Highest third-quarter phone gross adds in five years, increased wireless net additions and EPS growth

3Q 2019 highlights

Consolidated:

  • $1.25 in earnings per share (EPS), compared with $1.19 in 3Q 2018; adjusted EPS (non-GAAP), excluding special items, of $1.25, compared with $1.22 in 3Q 2018.

Consumer:

  • Total revenue of $22.7 billion, an increase of 1.4 percent year over year.
  • 193,000 retail postpaid net additions, including 239,000 phone net additions, more than double the 112,000 phone net additions in third-quarter 2018, and 372,000 postpaid smartphone net additions.
  • Total retail postpaid churn of 1.05 percent, and retail postpaid phone churn of 0.79 percent.
  • 30,000 Fios Internet net additions.

Business:

  • Total revenue of $7.9 billion, approximately flat year over year.
  • 408,000 retail postpaid net additions, including 205,000 phone net additions.
  • Total retail postpaid churn of 1.22 percent, and retail postpaid phone churn of 0.98 percent.

Wireless (non-GAAP):

  • Total revenue growth of 2.6 percent year over year to $23.6 billion, driven by a 2.7 percent increase in service revenue.
  • 601,000 retail postpaid net additions, including 444,000 phone net additions, an increase from 295,000 phone net additions in third-quarter 2018, and 615,000 postpaid smartphone net additions, an increase from 510,000 postpaid smartphone net additions in third-quarter 2018. This growth was driven by a 10 percent year over year increase in phone gross additions.
  • Total retail postpaid churn of 1.09 percent, and retail postpaid phone churn of 0.82 percent.

Wireline (non-GAAP):

  • Total revenue of $7.1 billion, a decrease of 3.8 percent year over year.
  • 36,000 Fios Internet net additions; Fios total revenue growth of 2.3 percent year over year.

NEW YORK, Oct. 25, 2019 (GLOBE NEWSWIRE) -- Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported strong third-quarter 2019 results highlighted by increased cash flow and the most third-quarter phone gross additions in five years.

"Verizon continued its momentum in the third quarter by driving strong wireless volumes in both our Consumer and Business segments, while delivering solid financial results, highlighted by continued wireless service revenue growth, increased cash flow, and EPS growth," said Chairman and CEO Hans Vestberg. "We are focused on our 5G rollout strategy, looking to deploy next-generation networks while enhancing our industry-leading 4G LTE network. Going into the fourth quarter, we are energized by the strong performance of the business and we are confident in our strategy to drive value for our customers and growth for our shareholders."

For third-quarter 2019, Verizon reported EPS of $1.25, compared with $1.19 in third-quarter 2018. The company's reported earnings include a minimal net impact from special items: a net pre-tax gain of $261 million from dispositions of assets and businesses that was offset by a pension re-measurement pre-tax charge of $291 million. On an adjusted basis (non-GAAP), third-quarter 2019 EPS, excluding special items, was $1.25, compared with adjusted EPS of $1.22 in third-quarter 2018.

In third-quarter 2019, Verizon's results included the effects of a reduction in benefits from the adoption of a revenue recognition standard, primarily due to the deferral of commission expense, and the adoption of a lease accounting standard. The combined net impact was a 4 cent headwind in third-quarter 2019, and 13 cents year-to-date, which is included in the year-over-year increase in adjusted EPS.

Consolidated results

Total consolidated operating revenues in third-quarter 2019 were $32.9 billion, up 0.9 percent from third-quarter 2018. This growth was primarily driven by higher wireless service revenue, partially offset by lower wireless equipment revenue and declines in legacy wireline revenue, predominantly in the Business segment.

Year-to-date cash flow from operations totaled $26.7 billion, an increase of $504 million year over year. This growth was the result of operational improvements in Verizon's businesses and lower discretionary employee benefit contributions, offset by higher cash tax payments and cash payments related to the Voluntary Separation Program. In September 2019, Verizon’s Board of Directors declared a quarterly dividend increase for the 13th consecutive year. Through third-quarter 2019, the company’s cash dividend payments totaled $7.5 billion.

Year-to-date capital expenditures were $12.3 billion through third-quarter 2019. Capital expenditures continue to support the launch and build-out of Verizon's 5G Ultra Wideband network, the growth in data and video traffic on the company's 4G LTE network, the deployment of significant fiber in markets nationwide and the upgrade to Verizon's Intelligent Edge Network architecture.

Strong operational cash flow and capital spending efficiencies have enabled Verizon to decrease total debt by $3.5 billion year to date. The company remains focused on reducing its unsecured debt portfolio while continuing to actively manage its near-term maturities, optimize its overall funding footprint, and lower its cost of capital.

In 2018, Verizon announced a goal to achieve $10 billion in cumulative cash savings by 2021. This initiative has yielded $4.6 billion of cumulative cash savings since the program began. In third-quarter 2019, Verizon realized over $400 million of expense savings from the Voluntary Separation Program, producing approximately $900 million in expense savings year-to-date.

Net income was $5.3 billion in third-quarter 2019. EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled approximately $12.2 billion. Consolidated operating income margin was 24.9 percent in third-quarter 2019, compared with 23.5 percent in third-quarter 2018. Consolidated EBITDA margin (non-GAAP) was 37.0 percent in third-quarter 2019, compared with 37.6 percent in third-quarter 2018. Adjusted EBITDA margin (non-GAAP) in third-quarter 2019 was 36.6 percent, and consolidated adjusted EBITDA (non-GAAP) in third-quarter 2019 was $12.0 billion.

Consumer results

  • Total Verizon Consumer revenues were $22.7 billion, an increase of 1.4 percent year over year, driven by continued strong growth in wireless service revenue and Fios service offerings, offset by declines in wireless equipment and legacy wireline services.

  • Verizon Consumer Group reported 193,000 wireless retail postpaid net additions in third-quarter 2019. This consisted of 239,000 phone net additions, more than double the 112,000 phone net additions in third-quarter 2018, and tablet net losses of 176,000, offset by 130,000 other connected device net additions, primarily wearables. Postpaid smartphone net additions were 372,000, an increase from 285,000 postpaid smartphone net additions in third-quarter 2018. This was driven by a 10 percent year over year increase in phone gross additions.

  • Consumer wireless service revenues increased 2.1 percent in third-quarter 2019, driven by customer step-ups to higher-priced plans and an increase in connections per account.

  • Total retail postpaid churn was 1.05 percent in third-quarter 2019, and retail postpaid phone churn was 0.79 percent.

  • In third-quarter 2019, Verizon Consumer Group reported 30,000 Fios Internet net additions and 67,000 Fios Video net losses, reflecting the ongoing shift from traditional linear video to over-the-top offerings. Consumer Fios revenues increased by 1.7 percent, primarily due to the demand for broadband offerings.

  • Segment operating income was $7.5 billion, an increase of 3.8 percent year over year, and segment operating income margin was 33.0 percent. Segment EBITDA (non-GAAP) totaled $10.3 billion in third-quarter 2019, an increase of 0.7 percent year over year. Segment EBITDA margin (non-GAAP) was 45.3 percent, which was down 30 basis points year over year, including approximately 80 basis points from the deferral of commission expense and the lease accounting standard.

Business results

  • Total Verizon Business revenues were $7.9 billion, approximately flat year over year, as growth in wireless service revenue and high quality fiber products was offset by declines in legacy wireline products.

  • Verizon Business Group reported 408,000 wireless retail postpaid net additions in third-quarter 2019, an increase of 12.1 percent year over year. This consisted of 205,000 phone net additions, 112,000 tablet net additions and 91,000 other connected device additions.

  • Total retail postpaid churn was 1.22 percent in third-quarter 2019, and retail postpaid phone churn was 0.98 percent.

  • Segment operating income was $1.0 billion, a decrease of 15.3 percent year over year, and segment operating income margin was 12.4 percent. Segment EBITDA (non-GAAP) totaled $2.0 billion in third-quarter 2019, a decrease of 10.7 percent year over year. Segment EBITDA margin (non-GAAP) was 25.2 percent, down from 28.2 percent in third-quarter 2018, due in part to declines in high margin wholesale revenue and legacy wireline products. This includes headwinds of approximately 50 basis points from the deferral of commission expense and the lease accounting standard.

Media results

  • Total Verizon Media revenues in third-quarter 2019 were $1.8 billion, down 2.0 percent year over year, continuing the improvement in revenue trends. Gains in native and mobile advertising continue to be offset by declines in desktop advertising, though the business is building momentum in key areas.

Outlook and guidance

As outlined in Verizon's second-quarter 2019 earnings release, the company expects the following:

  • Low single-digit percentage growth in adjusted 2019 EPS, excluding the impact of the lease accounting standard.

  • Low single-digit percentage growth in full-year consolidated revenues on a GAAP reported basis.

  • Cash taxes to be $2 billion to $3 billion higher than in 2018 due to benefits that were realized in 2018 that are not expected to repeat in 2019.

  • Capital spending for 2019 to be in the range of $17 billion to $18 billion, including the expanded commercial launch of 5G.

  • Adjusted effective income tax rate (non-GAAP) for full-year 2019 to be at the lower end of its previously disclosed range of 24 percent 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, Nasdaq: VZ), headquartered in New York City, generated revenues of $130.9 billion in 2018. The company operates America’s most awarded wireless network and the nation’s premier all-fiber network, and delivers integrated solutions to businesses worldwide. With brands like Yahoo, TechCrunch and HuffPost, the company’s media group helps consumers stay informed and entertained, communicate and transact, while creating new ways for advertisers and partners to connect. Verizon’s corporate responsibility prioritizes the environmental, social and governance issues most relevant to its business and impact to society.

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.

Media contacts:
Kim Ancin
908.559.3227
kimberly.ancin@verizon.com
 
Eric Wilkens
908.559.3063
eric.wilkens@verizon.com


Verizon Communications Inc.  
Condensed Consolidated Statements of Income 
     
             
      (dollars in millions, except per share amounts) 
 3 Mos. Ended 3 Mos. Ended   9 Mos. Ended 9 Mos. Ended   
Unaudited9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change 
             
Operating Revenues            
Service revenues and other$27,753  $27,254  1.8 $82,301  $81,145  1.4 
Wireless equipment revenues 5,141   5,353  (4.0)  14,792   15,437  (4.2) 
Total Operating Revenues 32,894   32,607  0.9  97,093   96,582  0.5 
             
Operating Expenses            
Cost of services 7,902   7,842  0.8  23,396   24,022  (2.6) 
Cost of wireless equipment 5,482   5,489  (0.1)  15,699   16,195  (3.1) 
Selling, general and administrative expense 7,216   7,224  (0.1)  21,682   21,673   
Depreciation and amortization expense 4,114   4,377  (6.0)  12,577   13,051  (3.6) 
Total Operating Expenses 24,714   24,932  (0.9)  73,354   74,941  (2.1) 
             
Operating Income 8,180   7,675  6.6  23,739   21,641  9.7 
Equity in losses of unconsolidated businesses (1)  (3) (66.7)  (20)  (250) (92.0) 
Other income (expense), net (110)  214  *  (1,127)  499  * 
Interest expense (1,146)  (1,211) (5.4)  (3,571)  (3,634) (1.7) 
Income Before Provision For Income Taxes 6,923   6,675  3.7  19,021   18,256  4.2 
Provision for income taxes (1,586)  (1,613) (1.7)  (4,450)  (4,282) 3.9 
Net Income$5,337  $5,062  5.4 $14,571  $13,974  4.3 
             
             
Net income attributable to noncontrolling interests$143  $138  3.6 $401  $385  4.2 
Net income attributable to Verizon 5,194   4,924  5.5  14,170   13,589  4.3 
Net Income$5,337  $5,062  5.4 $14,571  $13,974  4.3 
             
             
Basic Earnings Per Common Share            
Net income attributable to Verizon$1.26  $1.19  5.9 $3.42  $3.29  4.0 
Weighted-average shares outstanding (in millions) 4,138   4,136     4,138   4,125    
             
Diluted Earnings Per Common Share (1)            
Net income attributable to Verizon$1.25  $1.19  5.0 $3.42  $3.29  4.0 
Weighted-average shares outstanding (in millions) 4,140   4,140     4,140   4,129    
             
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. 
* Not meaningful            
             


   
Verizon Communications Inc.  
Condensed Consolidated Balance Sheets  
      
      
     (dollars in millions)
Unaudited9/30/19 12/31/18 $ Change
      
Assets     
Current assets     
Cash and cash equivalents$3,020  $2,745  $275 
Accounts receivable, net 24,713   25,102   (389)
Inventories 1,538   1,336   202 
Prepaid expenses and other 5,624   5,453   171 
Total current assets 34,895   34,636   259 
      
Property, plant and equipment 260,053   252,835   7,218 
Less accumulated depreciation 171,204   163,549   7,655 
Property, plant and equipment, net 88,849   89,286   (437)
Investments in unconsolidated businesses 628   671   (43)
Wireless licenses 94,433   94,130   303 
Goodwill 24,570   24,614   (44)
Other intangible assets, net 9,264   9,775   (511)
Operating lease right-of-use assets 22,218      22,218 
Other assets 10,018   11,717   (1,699)
Total assets$284,875  $264,829  $20,046 
      
Liabilities and Equity     
Current liabilities     
Debt maturing within one year$7,830  $7,190  $640 
Accounts payable and accrued liabilities 19,566   22,501   (2,935)
Current operating lease liabilities 2,959      2,959 
Other current liabilities 8,854   8,239   615 
Total current liabilities 39,209   37,930   1,279 
      
Long-term debt 101,769   105,873   (4,104)
Employee benefit obligations 18,236   18,599   (363)
Deferred income taxes 34,592   33,795   797 
Non-current operating lease liabilities 18,214      18,214 
Other liabilities 12,543   13,922   (1,379)
Total long-term liabilities 185,354   172,189   13,165 
      
Equity     
Common stock 429   429    
Additional paid in capital 13,418   13,437   (19)
Retained earnings 50,595   43,542   7,053 
Accumulated other comprehensive income 1,104   2,370   (1,266)
Common stock in treasury, at cost (6,822)  (6,986)  164 
Deferred compensation – employee stock ownership plans and other 197   353   (156)
Noncontrolling interests 1,391   1,565   (174)
Total equity 60,312   54,710   5,602 
Total liabilities and equity$284,875  $264,829  $20,046 
      
      
Consolidated - Selected Financial and Operating Statistics
(dollars in millions, except per share amounts)  
      
Unaudited9/30/19 12/31/18  
      
Total debt$109,599  $113,063   
Net debt$106,579  $110,318   
Net unsecured debt$97,779  $100,242   
Net debt / Consolidated Adjusted EBITDA(1)2.2x 2.3x  
Net unsecured debt / Consolidated Adjusted EBITDA(1)2.1x 2.1x  
Common shares outstanding end of period (in millions) 4,136   4,132   
Total employees (‘000) 135.4   144.5   
Quarterly cash dividends declared per common share$0.6150  $0.6025   
      
Footnotes:     
(1) Consolidated adjusted EBITDA excludes the effects of non-operational items and special items.  
      


      
Verizon Communications Inc.     
Condensed Consolidated Statements of Cash Flows 
      
      
   (dollars in millions)
 9 Mos. Ended 9 Mos. Ended  
Unaudited9/30/19 9/30/18 $ Change
      
Cash Flows from Operating Activities     
Net Income$14,571  $13,974  $597 
Adjustments to reconcile net income to net cash provided by operating activities:     
Depreciation and amortization expense 12,577   13,051   (474)
Employee retirement benefits (105)  (886)  781 
Deferred income taxes 1,070   2,023   (953)
Provision for uncollectible accounts 1,131   699   432 
Equity in losses of unconsolidated businesses, net of dividends received 64   291   (227)
Net loss on sale of divested businesses 94      94 
Changes in current assets and liabilities, net of effects from acquisition/disposition of businesses (3,902)  (1,944)  (1,958)
Discretionary employee benefits contributions (300)  (1,679)  1,379 
Other, net 1,548   715   833 
Net cash provided by operating activities 26,748   26,244   504 
      
Cash Flows from Investing Activities     
Capital expenditures (including capitalized software) (12,332)  (12,026)  (306)
Acquisitions of businesses, net of cash acquired (29)  (39)  10 
Acquisitions of wireless licenses (299)  (1,307)  1,008 
Proceeds from dispositions of businesses 27      27 
Other, net 476   236   240 
Net cash used in investing activities (12,157)  (13,136)  979 
      
Cash Flows from Financing Activities     
Proceeds from long-term borrowings 8,360   5,932   2,428 
Proceeds from asset-backed long-term borrowings 3,982   3,216   766 
Repayments of long-term borrowings and finance lease obligations (12,486)  (9,776)  (2,710)
Repayments of asset-backed long-term borrowings (5,273)  (2,915)  (2,358)
Dividends paid (7,474)  (7,283)  (191)
Other, net (1,410)  (1,595)  185 
Net cash used in financing activities (14,301)  (12,421)  (1,880)
      
Increase in cash, cash equivalents and restricted cash 290   687   (397)
Cash, cash equivalents and restricted cash, beginning of period 3,916   2,888   1,028 
Cash, cash equivalents and restricted cash, end of period$4,206  $3,575  $631 
      


            
Verizon Communications Inc.           
Consumer - Selected Financial Results
            
            
            
      (dollars in millions)
            
 3 Mos. Ended 3 Mos. Ended   9 Mos. Ended 9 Mos. Ended  
Unaudited9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change
            
Operating Revenues           
Service$16,433  $16,193  1.5 $49,042  $48,066  2.0
Wireless equipment 4,257   4,508  (5.6)  12,326   13,029  (5.4)
Other 2,016   1,698  18.7  5,481   4,934  11.1
Total Operating Revenues 22,706   22,399  1.4  66,849   66,029  1.2
            
Operating Expenses           
Cost of services 4,035   3,850  4.8  11,761   11,465  2.6
Cost of wireless equipment 4,291   4,379  (2.0)  12,342   12,948  (4.7)
Selling, general and administrative expense 4,085   3,947  3.5  12,090   11,426  5.8
Depreciation and amortization expense 2,806   3,010  (6.8)  8,581   8,982  (4.5)
Total Operating Expenses 15,217   15,186  0.2  44,774   44,821  (0.1)
            
Operating Income$7,489  $7,213  3.8 $22,075  $21,208  4.1
Operating Income Margin 33.0%  32.2%    33.0%  32.1%  
            
Segment EBITDA$10,295  $10,223  0.7 $30,656  $30,190  1.5
Segment EBITDA Margin 45.3%  45.6%    45.9%  45.7%  
            
            
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 segment performance.
            
Certain intersegment transactions with corporate entities have not been eliminated.  
            


            
Verizon Communications Inc.           
Consumer - Selected Operating Statistics
            
            
           
            
Unaudited      9/30/19 9/30/18 % Change
            
Connections (‘000):           
Wireless retail postpaid connections       89,739   89,062  0.8
Wireless retail prepaid connections       4,183   4,736  (11.7)
Total wireless retail connections       93,922   93,798  0.1
            
Fios video connections       4,203   4,423  (5.0)
Fios Internet connections       5,867   5,711  2.7
Fios digital voice residence connections       3,672   3,833  (4.2)
Fios digital connections       13,742   13,967  (1.6)
Broadband connections       6,469   6,452  0.3
Voice connections       5,904   6,480  (8.9)
            
            
 3 Mos. Ended 3 Mos. Ended   9 Mos. Ended 9 Mos. Ended  
Unaudited9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change
            
Gross Additions (‘000):           
Wireless retail postpaid 3,020   2,850  6.0  8,459   8,101  4.4
            
Net Additions Detail (‘000):           
Wireless retail postpaid (1) 193   151  27.8  118   243  (51.4)
Wireless retail prepaid (1) (81)  (96) 15.6  (470)  (667) 29.5
Total wireless retail (1) 112   55  *  (352)  (424) 17.0
            
Wireless retail postpaid phones (1) 239   112  *  149   (24) *
            
Fios video (67)  (64) (4.7)  (174)  (125) (39.2)
Fios Internet 30   48  (37.5)  106   146  (27.4)
Fios digital voice residence (53)  (30) (76.7)  (130)  (72) (80.6)
Fios digital (90)  (46) (95.7)  (198)  (51) *
Broadband (5)  5  *  9   11  (18.2)
Voice (154)  (151) (2.0)  (428)  (448) 4.5
            
Churn Rate:           
Wireless retail postpaid 1.05%  1.01%    1.03%  0.98%  
Wireless retail postpaid phones 0.79%  0.77%    0.77%  0.75%  
Wireless retail 1.27%  1.24%    1.27%  1.25%  
            
Revenue Statistics (in millions):           
Wireless service revenue$13,533  $13,257  2.1 $40,346  $39,260  2.8
Fios revenues$2,811  $2,764  1.7 $8,347  $8,236  1.3
            
Other Wireless Statistics:           
Wireless retail postpaid ARPA (2)$118.89  $117.06  1.6 $118.16  $115.34  2.4
Wireless retail postpaid upgrade rate 4.9%  5.1%        
Wireless retail postpaid accounts (‘000) (3)       33,898   34,005  (0.3)
Wireless retail postpaid connections per account (3)       2.65   2.62  1.1
Total wireless Internet postpaid base (3)       16.1%  15.9%  
            
            
            
Footnotes:           
(1) Connection net additions include certain adjustments.
(2) Wireless retail postpaid ARPA - average service revenue per account from retail postpaid accounts.
(3) Statistics presented as of end of period.
            
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 segment performance.
            
Certain intersegment transactions with corporate entities have not been eliminated.
            
* Not meaningful           
            


            
Verizon Communications Inc.           
Business - Selected Financial Results  
            
            
            
        (dollars in millions)
            
 3 Mos. Ended 3 Mos. Ended   9 Mos. Ended 9 Mos. Ended  
Unaudited9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change
            
Operating Revenues           
Global Enterprise$2,714  $2,782  (2.4) $8,078  $8,416  (4.0)
Small and Medium Business 2,899   2,729  6.2  8,392   7,905  6.2
Public Sector and Other 1,472   1,455  1.2  4,435   4,322  2.6
Wholesale 800   927  (13.7)  2,467   2,884  (14.5)
Total Operating Revenues 7,885   7,893  (0.1)  23,372   23,527  (0.7)
            
Operating Expenses           
Cost of services 2,666   2,657  0.3  7,838   8,027  (2.4)
Cost of wireless equipment 1,190   1,110  7.2  3,356   3,247  3.4
Selling, general and administrative expense 2,042   1,900  7.5  5,984   5,694  5.1
Depreciation and amortization expense 1,010   1,072  (5.8)  3,098   3,190  (2.9)
Total Operating Expenses 6,908   6,739  2.5  20,276   20,158  0.6
            
Operating Income$977  $1,154  (15.3) $3,096  $3,369  (8.1)
Operating Income Margin 12.4%  14.6%    13.2%  14.3%  
            
Segment EBITDA$1,987  $2,226  (10.7) $6,194  $6,559  (5.6)
Segment EBITDA Margin 25.2%  28.2%    26.5%  27.9%  
            
            
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 segment performance.
            
Certain intersegment transactions with corporate entities have not been eliminated.
            


Verizon Communications Inc.           
Business - Selected Operating Statistics
             
             
             
             
Unaudited      9/30/19 9/30/18 % Change
             
Connections (‘000):            
Wireless retail postpaid connections        24,732   23,073  7.2
             
Fios video connections        77   74  4.1
Fios Internet connections        322   302  6.6
Fios digital connections        399   376  6.1
Broadband connections        492   506  (2.8)
Voice connections        5,058   5,529  (8.5)
             
             
             
             
             
  3 Mos. Ended 3 Mos. Ended   9 Mos. Ended 9 Mos. Ended  
Unaudited 9/30/19 9/30/18 % Change 9/30/19 9/30/18 % Change
             
Gross Additions ('000):            
Wireless retail postpaid  1,302   1,163  12.0  3,644   3,405  7.0
             
Net Add Detail (‘000):            
Wireless retail postpaid (1)  408   364  12.1  995   1,063  (6.4)
Wireless retail postpaid phones (1)  205   183  12.0  496   494  0.4
             
Fios video  1   1    3   3  
Fios Internet  6   6    16   17  (5.9)
Fios digital  7   7    19   20  (5.0)
Broadband  (2)  (3) 33.3  (9)  (12) 25.0
Voice  (105)  (110) 4.5  (341)  (364) 6.3
             
Churn Rate:            
Wireless retail postpaid  1.22%  1.17%    1.22%  1.16%  
Wireless retail postpaid phones  0.98%  0.95%    0.99%  0.95%  
             
Revenue Statistics (in millions):            
Wireless service revenue $2,850  $2,687  6.1 $8,319  $7,803  6.6
Fios revenues $243  $222  9.5 $725  $657  10.4
             
Other Operating Statistics:            
Wireless retail postpaid upgrade rate  4.5%  4.8%        
Total wireless Internet postpaid base (2)        33.5%  33.1%  
             
             
Footnotes:           
(1) Connection net additions include certain adjustments.          
(2) Statistics presented as of end of period.            
             
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 segment performance.
             
Certain intersegment transactions with corporate entities have not been eliminated.        
             


            
Verizon Communications Inc.     
Supplemental Information - Wireless Historical Financial Results  
             
The following supplemental schedule contains historical wireless segment results and is provided to help investors understand trends in our new segment results.
 
(dollars in millions)
Unaudited 3 Mos. Ended 9/30/19 3 Mos. Ended 9/30/18 % Change 9 Mos. Ended 9/30/19 9 Mos. Ended 9/30/18 % Change
             
Operating Revenues            
Service $16,398  $15,966  2.7 $48,714  $47,122  3.4
Equipment  5,141   5,353  (4.0)  14,792   15,437  (4.2)
Other  2,030   1,654  22.7  5,445   4,763  14.3
Total Operating Revenues  23,569   22,973  2.6  68,951   67,322  2.4
             
Operating Expenses            
Cost of services  2,583   2,350  9.9  7,461   6,900  8.1
Cost of equipment  5,482   5,489  (0.1)  15,699   16,195  (3.1)
Selling, general and administrative expense  4,462   4,169  7.0  13,061   12,052  8.4
Depreciation and amortization expense  2,259   2,454  (7.9)  6,840   7,341  (6.8)
Total Operating Expenses  14,786   14,462  2.2  43,061   42,488  1.3
             
Operating Income $8,783  $8,511  3.2 $25,890  $24,834  4.3
Operating Income Margin  37.3%  37.0%    37.5%  36.9%  
             
Segment EBITDA $11,042  $10,965  0.7 $32,730  $32,175  1.7
Segment EBITDA Margin  46.8%  47.7%    47.5%  47.8%  
             
Footnotes:            
The segment financial results and metrics above are adjusted to exclude the effects of special items.
             
Certain intersegment transactions with corporate entities have not been eliminated.      
             


Verizon Communications Inc.           
Supplemental Information - Wireless Historical Operating Statistics
             
The following supplemental schedule contains historical wireless segment results and is provided to help investors understand trends in our new segment results.
             
 
Unaudited 9/30/19 9/30/18 % Change
             
Connections (‘000)            
Retail postpaid        114,471   112,135  2.1
Retail prepaid        4,183   4,736  (11.7)
Total retail        118,654   116,871  1.5
             
             
Unaudited 3 Mos. Ended 9/30/19 3 Mos. Ended 9/30/18 % Change 9 Mos. Ended 9/30/19 9 Mos. Ended 9/30/18 % Change
             
Net Add Detail (‘000) (1)            
Retail postpaid  601   515  16.7  1,113   1,306  (14.8)
Retail prepaid  (81)  (96) 15.6  (470)  (667) 29.5
Total retail  520   419  24.1  643   639  0.6
             
Account Statistics            
Retail postpaid accounts (‘000) (2)        35,371   35,309  0.2
Retail postpaid connections per account (2)        3.24   3.18  1.9
Retail postpaid ARPA (3) $139.01  $136.58  1.8 $137.83  $134.28  2.6
             
Churn Detail            
Retail postpaid  1.09%  1.04%    1.07%  1.02%  
Retail  1.26%  1.22%    1.26%  1.23%  
             
Retail Postpaid Connection Statistics (2)            
Total smartphone postpaid phone base        93.5%  91.7%  
Total Internet postpaid base        19.8%  19.4%  
             
Footnotes:            
(1) Connection net additions include certain adjustments.            
(2) Statistics presented as of end of period.            
(3) Wireless retail postpaid ARPA - average service revenue per account from retail postpaid accounts.      
             
The segment financial results and metrics above are adjusted to exclude the effects of special items.       
             
Certain intersegment transactions with corporate entities have not been eliminated.         
             


Verizon Communications Inc.           
Supplemental Information - Wireline Historical Financial Results
             
The following supplemental schedule contains historical wireline segment results and is provided to help investors understand trends in our new segment results.
(dollars in millions)
Unaudited 3 Mos. Ended 9/30/19 3 Mos. Ended 9/30/18 % Change 9 Mos. Ended 9/30/19 9 Mos. Ended 9/30/18 % Change
             
Operating Revenues            
Consumer Markets $3,124  $3,138  (0.4) $9,397  $9,420  (0.2)
Enterprise Solutions  2,085   2,172  (4.0)  6,309   6,623  (4.7)
Partner Solutions  1,044   1,166  (10.5)  3,162   3,594  (12.0)
Business Markets  795   840  (5.4)  2,443   2,561  (4.6)
Other  46   55  (16.4)  173   189  (8.5)
Total Operating Revenues  7,094   7,371  (3.8)  21,484   22,387  (4.0)
             
Operating Expenses            
Cost of services  4,318   4,371  (1.2)  12,701   13,223  (3.9)
Selling, general and administrative expense  1,542   1,498  2.9  4,701   4,554  3.2
Depreciation and amortization expense  1,480   1,552  (4.6)  4,606   4,610  (0.1)
Total Operating Expenses  7,340   7,421  (1.1)  22,008   22,387  (1.7)
             
Operating Loss $(246) $(50) * $(524) $  *
Operating Loss Margin  (3.5)%  (0.7)%    (2.4)%  0.0%  
             
Segment EBITDA $1,234  $1,502  (17.8) $4,082  $4,610  (11.5)
Segment EBITDA Margin  17.4%  20.4%    19.0%  20.6%  
             
Footnotes:            
             
The segment financial results and metrics above are adjusted to exclude the effects of special items.    
             
Certain intersegment transactions with corporate entities have not been eliminated.    
             
* Not meaningful            
             


Verizon Communications Inc.           
Supplemental Information - Wireline Historical Operating Statistics    
             
The following supplemental schedule contains historical wireline segment results and is provided to help investors understand trends in our new segment results.
Unaudited       9/30/19 9/30/18 % Change
             
Connections (‘000)            
Fios video connections        4,280   4,497  (4.8)
Fios Internet connections        6,189   6,013  2.9
Fios digital voice residence connections        3,672   3,833  (4.2)
Fios digital connections        14,141   14,343  (1.4)
Broadband connections        6,961   6,958  
Voice connections        10,962   12,009  (8.7)
             
             
Unaudited 3 Mos. Ended 9/30/19 3 Mos. Ended 9/30/18 % Change 9 Mos. Ended 9/30/19 9 Mos. Ended 9/30/18 % Change
             
Net Add Detail (‘000)            
Fios video connections  (66)  (63) (4.8)  (171)  (122) (40.2)
Fios Internet connections  36   54  (33.3)  122   163  (25.2)
Fios digital voice residence connections  (53)  (30) (76.7)  (130)  (72) (80.6)
Fios digital connections  (83)  (39) *  (179)  (31) *
Broadband connections  (7)  2  *     (1) *
Voice connections  (259)  (261) 0.8  (770)  (812) 5.2
             
Revenue Statistics            
Fios revenues (in millions) $3,054  $2,986  2.3 $9,072  $8,893  2.0
             
Footnotes:            
The segment financial results and metrics above are adjusted to exclude the effects of special items.    
             
Certain intersegment transactions with corporate entities have not been eliminated.    
             
* Not meaningful            
             


Verizon Communications Inc.               
Non-GAAP Reconciliations - Consolidated Verizon   
                
Consolidated EBITDA, Consolidated EBITDA Margin, Consolidated Adjusted EBITDA and Consolidated Adjusted EBITDA Margin   
                
            (dollars in millions) 
Unaudited 3 Mos. Ended 9/30/2019 3 Mos. Ended 6/30/2019 3 Mos. Ended 3/31/2019 3 Mos. Ended 12/31/2018 3 Mos. Ended 9/30/2018 3 Mos. Ended 6/30/2018 3 Mos. Ended 3/31/2018 
                
Consolidated Net Income $5,337  $4,074 $5,160  $2,065  $5,062  $4,246  $4,666 
Add/(subtract):               
Provision (benefit) for income taxes  1,586   1,236  1,628   (698)  1,613   1,281   1,388 
Interest expense  1,146   1,215  1,210   1,199   1,211   1,222   1,201 
Depreciation and amortization expense  4,114   4,232  4,231   4,352   4,377   4,350   4,324 
Consolidated EBITDA $12,183  $10,757 $12,229  $6,918  $12,263  $11,099  $11,579 
                
Add/(subtract):               
Other (income) expense, net* $110  $1,312 $(295) $(1,865) $(214) $(360) $75 
Equity in losses (earnings) of unconsolidated businesses†  1   13  6   (64)  3   228   19 
Oath goodwill impairment          4,591          
Severance charges          1,818      339    
Product realignment charges‡                450    
Acquisition and integration related charges‡          187   130   109   105 
Net gain from dispositions of assets and businesses  (261)                 
   (150)  1,325  (289)  4,667   (81)  766   199 
                
Consolidated Adjusted EBITDA $12,033  $12,082 $11,940  $11,585  $12,182  $11,865  $11,778 
Consolidated Operating Revenues - Quarter to Date $32,894        $32,607      
Operating Income $8,180        $7,675      
Operating Income Margin - Quarter to Date  24.9%        23.5%     
Consolidated EBITDA Margin - Quarter to Date  37.0%        37.6%     
Consolidated Adjusted EBITDA Margin - Quarter to Date  36.6%             
                
                
* Includes Pension and benefits mark-to-market adjustments and Early debt redemption costs, where applicable.   
† Includes Product realignment charges, where applicable. 
‡ Excludes depreciation and amortization expense, where applicable. 
                


            
Verizon Communications Inc. 
Non-GAAP Reconciliations - Consolidated Verizon 
            
Net Debt and Net Debt to Consolidated Adjusted EBITDA Ratio        
        (dollars in millions) 
Unaudited       9/30/19 12/31/18 
            
Debt maturing within one year       $7,830  $7,190  
Long-term debt        101,769   105,873  
Total Debt        109,599   113,063  
Less Cash and cash equivalents        3,020   2,745  
Net Debt       $106,579  $110,318  
Net Debt to Consolidated Adjusted EBITDA Ratio       2.2x 2.3x 
            
            
            
Net Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio        
        (dollars in millions) 
Unaudited       9/30/19 12/31/18 
            
            
Total Debt       $109,599  $113,063  
Less Secured debt        8,800   10,076  
Unsecured debt        100,799   102,987  
Less Cash and cash equivalents        3,020   2,745  
Net Unsecured Debt       $97,779  $100,242  
Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio       2.1x 2.1x 
            
            
            
Adjusted Earnings per Common Share (Adjusted EPS)(1)         
    (dollars in millions, except per share amounts) 
Unaudited 3 Mos. Ended 9/30/19  3 Mos. Ended 9/30/18 
 Pre-taxTaxAfter-Tax Pre-taxTax After-Tax   
EPS   $1.25      $1.19  
Pension remeasurement charge (credit)$291 $(76)$215  0.05 $(454)$119  $(335)  (0.08) 
Acquisition and integration-related charges         137  (34)  103   0.02  
Early debt redemption costs         476  (124)  352   0.09  
Net gain from dispositions of assets and businesses (261) 37  (224) (0.05)           
 $30 $(39)$(9)$ $159 $(39) $120  $0.03  
Adjusted EPS   $1.25      $1.22  
            
            
(1) Adjusted EPS may not add due to rounding.           
            


      
Verizon Communications Inc.     
Non-GAAP Reconciliations - Segments    
      
Segment EBITDA and Segment EBITDA Margin 
      
Consumer (dollars in millions) 
      
Unaudited 3 Mos. Ended 9/30/19 3 Mos. Ended 9/30/18 
      
Operating Income $7,489  $7,213  
Add Depreciation and amortization expense  2,806   3,010  
Segment EBITDA $10,295  $10,223  
Year over year change  0.7%   
      
Total operating revenues $22,706  $22,399  
Operating Income Margin  33.0%  32.2% 
Segment EBITDA Margin  45.3%  45.6% 
Segment EBITDA Margin - Year Over Year Change (30) bps   
      
      
      
Business (dollars in millions) 
      
Unaudited 3 Mos. Ended 9/30/19 3 Mos. Ended 9/30/18 
      
Operating Income $977  $1,154  
Add Depreciation and amortization expense  1,010   1,072  
Segment EBITDA $1,987  $2,226  
Year over Year Change  (10.7)%   
      
Total operating revenues $7,885  $7,893  
Operating Income Margin  12.4%  14.6% 
Segment EBITDA Margin  25.2%  28.2% 
      


Verizon Communications Inc.            
Supplemental Information  - VZ 2.0 to Historical Financial Results Reconciliation(1)       
                 
The following tables present a reconciliation of financial results for our current reportable segments, Consumer and Business, to our historical reportable segments, Wireless and Wireline.
                 
 3 Mos. Ended 9/30/19 
  (dollars in millions)
 VZ 2.0Historical
 ConsumerBusinessTotal Reportable SegmentsAdjustments(2)Adjusted Total Reportable SegmentsWirelessWirelineHistorical
Total
Reportable
Segments
UnauditedServiceEquipmentOtherTotal WirelessConsumer
Markets
Enterprise
Solutions
Partner
Solutions
Business
Markets
OtherTotal Wireline
External Operating Revenues                
Total Operating Revenues$22,706 $7,885 $30,591$72 $30,663$16,398$5,141$2,030$23,569 $3,124$2,085$1,044$795$46$7,094 $30,663
                 
Operating Expenses                
Cost of services 4,035  2,666  6,701 200  6,901    2,583       4,318  6,901
Cost of wireless equipment 4,291  1,190  5,481 1  5,482    5,482         5,482
Selling, general and administrative expense 4,085  2,042  6,127 (123) 6,004    4,462       1,542  6,004
Depreciation and amortization expense 2,806  1,010  3,816 (77) 3,739    2,259       1,480  3,739
Total Operating Expenses 15,217  6,908  22,125 1  22,126    14,786       7,340  22,126
Operating Income (Loss)$7,489 $977 $8,466$71 $8,537   $8,783      $(246)$8,537
Add Depreciation and amortization expense 2,806  1,010  3,816 (77) 3,739    2,259       1,480  3,739
Segment EBITDA$10,295 $1,987 $12,282$(6)$12,276   $11,042      $1,234 $12,276
Operating Income (Loss) Margin 33.0% 12.4%       37.3%      (3.5)% 
Segment EBITDA Margin 45.3% 25.2%       46.8%      17.4% 
                 
Footnotes:                
(1) Information presented for VZ 2.0 and historical financial results includes intersegment transactions.
(2) Adjustment represents intersegment transactions that have been eliminated under the new structure net of the impact of VZ Connect and other early-stage development businesses previously included in Corporate.
                 
 3 Mos. Ended 9/30/18 
  (dollars in millions)
 VZ 2.0Historical
 ConsumerBusinessTotal Reportable SegmentsAdjustments(2)Adjusted Total Reportable SegmentsWirelessWirelineHistorical Total Reportable Segments
UnauditedServiceEquipmentOtherTotal WirelessConsumer
Markets
Enterprise
Solutions
Partner
Solutions
Business
Markets
OtherTotal Wireline
External Operating Revenues                
Total Operating Revenues$22,399 $7,893 $30,292$52 $30,344$15,966$5,353$1,654$22,973 $3,138$2,172$1,166$840$55$7,371 $30,344
                 
Operating Expenses                
Cost of services 3,850  2,657  6,507 214  6,721    2,350       4,371  6,721
Cost of wireless equipment 4,379  1,110  5,489   5,489    5,489         5,489
Selling, general and administrative expense 3,947  1,900  5,847 (180) 5,667    4,169       1,498  5,667
Depreciation and amortization expense 3,010  1,072  4,082 (76) 4,006    2,454       1,552  4,006
Total Operating Expenses 15,186  6,739  21,925 (42) 21,883    14,462       7,421  21,883
Operating Income (Loss)$7,213 $1,154 $8,367$94 $8,461   $8,511      $(50)$8,461
Add Depreciation and amortization expense 3,010  1,072  4,082 (76) 4,006    2,454       1,552  4,006
Segment EBITDA$10,223 $2,226 $12,449$18 $12,467   $10,965      $1,502 $12,467
Operating Income (Loss) Margin 32.2% 14.6%       37.0%      (0.7)% 
Segment EBITDA Margin 45.6% 28.2%       47.7%      20.4% 
                 
Footnotes:                
(1) Information presented for VZ 2.0 and historical financial results includes intersegment transactions.
(2) Adjustment represents intersegment transactions that have been eliminated under the new structure net of the impact of VZ Connect and other early-stage development businesses previously included in Corporate.
                 
 9 Mos. Ended 9/30/19 
  (dollars in millions)
 VZ 2.0Historical
 ConsumerBusinessTotal Reportable SegmentsAdjustments(2)Adjusted Total Reportable SegmentsWirelessWirelineHistorical Total Reportable Segments
UnauditedServiceEquipmentOtherTotal WirelessConsumer
Markets
Enterprise
Solutions
Partner
Solutions
Business
Markets
OtherTotal Wireline
External Operating Revenues                
Total Operating Revenues$66,849 $23,372 $90,221$214 $90,435$48,714$14,792$5,445$68,951 $9,397$6,309$3,162$2,443$173$21,484 $90,435
                 
Operating Expenses                
Cost of services 11,761  7,838  19,599 563  20,162    7,461       12,701  20,162
Cost of wireless equipment 12,342  3,356  15,698 1  15,699    15,699         15,699
Selling, general and administrative expense 12,090  5,984  18,074 (312) 17,762    13,061       4,701  17,762
Depreciation and amortization expense 8,581  3,098  11,679 (233) 11,446    6,840       4,606  11,446
Total Operating Expenses 44,774  20,276  65,050 19  65,069    43,061       22,008  65,069
Operating Income (Loss)$22,075 $3,096 $25,171$195 $25,366   $25,890      $(524)$25,366
Add Depreciation and amortization expense 8,581  3,098  11,679 (233) 11,446    6,840       4,606  11,446
Segment EBITDA$30,656 $6,194 $36,850$(38)$36,812   $32,730      $4,082 $36,812
Operating Income (Loss) Margin 33.0% 13.2%       37.5%      (2.4)% 
Segment EBITDA Margin 45.9% 26.5%       47.5%      19.0% 
                 
Footnotes:                
(1) Information presented for VZ 2.0 and historical financial results includes intersegment transactions.
(2) Adjustment represents intersegment transactions that have been eliminated under the new structure net of the impact of VZ Connect and other early-stage development businesses previously included in Corporate.
                 
 9 Mos. Ended 9/30/18 
  (dollars in millions)
 VZ 2.0Historical
 ConsumerBusinessTotal Reportable SegmentsAdjustments(2)Adjusted Total Reportable SegmentsWirelessWirelineHistorical Total Reportable Segments
UnauditedServiceEquipmentOtherTotal WirelessConsumer
Markets
Enterprise
Solutions
Partner
Solutions
Business
Markets
OtherTotal Wireline
External Operating Revenues                
Total Operating Revenues$66,029 $23,527 $89,556$153 $89,709$47,122$15,437$4,763$67,322 $9,420$6,623$3,594$2,561$189$22,387 $89,709
                 
Operating Expenses                
Cost of services 11,465  8,027  19,492 631  20,123    6,900       13,223  20,123
Cost of wireless equipment 12,948  3,247  16,195   16,195    16,195         16,195
Selling, general and administrative expense 11,426  5,694  17,120 (514) 16,606    12,052       4,554  16,606
Depreciation and amortization expense 8,982  3,190  12,172 (221) 11,951    7,341       4,610  11,951
Total Operating Expenses 44,821  20,158  64,979 (104) 64,875    42,488       22,387  64,875
Operating Income$21,208 $3,369 $24,577$257 $24,834   $24,834      $ $24,834
Add Depreciation and amortization expense 8,982  3,190  12,172 (221) 11,951    7,341       4,610  11,951
Segment EBITDA$30,190 $6,559 $36,749$36 $36,785   $32,175      $4,610 $36,785
Operating Income Margin 32.1% 14.3%       36.9%      0.0% 
Segment EBITDA Margin 45.7% 27.9%       47.8%      20.6% 
                 
Footnotes:                
(1) Information presented for VZ 2.0 and historical financial results includes intersegment transactions.
(2) Adjustment represents intersegment transactions that have been eliminated under the new structure net of the impact of VZ Connect and other early-stage development businesses previously included in Corporate.