Verizon Communications Inc. · NYSE:VZ
Verizon Communications — Q1 2016 Earnings Presentation
15 slides from Verizon Communications's earnings presentation, Apr 21, 2016
Slide 1: 1st Quarter 2016 Earnings Results
1st Quarter 2016 Earnings Results Fran Shammo Chief Financial Officer April 21, 2016
Slide 2: Safe Harbor Statement
“Safe Harbor” Statement NOTE: In this presentation 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
Slide 3: Consolidated Earnings Summary
Consolidated Earnings Summary 1Q ’16 Reported EPS $1.06 Add: Pension remeasurement $0.02 Less: Gain on spectrum license transaction $0.02 Adjusted EPS* $1.06 * Adjusted for non-operational items Note: Amounts may not add due to rounding Strong earnings performance © 2016 Verizon 3
Slide 4: Strategy for Growth
Strategy for Growth Smart Cities 1. Identify high growth markets Solutions Networkfleet AOL Brands 2. Invest and execute 3. Achieve market leadership Platforms ThingSpace IOT VDMS 1. Protect & Grow Connectivity 2. Drive profitability 3. Create financial flexibility 5G Network Architecture Global IP
Slide 5: Operating & Financial Summary
Consolidated Earnings Per Share Operating & $1.06 $1.02 Financial Summary $0.89* 3.9% Y/Y Growth Total revenue excluding AOL down 1.5% Y/Y in 1Q ’16 1Q '15 4Q '15 1Q '16 1Q ’16 EBITDA of $12.0B Total Revenue ($B) 1Q ’16 EBITDA margin of 37.2%, $34.3 down 20 bps Y/Y $32.0 $32.2 0.6% Y/Y Growth 1Q '15
Slide 6: Cash Flow Summary
Consolidated Cash Flow Summary ($ in billions) 1Q ’15 1Q ’16 Cash flow from operations $10.2* $7.4 Capital expenditures $3.7 $3.4 Free cash flow $6.5 $4.0 Dividends paid $2.2 $2.3 Total debt $112.9 $109.9 Net debt to adjusted EBITDA 2.5x 2.2x * Includes $2.4B from the tower transaction Note: Amounts
Slide 7: Wireless: Connections / Net Adds / Churn
Wireless Retail Connections (M) Connections / 112.1 112.6 108.6 Net Adds / Churn 3.7% Y/Y Growth 106.5 107.2 102.6 Retail postpaid connections growth of 4.4% Y/Y in 1Q ’16 640K retail postpaid net adds 1Q '15 4Q '15 1Q '16 ■ Retail Postpaid ■ Retail Prepaid in 1Q ’16* • 452K new 4G LTE Retail Postpa
Slide 8: Wireless: Devices / 4G LTE
Wireless Retail Postpaid Device Activations (M) Devices / 4G LTE 13.4 11.3 11.6 10.3 9.9 Smartphone penetration of 85%, up from 80% a year ago Added 2.5M 4G LTE devices in 1Q '15 2Q '15 3Q '15 4Q '15 1Q '16 ■ Smartphones ■ Other 1Q ’16 • About 95% of smartphones 4G LTE Devices (M) are 4G LTE 86.9 80
Slide 9: Wireless: Profitability & Revenue
Wireless Segment EBITDA ($B) Profitability & $10.0 $10.2 Revenue $9.1 1.7% Y/Y Growth 1Q ’16 EBITDA margin on 44.8% 46.2% total revenue of 46.2% up 38.4% 140 bps Y/Y Service revenue plus 1Q '15 4Q '15 1Q '16 installment billings up 1.6% ■ EBITDA Margin % Y/Y in 1Q ’16 Total Revenue ($B) 48% of postp
Slide 10: Wireline: Mass Markets
Wireline Consumer Revenue ($B) Mass Markets $4.0 $4.1 $4.0 0.8% Y/Y Growth Consumer revenue grew 0.8% Y/Y in 1Q ’16 Fios now 81% of consumer revenue 1Q '15 4Q '15 1Q '16 • Fios consumer revenue growth of 4.7% Y/Y in 1Q ’16 Consumer Fios Internet Subscribers Fios Internet subscribers • 98K net adds F
Slide 11: Wireline: Profitability & Revenue
Wireline Segment EBITDA ($B) Profitability & Revenue $2.2 $2.3 $2.2 1.2% Y/Y Growth 24.2% 23.4% 22.7% 1Q ’16 EBITDA of $2.2B, up 1.2% Y/Y 1Q ’16 EBITDA margin of 1Q '15 4Q '15 1Q '16 23.4% ■ EBITDA Margin % Total Fios revenue grew 5.0% Total Revenue ($B) Y/Y in 1Q ’16 Global Enterprise revenue $9.5
Slide 12: Wireline Post Frontier: Revenue & Margin
Wireline – Post Frontier Total Revenue ($B) Revenue & Margin Full Year “Preliminary Historical Financials” $38 $38 Recast Y/Y Growth $33 (1.9%) $32 Recast historical results associated 23% 24% with Florida, Texas and California 18% 18% will be included in Corporate & Other in future filings 2014 201
Slide 13: Liability Management
Consolidated Liability Management Frontier transaction generated Total Debt ($B) gross cash proceeds of $9.9B $113 Proceeds and cash generation $110 utilized to reduce debt • Higher cost debt targeted • Range of maturities through 2043 YE '14 1Q '16 • Completed tender offers and early redemptions of
Slide 14: Summary & 2016 Priorities
Summary & 2016 Priorities Deliver solid operating and financial performance Consistently invest in networks and platforms Focus on new revenue streams Generate strong cash flow Improve cost and capital efficiency Return value to shareholders Confident in ability to execute while building for the fut
Slide 15: 1st Quarter 2016 Earnings Results
1st Quarter 2016 Earnings Results Fran Shammo Chief Financial Officer April 21, 2016
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