Mos. 3 Mos. 
 Ended Ended Ended Ended Ended 
Unaudited3/31/18 12/31/17 9/30/17 6/30/17 3/31/17 
      
Consolidated Net Income$  4,666 $  18,783 $  3,736 $  4,478 $  3,553 
  Add/(subtract):     
Provision for income taxes  1,388   (15,849)  1,775   2,489   1,629 
Interest expense  1,201   1,219   1,164   1,218   1,132 
Other (income) expense, net  75   1,302   291   (199)  627 
Equity in losses of unconsolidated businesses  19   6   22   28   21 
Operating Income  7,349   5,461   6,988   8,014   6,962 
Add Depreciation and amortization expense  4,324   4,456   4,272   4,167   4,059 
Consolidated EBITDA  11,673   9,917   11,260   12,181   11,021 
      
  Add/subtract special items (before tax):     
Severance(2)  —   302   —   195   — 
Product realignment  —   463   —   —   — 
Gain on spectrum license transactions  —   (144)  —   —   (126)
Net gain on sale of divested businesses  —   —   —   (1,774)  — 
Acquisition and integration related costs(1)(2)  105   154   166   559   — 
   105   775   166   (1,020)  (126)
Consolidated Adjusted EBITDA   11,778    10,692    11,426    11,161    10,895 
Operating Results from divested businesses(1)  —   —   (17)  (50)  (104)
Consolidated Adjusted EBITDA Excluding Operating Results From Divested Businesses$  11,778 $  10,692 $  11,409 $  11,111 $  10,791 
Consolidated Operating Revenues - Quarter to Date$  31,772    $  29,814 
Consolidated Operating Income Margin - Quarter to Date 23.1%    
Consolidated EBITDA Margin - Quarter to Date 36.7%    37.0%
Consolidated Adjusted EBITDA Margin - Quarter to Date 37.1%    36.5%
      
(1)  Excludes depreciation and amortization expense.    
      
(2)  Certain amounts have been reclassified to conform to the current period presentation.
      

 

         
Verizon Communications Inc.        
Non-GAAP Reconciliations - Consolidated Verizon    
         
         
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio     
       (dollars in millions) 
Unaudited      3/31/18 12/31/17 
         
Net Debt        
Debt maturing within one year      $  6,323 $  3,453 
Long-term debt        112,734   113,642 
Total Debt        119,057   117,095 
Less Cash and cash equivalents        1,923   2,079 
Net Debt      $  117,134 $  115,016 
Net Debt to Consolidated Adjusted EBITDA Ratio      2.6x 2.6x 
         
         
Adjusted Earnings per Common Share (Adjusted EPS)(1)    
    3 Mos. Ended   3 Mos. Ended 
Unaudited   3/31/18   3/31/17 
 Pre-taxTaxAfter-Tax Pre-taxTaxAfter-Tax 
EPS   $  1.11   $  0.84 
Early debt redemption costs   249   (65)   184   0.04  848   (336)  512    0.13 
Acquisition and integration related costs   107   (25)   82   0.02  —   —   —   — 
Gain on spectrum license transactions  —  —   —  —  (126)  49   (77)   (0.02)
 $  356$  (90)$  266   0.06$  722 $  (287)$  435    0.11 
Adjusted EPS   $  1.17   $  0.95 
         
(1)  Adjusted EPS may not add due to rounding.        
         

 

    
Verizon Communications Inc.   
Non-GAAP Reconciliations - Segments   
    
    
Segment EBITDA and Segment EBITDA Margin   
    
Wireless(dollars in millions) 
 3 Mos. Ended  3 Mos. Ended 
Unaudited3/31/18  3/31/17 
    
Operating Income$  8,049  $  7,076 
Add Depreciation and amortization expense  2,428    2,338 
Segment EBITDA$  10,477  $  9,414 
    
Total operating revenues$  21,900  $  20,878 
Operating Income Margin 36.8%  33.9%
Segment EBITDA Margin 47.8%  45.1%
    
    
Wireline(dollars in millions) 
 3 Mos. Ended  3 Mos. Ended 
Unaudited3/31/18  3/31/17 
    
Operating Income$  69  $  206 
Add Depreciation and amortization expense  1,534    1,475 
Segment EBITDA$  1,603  $  1,681 
    
Total operating revenues$  7,557  $  7,682 
Operating Income Margin 0.9%  2.7%
Segment EBITDA Margin 21.2%  21.9%
    

 

   
Verizon Communications Inc.  
EBITDA excluding impacts from the adoption of Topic 606
   
   
Consolidated - Excluding Impacts From the Adoption of Topic 606 
 (dollars in millions) 
 3 Months 3 Months 
 Ended Ended 
Unaudited3/31/18 3/31/17 
   
   
Consolidated Net Income$  4,666 $  3,553 
  Add/(subtract):  
Provision for income taxes  1,388   1,629 
Interest expense  1,201   1,132 
Other (income) expense, net  75   627 
Equity in losses of unconsolidated businesses  19   21 
Operating Income  7,349   6,962 
Add Depreciation and amortization expense  4,324   4,059 
Consolidated EBITDA   11,673    11,021 
   
  Add/subtract special items (before tax):  
Gain on spectrum license transactions  —   (126)
Acquisition and integration related costs  105   — 
   105   (126)
   
Consolidated Adjusted EBITDA   11,778    10,895 
Less Impacts from the Adoption of Topic 606 to Operating Income  423   — 
Consolidated Adjusted EBITDA excluding the impacts from the adoption of Topic 606$  11,355 $  10,895 
Total operating revenues(1)$  31,727 $  29,814 
Consolidated Adjusted EBITDA Margin(1) 35.8% 36.5%
Year over year increase to consolidated adjusted EBITDA$  460  
Year over year change in consolidated adjusted EBITDA margin (70) bps   
   
   
Wireless - Excluding Impacts From the Adoption of Topic 606  
 (dollars in millions) 
 3 Months 3 Months 
 Ended Ended 
Unaudited3/31/18 3/31/17 
   
   
Operating Income(1)$  7,687 $  7,076 
Add Depreciation and amortization expense  2,428   2,338 
Segment EBITDA(1)$  10,115 $  9,414 
Total operating revenues(1)$  21,865 $  20,878 
Segment EBITDA Margin(1) 46.3% 45.1%
Year over year change in segment EBITDA margin 120 bps   
   
   
Wireline - Excluding Impacts From the Adoption of Topic 606  
   
 (dollars in millions)  
 3 Months  
 Ended  
Unaudited3/31/18  
   
   
Operating Income(1)$  5  
Add Depreciation and amortization expense  1,534  
Segment EBITDA(1)$  1,539  
Total operating revenues(1)$  7,540  
Segment EBITDA Margin(1) 20.4% 
   
   
   
(1)  Amounts for the three months ended March 31, 2018 exclude impacts of Accounting Standard Update 2014-09, “Revenue from Contracts with Customers (Topic 606)”, which we adopted on January 1, 2018.
   

Media contacts:
Bob Varettoni
908.559.6388
robert.a.varettoni@verizon.com

Eric Wilkens
908.559.3063
eric.wilkens@verizon.com

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Source: Verizon Communications