Verizon 2q12 Earnings Release Slides[1]
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Transcript of Verizon 2q12 Earnings Release Slides[1]
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7/31/2019 Verizon 2q12 Earnings Release Slides[1]
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2nd QUARTER 2012 EARNINGS RESULTS
Fran ShammoChief Financial Officer
July 19, 2012
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SAFE HARBOR STATEMENT
NOTE: This presentation contains statements about expected future events and financial results thatare forward-looking and subject to risks and uncertainties. For those statements, we claim theprotection of the safe harbor for forward-looking statements contained in the Private SecuritiesLitigation Reform Act of 1995. The following important factors could affect future results and couldcause 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; materialadverse changes in labor matters, including labor negotiations or additional organizing activity, andany resulting financial and/or operational impact; material changes in available technology; anydisruption of our key suppliers provisioning of products or services; significant increases in benefitplan costs or lower investment returns on plan assets; breaches of network or information technologysecurity, natural disasters or terrorist attacks or existing or future litigation and any resulting financialimpact not covered by insurance; technology substitution; an adverse change in the ratings affordedour debt securities by nationally accredited ratings organizations or adverse conditions in the creditmarkets impacting the cost, including interest rates, and/or availability of financing; any changes in theregulatory environments in which we operate, including any increase in restrictions on our ability tooperate our networks; the timing, scope and financial impact of our deployment of broadbandtechnology; changes in our accounting assumptions that regulatory agencies, including the SEC, mayrequire or that result from changes in the accounting rules or their application, which could result in an
impact on earnings; our ability to complete acquisitions and dispositions; and the inability toimplement our business strategies.
As required by SEC rules, we have provided a reconciliation of the non-GAAP financial measures included in thispresentation to the most directly comparable GAAP measures in materials on our website at www.verizon.com/investor.
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CONSOLIDATED
2Q 12 OVERVIEW
Solid double-digit growth in operating income and earnings
YTD free cash flow more than doubled over last year
Strong growth in wireless retail service revenue with
continued robust postpaid ARPU accretion Industry-leading and record wireless EBITDA service margin
Accelerating wireline consumer revenue and ARPU growth
Intense focus on profitability and cash management
Continued strong, sustained performance 3
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CONSOLIDATED
2Q 12 FINANCIAL SUMMARY
Consolidated revenue
of $28.6B, up 3.7% Y/Y Revenue growth across allstrategic areas Y/Y
Operating income growth of15.5%
EBITDA margin expansion to34.2%
2Q 12 EPS of $0.64 up
12.3% Y/Y
Earnings Per Share
Revenue ($B)
3.7%Y/Y Growth
2Q '11 1Q '12 2Q '12
$0.57 $0.59$0.64
2Q '11 1Q '12 2Q '12
Strong earnings growth trajectory
12.3%Y/Y Growth
4
$27.5 $28.2 $28.6
Wireless Wireline
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CONSOLIDATED
CASH FLOW
YTD cash flow of $15.3B, up19.4% Y/Y
Disciplined capital spendingacross entire business
1H 12 capital expendituresdown 16.7% Y/Y
YTD free cash flow up $4.0BY/Y
Capital Expenditures / Revenue
1H 11 1H 12
Cash from operations $12.8 $15.3
Capital expenditures $8.9 $7.4
Free cash flow $3.9 $7.8
Note: Amounts may not add due to rounding.
16.4%13.1%
1H '11 1H '12
Cash Flow Summary ($B)
Solid cash flow growth and capital efficiency profile 5
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WIRELESS
REVENUE
Total revenue growthof 7.4% Y/Y
Retail postpaid revenue up8.3% Y/Y
Retail prepaid revenue up27.2% Y/Y
Total data revenue of $6.9B, up18.5% Y/Y
Web and e-mail servicesrevenue up 32.3% Y/Y
Messaging revenue up 4.2%Y/Y
Total Service Revenue ($B)
Retail Service Revenue ($B)
8.6%
Y/Y Growth
7.3%Y/Y Growth
$14.0$14.9 $15.2
2Q '11 1Q '12 2Q '12
$14.7 $15.4$15.8
2Q '11 1Q '12 2Q '12
Sustained top-line growth trends 6
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0.84%0.96%
0.89%
WIRELESS
CONNECTIONS / NET ADDS / CHURN
Strong growth in retailconnections, up 4.9% Y/Y
888K retail postpaid net adds*
290K retail prepaid net adds*
7% of retail postpaid baseupgraded in 2Q 12
7.5M Internet devices
61% of tablet customers arepostpaid
* Excludes acquisitions and adjustments
4.9%Y/Y Growth
2Q '11 1Q '12 2Q '12
1Q 122Q 11 2Q 12
Retail Postpaid Retail Prepaid
89.7 93.094.2
Retail Postpaid Retail Prepaid
1,3181,178
734
Retail Postpaid Churn
Retail Net Adds* (000)
Retail Connections (M)
Lowest retail postpaid churn in 4 years
(10.6%)Y/Y Growth
7
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$54.12 $55.43 $56.13
4.9%
3.3%
4.9%
2Q '11 1Q '12 2Q '12
50%47%36%
2Q '11 1Q '12 2Q '12
WIRELESS
PHONES / SMARTPHONES
Smartphone penetration of
50%, up 13.8%
5.9M smartphones sold in 2Q
73% of postpaid phone saleswere smartphones
41% of postpaid smartphoneupgrades were new tocategory
Retail postpaid data ARPU of
$24.53, up 15.4% Y/Y
Retail Postpaid ARPU
Retail Postpaid Phone Connections (M)
Smartphone Penetration
Phones
Smartphones
Y/Y Phone ARPU Growth
3.7%Y/Y Growth
8Highest retail postpaid ARPU growth in 3 years 8
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146176
203 209233
2Q '11 3Q '11 4Q '11 1Q '12 2Q '12
WIRELESS
4G LTE NETWORK DEPLOYMENT / COVERAGE
3.2M 4G LTE device sales in2Q 12
Verizon Wireless 4G LTEnetwork:
offers more 4G LTE coveragethan all other competitorsnetworks combined
now available in 337 markets
covers nearly 75% of the U.S.population
Recognized by RootMetrics in
more markets for excellence inmobile performance experience
4G LTE POPs (M)
9Continued progress in 4G LTE adoption
4G LTE Devices (M)
9
1.7
3.15.3
8.0
10.9
2.0% 3.6%6.1%
9.1%
12.2%
2Q '11 3Q '11 4Q '11 1Q '12 2Q '12
% of Retail Postpaid Connections
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WIRELESS
PROFITABILITY
Record EBITDA service margin
Continue to balance growth andprofitability
Sustained service revenue
growth
Increased smartphonepenetration
On track to achieve $2B ofexpense reduction in 2012
45.4% 46.3%
49.0%
2Q '11 1Q '12 2Q '12
EBITDA Service Margin
Sustained industry-leading profitability 10
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WIRELINE
REVENUE & PROFITABILITY
Managing challenges
Strategic revenue growthcontinues Consumer revenue up 2.5% Y/Y
FiOS revenue grew 17.4% Y/Y
Enterprise strategic services
revenue up 4.4% Y/Y
Sequential EBITDA margingrowth
Product portfolio rationalization
Targeted pricing actions Cost management
(3.1%)Y/Y Growth
Total Revenue ($B)
Segment EBITDA ($B)
$10.2 $9.9 $9.9
2Q '11 1Q '12 2Q '12
$2.4 $2.2 $2.3
23.8%22.6% 23.1%
2Q '11 1Q '12 2Q '12
EBITDA Margin %
Focus on long-term profitability
(6.0%)Y/Y Growth
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WIRELINE
MASS MARKETS
FiOS now 65% of consumer revenue 16% Y/Y growth in triple play
customers
ARPU over $149
FiOS Internet subscribers 5.1M subscribers, 134K net adds
36.6% penetration
FiOS Video subscribers 4.5M subscribers, 120K net adds 32.6% penetration
Copper migrations accelerating
Consumer ARPU now over $100 8.5% Y/Y growth
Line loss continues to improve Y/Y
Consumer Revenue ($B)
Mass Markets Revenue ($B)
1.7%Y/Y Growth
8.5%ARPU
Y/Y Growth
$4.1 $4.1$4.1
2Q '11 1Q '12 2Q '12
$3.4 $3.4 $3.5
$92.44 $97.88
2Q '11 1Q '12 2Q '12
$100.26
Consumer ARPU
Highest consumer revenue growth in several years 12
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WIRELINE
GLOBAL ENTERPRISE
Global economy and F/Xpressures
Product rationalization actions
De-emphasis of CPE
Positive revenue growth without
CPE and F/X impacts Strategic services revenue
growth of 4.4%
52% of Global Enterprise revenue
Executing strategy
Global Enterprise Revenue ($B)
Confident in asset portfolio longer term 13
Services Hardware
2Q '11 1Q '12 2Q '12
$4.0 $3.9 $3.8 (3.4%)Y/Y Growth
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CONSOLIDATED
2Q 12 SUMMARY
Continued revenue growth across all strategic areas
Strong earnings momentum and free cash flow generation
Capital efficiency continues to improve
Strategic investments set stage for continued growth
Strategic actions leading to improved revenue mix andlong-term profitability
On track for solid double-digit earnings growth in 2012 14
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