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Verizon finishes 2023 with strong cash flow and wireless customer growth
Source: Nasdaq GlobeNewswire / 23 Jan 2024 07:00:49 America/New_York
Full-year 2023 wireless service revenue was $76.7 billion, up 3.2 percent from full-year 2022
Fixed wireless net additions for full-year 2023 were up over 31 percent year over year reflecting the increased demand driven by the strength and reliability of the product
Total wireless postpaid net additions for full-year 2023 spike 26 percent compared to 2022
Total wireless postpaid phone net additions jump to 449,000 for fourth-quarter 2023 compared to 217,000 for fourth-quarter 2022
Consumer postpaid phone gross additions for fourth-quarter 2023 increase nearly 17 percent year over year, marking the best quarterly performance in four years
2023 highlights
Consolidated:
- Full-year 2023 earnings per share (EPS) of $2.75, compared with $5.06 in 2022; adjusted EPS1, excluding special items, of $4.71, compared with 2022 adjusted EPS1 of $5.18.
- Total operating revenue of $134.0 billion in full-year 2023, down 2.1 percent year over year.
- Full-year 2023 cash flow from operations of $37.5 billion, an increase from $37.1 billion in 2022.
- Full-year 2023 free cash flow1 of $18.7 billion, an increase from $14.1 billion in 2022.
4Q 2023 highlights
Consolidated:
- Earnings per share was $(0.64), compared with earnings per share of $1.56 in fourth-quarter 2022; adjusted EPS1, excluding special items, of $1.08, compared with $1.19 in fourth-quarter 2022.
- Total operating revenue of $35.1 billion, a decrease of 0.3 percent from fourth-quarter 2022.
- Consolidated net loss for the fourth-quarter of $2.6 billion, compared to consolidated net income of $6.7 billion in fourth-quarter 2022, and consolidated adjusted EBITDA1 of $11.7 billion, in line with the 2022 result.
Total Broadband:
- Total broadband net additions of 413,000, represented the fifth consecutive quarter that Verizon reported more than 400,000 broadband net additions. Total broadband net additions included 375,000 fixed wireless net additions, bringing the subscriber base to over 3 million. In fourth-quarter 2023, more than 80 percent of Consumer fixed wireless gross additions were in Verizon's first 76 C-Band markets. Verizon is ahead of schedule to achieve its goal of 4 to 5 million subscribers by the end of 2025.
- 55,000 Fios Internet net additions, down 4,000 from the fourth-quarter 2022.
- 10.7 million total broadband subscribers as of the end of fourth-quarter 2023.
Total Wireless:
- Total wireless service revenue2 of $19.4 billion, a 3.2 percent increase year over year.
- Retail postpaid phone net additions of 449,000, and retail postpaid net additions of 1,460,000.
- Retail postpaid churn of 1.18 percent, and retail postpaid phone churn of 0.93 percent.
NEW YORK, Jan. 23, 2024 (GLOBE NEWSWIRE) -- Verizon Communications Inc. (NYSE, Nasdaq: VZ) reported strong fourth-quarter and full-year 2023 results highlighted by total wireless postpaid net additions, fixed wireless net additions and increased wireless service revenue.
"After delivering continuous improvement throughout 2023, we ended the year strong and continue to pursue the right balance of growth and profitability," said Verizon Chairman and CEO Hans Vestberg. "2023 was a year of change. We have the right assets and the best team in place and are well-positioned for growth in 2024."
For fourth-quarter 2023, Verizon reported earnings per share of $(0.64), compared with earnings per share of $1.56 in fourth-quarter 2022. On an adjusted basis1, excluding special items, EPS was $1.08 in fourth-quarter 2023, compared with adjusted EPS1 of $1.19 in fourth-quarter 2022.
Fourth-quarter 2023 financial results reflected a pre-tax loss from special items of approximately $7.8 billion. This includes the impacts of a previously disclosed goodwill impairment charge related to our Business reporting unit of $5.8 billion, a market-to-market adjustment for our pension and Other Post Employment Benefits (OPEB) liabilities of $992 million, asset rationalization charges of $325 million primarily relating to Business network assets that Verizon has ceased the use of, a severance charge of $296 million, the amortization of intangible assets related to Tracfone and other acquisitions of $227 million, and a $100 million charge relating to the settlement of a litigation matter regarding certain administrative fees.
For full-year 2023, Verizon reported $2.75 in EPS, compared with $5.06 for full-year 2022. On an adjusted basis1, excluding special items, 2023 EPS was $4.71, compared with $5.18 for 2022.
Consolidated results
- Total consolidated operating revenue in fourth-quarter 2023 of $35.1 billion, down 0.3 percent from fourth-quarter 2022. The decrease can be attributed to wireless equipment revenue, which was 2.0 percent lower than 2022, as total postpaid upgrades declined by 17.9 percent. Full-year 2023 consolidated operating revenue was $134.0 billion, down 2.1 percent year over year.
- Total wireless service revenue2 in fourth-quarter 2023 was $19.4 billion, up 3.2 percent year over year, driven primarily by pricing actions implemented in recent quarters, the larger allocation of our administrative and telco recovery fees from other revenue into wireless service revenue, higher premium price plan adoption and growth from fixed wireless access offerings.
- Full-year 2023 cash flow from operations was $37.5 billion, an increase from $37.1 billion in 2022. This marks a year over year increase of over $300 million, primarily due to working capital improvements.
- Full-year 2023 capital expenditures were $18.8 billion, down from $23.1 billion in 2022.
- The company ended 2023 with free cash flow1 of $18.7 billion, an increase from $14.1 billion in 2022.
- Consolidated net loss for the fourth-quarter 2023 was $2.6 billion, compared to consolidated net income of $6.7 billion in fourth-quarter 2022, and consolidated adjusted EBITDA1 was $11.7 billion, in line with the 2022 result.
- Verizon's total unsecured debt as of the end of the year was $128.5 billion, a $2.1 billion increase sequentially, but $2.1 billion lower year over year. The company's net unsecured debt1 at the end of the year was $126.4 billion, a $4.2 billion increase from third-quarter 2023, but $1.6 billion lower year over year. At the end of fourth-quarter 2023, Verizon's ratio of unsecured debt to net income (LTM) was approximately 10.6 times and net unsecured debt to adjusted EBITDA ratio1 was approximately 2.6 times.
Verizon Consumer results
- Total Verizon Consumer revenue in fourth-quarter 2023 was $27.0 billion, an increase of 0.7 percent year over year as growth in service revenue was offset by declines in wireless equipment revenue and other revenue. For full-year 2023, total Consumer revenue was $101.6 billion, a decrease of 1.8 percent from full-year 2022.
- Wireless service revenue in fourth-quarter 2023 increased 3.2 percent year over year driven primarily by growth in Consumer wireless postpaid Average Revenue Per Account (ARPA) resulting from pricing actions implemented in recent quarters, the larger allocation of our administrative and telco recovery fees from other revenue into wireless service revenue, higher premium price plan adoption, and growth from fixed wireless access offerings. For full-year 2023, total Consumer wireless service revenue was $63.4 billion, an increase of 3.0 percent from full-year 2022.
- Consumer wireless retail postpaid churn was 1.08 percent in fourth-quarter 2023, and wireless retail postpaid phone churn was 0.88 percent.
- In fourth-quarter 2023, Consumer reported 318,000 wireless retail postpaid phone net additions, representing an improvement of 369,000 from third-quarter 2023 and 277,000 from fourth-quarter 2022. Consumer postpaid phone gross additions in the fourth-quarter 2023 increased 16.9 percent year over year, the best performance in four years.
- Verizon continues to see better performance in the markets where C-Band is deployed. In Verizon's first 76 C-Band markets, fourth-quarter growth in Consumer postpaid phone gross additions was more than 8 percentage points better than in non C-Band markets and postpaid phone churn remains lower than non C-Band markets.
- Consumer reported 289,000 wireless retail prepaid net losses in fourth-quarter 2023.
- Consumer reported 231,000 fixed wireless net additions and 53,000 Fios Internet net additions in fourth-quarter 2023. Consumer Fios revenue was $2.9 billion in fourth-quarter 2023, an increase of 1.0 percent year over year. Full-year 2023 Consumer Fios revenue was $11.6 billion, relatively flat year over year.
- In fourth-quarter 2023, Consumer operating income was $7.0 billion, an increase of 0.1 percent year over year, and segment operating income margin was 26.1 percent, a decrease from 26.3 percent in fourth-quarter 2022. Full-year 2023 Consumer operating income was $29.0 billion, an increase of 0.6 percent year over year, and segment operating income margin was 28.5 percent, an increase from 27.9 percent in full-year 2022. Segment EBITDA1 in fourth-quarter 2023 was $10.4 billion, an increase of 2.4 percent year over year. This improvement can be attributed to wireless service revenue growth and lower upgrade volumes. Segment EBITDA margin1 in fourth-quarter 2023 was 38.5 percent, an increase from 37.9 percent in fourth-quarter 2022. Full-year 2023 segment EBITDA margin1 was 41.4 percent, an increase from 40.2 percent in 2022.
Verizon Business results
- Total Verizon Business revenue was $7.6 billion in fourth-quarter 2023, a decrease of 3.6 percent year over year as lower wireline revenue and lower wireless equipment revenue was partially offset by higher wireless service revenue. For full-year 2023, total Business revenue was $30.1 billion, a 3.1 percent decrease year over year.
- Business wireless service revenue in fourth-quarter 2023 was $3.4 billion, an increase of 3.0 percent year over year. This was driven by the larger allocation of our administration and telco recovery fees from other revenue into wireless service revenue, continued strong net additions and the benefit of pricing actions implemented earlier in the year. Full-year 2023 Business wireless service revenue was $13.4 billion, an increase of 4.1 percent compared to full-year 2022.
- Business reported 292,000 wireless retail postpaid net additions in fourth-quarter 2023, including 131,000 postpaid phone net additions. This was the 10th consecutive quarter that Business reported more than 125,000 postpaid phone net additions. Business continues to grow volumes and expand its relationships with customers strengthening its position as a wireless market share leader.
- Business wireless retail postpaid churn was 1.48 percent in fourth-quarter 2023, and wireless retail postpaid phone churn was 1.12 percent.
- Business reported 144,000 fixed wireless net additions in fourth-quarter 2023.
- In fourth-quarter 2023, Verizon Business operating income was $443 million, a decrease of 24.3 percent year over year, and segment operating income margin was 5.8 percent, a decrease from 7.4 percent in fourth-quarter 2022. Full-year 2023 segment operating income was $2.1 billion, a decrease of 21.5 percent year over year, and segment operating income margin was 6.9 percent, compared with 8.5 percent in full-year 2022. Segment EBITDA1 in fourth-quarter 2023 was $1.6 billion, a decrease of 4.5 percent year over year, driven by continued declines in high margin wireline revenues. Segment EBITDA margin1 in fourth-quarter 2023 was 21.1 percent, a decrease from 21.3 percent in fourth-quarter 2022. For the full year, segment EBITDA margin1 was 21.8 percent, a decrease from 22.3 percent in 2022.
Outlook and guidance
The company does not provide a reconciliation for any of the following adjusted (non-GAAP) forecasts because it cannot, without unreasonable effort, predict the special items that could arise, and the company is unable to address the probable significance of the unavailable information.
For 2024, Verizon expects the following:
- Total wireless service revenue growth2 of 2.0 percent to 3.5 percent.
- Adjusted EBITDA growth1 of 1.0 percent to 3.0 percent.
- Adjusted EPS1 of $4.50 to $4.70.
- Capital expenditures between $17.0 billion and $17.5 billion.
- Adjusted effective income tax rate1 in the range of 22.5 percent to 24.0 percent.
1 Non-GAAP financial measure. See the accompanying schedules and www.verizon.com/about/investors for reconciliations of non-GAAP financial measures cited in this document to most directly comparable financial measures under generally accepted accounting principles (GAAP).
2 Total wireless service revenue represents the sum of Consumer and Business segments.
Verizon Communications Inc. (NYSE, Nasdaq: VZ) was formed on June 30, 2000 and is one of the world’s leading providers of technology and communications services. Headquartered in New York City and with a presence around the world, Verizon generated revenues of $134.0 billion in 2023. The company offers data, video and voice services and solutions on its award-winning networks and platforms, delivering on customers’ demand for mobility, reliable network connectivity, security and control.
VERIZON’S ONLINE MEDIA CENTER: News releases, stories, media contacts and other resources are available at verizon.com/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,” “assumes,” “believes,” “estimates,” “expects,” “forecasts,” “hopes,” “intends,” “plans,” “targets” 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: the effects of competition in the markets in which we operate, including the inability to successfully respond to competitive factors such as prices, promotional incentives and evolving consumer preferences; failure to take advantage of, or respond to competitors' use of, developments in technology and address changes in consumer demand; performance issues or delays in the deployment of our 5G network resulting in significant costs or a reduction in the anticipated benefits of the enhancement to our networks; the inability to implement our business strategy; adverse conditions in the U.S. and international economies, including inflation and changing interest rates in the markets in which we operate; cyber attacks impacting our networks or systems and any resulting financial or reputational impact; damage to our infrastructure or disruption of our operations from natural disasters, extreme weather conditions, acts of war, terrorist attacks or other hostile acts and any resulting financial or reputational impact; disruption of our key suppliers’ or vendors' provisioning of products or services, including as a result of geopolitical factors or the potential impacts of global climate change; material adverse changes in labor matters and any resulting financial or operational impact; damage to our reputation or brands; the impact of public health crises on our operations, our employees and the ways in which our customers use our networks and other products and services; changes in the regulatory environment in which we operate, including any increase in restrictions on our ability to operate our networks or businesses; allegations regarding the release of hazardous materials or pollutants into the environment from our, or our predecessors’, network assets and any related government investigations, regulatory developments, litigation, penalties and other liability, remediation and compliance costs, operational impacts or reputational damage; our high level of indebtedness; significant litigation and any resulting material expenses incurred in defending against lawsuits or paying awards or settlements; 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; significant increases in benefit plan costs or lower investment returns on plan assets; changes in tax laws or regulations, or in their interpretation, or challenges to our tax positions, resulting in additional tax expense or liabilities; and 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.Non-GAAP Reconciliations - Consolidated Verizon
Consolidated EBITDA and Consolidated Adjusted EBITDA
(dollars in millions) Unaudited 3 Mos. Ended 12/31/23 3 Mos. Ended 9/30/23 3 Mos. Ended 6/30/23 3 Mos. Ended 3/31/23 3 Mos. Ended 12/31/22 3 Mos. Ended 9/30/22 3 Mos. Ended
6/30/223 Mos. Ended
3/31/22Consolidated Net Income (Loss) $ (2,573 ) $ 4,884 $ 4,766 $ 5,018 $ 6,698 $ 5,024 $ 5,315 $ 4,711 Add: Provision for income taxes 756 1,308 1,346 1,482 2,113 1,496 1,542 1,372 Interest expense 1,599 1,433 1,285 1,207 1,105 937 785 786 Depreciation and amortization expense (1) 4,516 4,431 4,359 4,318 4,218 4,324 4,321 4,236 Consolidated EBITDA $ 4,298 $ 12,056 $ 11,756 $ 12,025 $ 14,134 $ 11,781 $ 11,963 $ 11,105 Add/(subtract): Other (income) expense, net (2) $ 807 $ (170 ) $ (210 ) $ (114 ) $ (2,687 ) $ 439 $ (49 ) $ 924 Equity in losses (earnings) of unconsolidated businesses 11 18 33 (9 ) (4 ) (2 ) (41 ) 3 Severance charges 296 — 237 — 304 — — — Verizon Business Group goodwill impairment 5,841 — — — — — — — Asset rationalization 325 — 155 — — — — — Legal settlement 100 — — — — — — — Business transformation costs — 176 — — — — — — Non-strategic business shutdown — 158 — — — — — — 7,380 182 215 (123 ) (2,387 ) 437 (90 ) 927 Consolidated Adjusted EBITDA $ 11,678 $ 12,238 $ 11,971 $ 11,902 $ 11,747 $ 12,218 $ 11,873 $ 12,032 Consolidated Adjusted EBITDA - Year over year change % (0.6)% Footnotes: (1) Includes Amortization of acquisition-related intangible assets and a portion of the Non-strategic business shutdown, where applicable. (2) Includes Pension and benefits remeasurement adjustments and Early debt redemption costs, where applicable. Consolidated EBITDA and Consolidated Adjusted EBITDA (LTM)
Unaudited 12 Mos. Ended
12/31/2312 Mos. Ended
9/30/2312 Mos. Ended
12/31/22Consolidated Net Income $ 12,095 $ 21,366 $ 21,748 Add: Provision for income taxes 4,892 6,249 6,523 Interest expense 5,524 5,030 3,613 Depreciation and amortization expense (1) 17,624 17,326 17,099 Consolidated EBITDA $ 40,135 $ 49,971 $ 48,983 Add/(subtract): Other (income) expense, net (2) $ 313 $ (3,181 ) $ (1,373 ) Equity in losses (earnings) of unconsolidated businesses 53 38 (44 ) Severance charges 533 541 304 Verizon Business Group goodwill impairment 5,841 — — Asset rationalization 480 155 — Legal settlement 100 — — Business transformation costs 176 176 — Non-strategic business shutdown 158 158 — 7,654 (2,113 ) (1,113 ) Consolidated Adjusted EBITDA $ 47,789 $ 47,858 $ 47,870 Footnotes: (1) Includes Amortization of acquisition-related intangible assets and a portion of the Non-strategic business shutdown, where applicable. (2) Includes Pension and benefits remeasurement adjustments and Early debt redemption costs, where applicable. Net Unsecured Debt and Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio (dollars in millions) Unaudited 12/31/23 9/30/23 12/31/22 Debt maturing within one year $ 12,973 $ 12,950 $ 9,963 Long-term debt 137,701 134,441 140,676 Total Debt 150,674 147,391 150,639 Less Secured debt 22,183 20,951 20,008 Unsecured Debt 128,491 126,440 130,631 Less Cash and cash equivalents 2,065 4,210 2,605 Net Unsecured Debt $ 126,426 $ 122,230 $ 128,026 Consolidated Net Income (LTM) $ 12,095 $ 21,748 Unsecured Debt to Consolidated Net Income Ratio 10.6x 6.0x Consolidated Adjusted EBITDA (LTM) $ 47,789 $ 47,870 Net Unsecured Debt to Consolidated Adjusted EBITDA Ratio 2.6x 2.7x Net Unsecured Debt - Quarter over quarter change $ 4,196 Net Unsecured Debt - Year over year change $ (1,600 ) Adjusted Earnings per Common Share (Adjusted EPS)
(dollars in millions, except per share amounts) Unaudited 3 Mos. Ended 12/31/23 3 Mos. Ended 12/31/22 Pre-tax Tax After-Tax Pre-tax Tax After-Tax EPS $ (0.64 ) $ 1.56 Amortization of acquisition-related intangible assets $ 227 $ (57 ) $ 170 0.04 $ 115 $ (34 ) $ 81 0.02 Severance, pension and benefits charges (credits) 1,288 (319 ) 969 0.23 (2,214 ) 552 (1,662 ) (0.40 ) Verizon Business Group goodwill impairment 5,841 (52 ) 5,789 1.37 — — — — Asset rationalization 325 (80 ) 245 0.06 — — — — Legal settlement 100 (25 ) 75 0.02 — — — — $ 7,781 $ (533 ) $ 7,248 $ 1.72 $ (2,099 ) $ 518 $ (1,581 ) $ (0.38 ) Adjusted EPS $ 1.08 $ 1.19 Footnotes: Adjusted EPS may not add due to rounding. (dollars in millions, except per share amounts) Unaudited 12 Mos. Ended 12/31/23 12 Mos. Ended 12/31/22 Pre-tax Tax After-Tax Pre-tax Tax After-Tax EPS $ 2.75 $ 5.06 Amortization of acquisition-related intangible assets $ 865 $ (219 ) $ 646 0.15 $ 826 $ (214 ) $ 612 0.15 Severance, pension and benefits charges (credits) 1,525 (378 ) 1,147 0.27 (1,371 ) 339 (1,032 ) (0.25 ) Verizon Business Group goodwill impairment 5,841 (52 ) 5,789 1.37 — — — — Asset rationalization 480 (113 ) 367 0.09 — — — — Legal settlement 100 (25 ) 75 0.02 — — — — Business transformation costs 176 (45 ) 131 0.03 — — — — Non-strategic business shutdown 179 (83 ) 96 0.02 — — — — Early debt redemption costs — — — — 1,241 (316 ) 925 0.22 $ 9,166 $ (915 ) $ 8,251 $ 1.96 $ 696 $ (191 ) $ 505 $ 0.12 Adjusted EPS $ 4.71 $ 5.18 Footnotes: Adjusted EPS may not add due to rounding. Free Cash Flow (dollars in millions) Unaudited 12 Mos. Ended
12/31/2312 Mos. Ended
12/31/22Net Cash Provided by Operating Activities $ 37,475 $ 37,141 Capital expenditures (including capitalized software) (18,767 ) (23,087 ) Free Cash Flow $ 18,708 $ 14,054 Non-GAAP Reconciliations - Segments
Segment EBITDA and Segment EBITDA Margin Consumer (dollars in millions) Unaudited 3 Mos. Ended
12/31/233 Mos. Ended
12/31/2212 Mos. Ended
12/31/2312 Mos. Ended
12/31/22Operating Income $ 7,035 $ 7,028 $ 29,011 $ 28,846 Add Depreciation and amortization expense 3,344 3,111 13,077 12,716 Segment EBITDA $ 10,379 $ 10,139 $ 42,088 $ 41,562 Year over year change % 2.4 % 1.3 % Total operating revenues $ 26,954 $ 26,770 $ 101,626 $ 103,506 Operating Income Margin 26.1 % 26.3 % 28.5 % 27.9 % Segment EBITDA Margin 38.5 % 37.9 % 41.4 % 40.2 % Business (dollars in millions) Unaudited 3 Mos. Ended
12/31/233 Mos. Ended
12/31/2212 Mos. Ended
12/31/2312 Mos. Ended
12/31/22Operating Income $ 443 $ 585 $ 2,066 $ 2,631 Add Depreciation and amortization expense 1,164 1,098 4,488 4,312 Segment EBITDA $ 1,607 $ 1,683 $ 6,554 $ 6,943 Year over year change % (4.5) % (5.6) % Total operating revenues $ 7,618 $ 7,900 $ 30,122 $ 31,072 Operating Income Margin 5.8 % 7.4 % 6.9 % 8.5 % Segment EBITDA Margin 21.1 % 21.3 % 21.8 % 22.3 % Media contacts:
Katie Magnotta
201-602-9235
katie.magnotta@verizon.comEric Wilkens
201-572-9317
eric.wilkens@verizon.com