Verizon has just put out its Q4 and full-year earnings for 2012, and the top-line figure for the carrier is that it has reached the $30 billion operating revenue mark for the first time in the company’s history, just beating analysts’ average estimates of $29.83 billion. This follows on from a strong performance in its newer, non-legacy lines of business, specifically Verizon Wireless and its FiOS TV and broadband services.
But at the same time, the company reported negative earnings per share of -$1.48, double the negative EPS of $0.71 this quarter last year, on the back of pension charges, debt retirement and “other restructuring items.” On top of that it noted that “Superstorm Sandy” had a $0.70 per share impact on adjusted EPS, which was $0.38 per share compared to $0.52 per share a year ago. That put it just shy of analysts’ low-end estimate of $0.39 per share.
Verizon — which people regularly speculate may try to consolidate its holdings in Verizon Wireless by buying out partner Vodafone — now has 98.2 million total wireless customers, 92.5 million of which are on higher-value postpaid connections. That represents a 6.6% rise on last year’s 92.5 million activations. Verizon had already given the market a heads-up on its wireless growth in an SEC filing earlier in the month, in which it noted that a lot it was fuelled by iPhone sales and activations. Indeed, figures out today from Kantar Worldpanel notes that in the U.S. iPhones continue to be the most popular smartphone, bucking a worldwide trend for Android.
Indeed, smartphones overall are driving a lot of Verizon Wireless business today: some 58% of all handset sales in the quarter were of smartphones, the carrier noted, up from 44% in the quarter last year.
Verizon didn’t specify how many 4G subscribers it currently has among its 98.2 million current users, but it did spell out some other details that point to how more people can use the service on its network. It says that “almost 50%” of all data traffic is on its 4G LTE services, which now cover some 89% of the U.S. by population. Verizon also says that it now has a total of 21.6 million LTE-enabled devices on its network, a rise of 23.3% on last year. It sold 7.3 million of those in the last quarter. “Devices” include smartphones but also other hardware like network dongles.
Full release below.
Earnings Impacted by Previously Announced Non-Operational Charges
4Q 2012 HIGHLIGHTS
NEW YORK - Verizon Communications Inc. (NYSE, Nasdaq: VZ) today reported strong customer and revenue growth in Verizon Wireless and Verizon FiOS services in fourth-quarter 2012 — positioning the company well for 2013.
Verizon Wireless reported record-setting customer additions in the quarter, while Verizon FiOS customer additions were higher in fourth-quarter 2012 than in the prior two quarters, despite the impact of Superstorm Sandy.
“Verizon seized growth opportunities in the fourth quarter to cap a year of solid progress across the entire business,” said Lowell McAdam, Verizon chairman and CEO. “We delivered a total return of 13.2 percent to shareholders in 2012, and we enter 2013 ready to accelerate the momentum we’ve achieved and create significant shareholder value in the years to come.”
4Q and Full-Year Earnings Results
Due to the impact of non-operational items announced earlier this month, Verizon reported a loss of $1.48 in EPS in fourth-quarter 2012, compared with a fourth-quarter 2011 loss of 71 cents per share.
A reduction of 7 cents per share due to impacts from Superstorm Sandy yielded a total of 38 cents per share in adjusted fourth-quarter 2012 earnings (non-GAAP). Fourth-quarter 2012 charges totaled $1.86 per share: $1.55 per share related to severance, pension and benefit charges primarily for the annual actuarial valuation of Verizon’s benefit plans as well as the annuitization of various pension liabilities during the quarter, and 31 cents per share related to the early retirement of debt and other restructuring activities.
Comparable adjusted fourth-quarter 2011 earnings of 52 cents per share excluded charges of $1.23 per share, primarily related to the valuation of pension plans.
On an annual basis, Verizon reported 31 cents in 2012 EPS, compared with 85 cents per share in 2011. Adjusted annual EPS (non-GAAP) was $2.24 in 2012, compared with $2.15 in 2011.
Revenue Growth Across All Strategic Areas; Continued Strong Cash Flow
In fourth-quarter 2012, Verizon’s consolidated quarterly operating revenues exceeded $30.0 billion for the first time in company history. This represented a 5.7 percent increase compared with fourth-quarter 2011 and was the company’s highest year-over-year quarterly growth rate in 2012.
For full-year 2012, Verizon’s revenues totaled $115.8 billion, an increase of 4.5 percent, or $5.0 billion, compared with 2011. In fourth-quarter 2012, Verizon saw year-over-year revenue increases across all strategic growth areas: 8.5 percent for Verizon Wireless service revenues, 15.7 percent for FiOS revenues and 5.3 percent for strategic enterprise services.
Cash flow from operating activities totaled $31.5 billion in 2012, an increase of 5.7 percent compared with $29.8 billion in 2011.
Capital expenditures were $16.2 billion in 2012, including $135 million in companywide capital related to Superstorm Sandy recovery efforts, and totaled about $70 million less than in 2011. Free cash flow (non-GAAP, cash flow from operations less capex) was $15.3 billion for the year, an increase of 13.1 percent compared with $13.5 billion in 2011.
Verizon maintained a strong balance sheet, with year-end 2012 total debt of $52.0 billion, down from $55.2 billion at year-end 2011.
Verizon Wireless Delivers Record-High Customer Additions and Strong Revenue Growth
In fourth-quarter 2012, Verizon Wireless delivered the highest number of retail postpaid net additions of any quarter in its history, strong growth in revenues, an increase in smartphone penetration, and continued low retail postpaid churn.
Wireless Financial Highlights
Wireless Operational Highlights
Wireline Reports Continued Strong FiOS Customer and Revenue Growth
In the Wireline segment, FiOS customer growth in fourth-quarter 2012 was greater than in the prior two quarters, despite the disruption caused by Superstorm Sandy. In global enterprise and wholesale, increased sales of strategic services continued to help mitigate lower revenues resulting from secular and global economic impacts.
Wireline Financial Highlights
Wireline Operational Highlights
NOTE: See the accompanying schedules and www.verizon.com/investor for reconciliations to generally accepted accounting principles (GAAP) for non-GAAP financial measures cited in this document.
NOTE: This presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. 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. The following important factors 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; competition in our markets; material changes in available technology or technology substitution; disruption of our key suppliers’ provisioning of products or services; changes in the regulatory environments 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 significant litigation and any resulting financial impact not covered by insurance; an adverse change in the ratings afforded our debt securities by nationally accredited ratings organizations or adverse conditions in the credit markets impacting the cost, including interest rates, and/or availability of financing; changes in our 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; significant increases in benefit plan costs or lower investment returns on plan assets; and the inability to implement our business strategies.
Verizon Communications Inc. delivers broadband and other wireline and wireless communication innovations to mass market, business, government and wholesale customers. Verizon Wireless operates America’s largest wireless network that serves nearly 102 million customers nationwide. Verizon’s Wireline operations include Verizon Business and Verizon Telecom, which brings customers converged communications, information and entertainment services over Verizon’s fiber-optic network.