Verizon Reports Double Digit Earnings Growth for 2Q 2013

This morning, July 18, Verizon Communications Inc. reported double-digit percentage growth in operating income and earnings per share for the second quarter of 2013. This is being attributed to strategic investments in 4G LTE, FiOS and global networks.

Lowell McAdam, Verizon chairman and CEO, re-enforced this by saying, “Verizon’s consistent strategic investments in wireless, FiOS and global networks drove strong financial performance in the first half of 2013. Having posted double-digit earnings growth in five of the last six quarters, we are focused on continuing to provide the best portfolio of products on the most reliable networks; capturing incremental revenue growth in broadband, video and cloud services; and sustaining our earnings and cash-flow momentum.”


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According to the new report from Verizon, the breakdown is as follows:

Consolidated

• 78 cents in earnings per share (EPS), including a non-operational gain of 5 cents per share related to pensions, compared with 64 cents per share in 2Q 2012.
• 73 cents in adjusted EPS (non-GAAP), a 14.1 percent increase compared with 2Q 2012.

Wireless

• 8.3 percent year-over-year increase in service revenues in 2Q 2013; 7.8 percent increase in retail service revenues; 32.4 percent operating income margin and 49.8 percent segment EBITDA margin on service revenues (non-GAAP).
• 941,000 retail postpaid net additions, up 6 percent year over year; low retail postpaid churn of 0.93 percent; 100.1 million total retail connections, 94.3 million total retail postpaid connections.
• 4G LTE service now available to 301 million people in 500 markets across the U.S.

Wireline

• 4.7 percent year-over-year increase in consumer revenues; consumer ARPU (average revenue per user) up 9.4 percent year over year, to $109.67.
• 14.7 percent year-over-year increase in FiOS revenue; 161,000 FiOS Internet and 140,000 FiOS Video net additions, including the addition of the 5 millionth FiOS Video customer with continued increased sales penetration for both services.
• 4.8 percent year-over-year increase in revenues for global enterprise strategic services.

It would seem that getting a head start on rolling out a faster fourth generation wireless network is paying off for Verizon. The healthy profit of $2.25 billion is being driven by growth in wireless subscribers. The net income came in higher than was expected by Wall Street analysts. They were expecting around 72 cents a share.

Verizon’s consolidated results reflect that it is experiencing continued profitable growth. The total operating revenue in 2Q 2013 was $29.8 billion. This represents a 4.3 percent increase as compared to last year. Operating income rose to $6.6 billion which is an increase of 16 percent. Cash flow from operating activities totaled $17.1 billion for the first half of 2013 and capital expenditures were $7.6 billion, compared with $7.4 billion for the first half of 2012.

Some of the wireless financial highlights include:

• Total revenues were $20.0 billion in second-quarter 2013, up 7.5 percent year over year.  Service revenues in the quarter totaled $17.1 billion, up 8.3 percent year over year.  Retail service revenues grew 7.8 percent year over year, to $16.4 billion.
• Retail postpaid ARPA (average revenue per account) increased 6.4 percent over second-quarter 2012, to $152.50 per month.
• In second-quarter 2013, wireless operating income margin was 32.4 percent, compared with 30.8 percent in second-quarter 2012.  Segment EBITDA margin on service revenues was 49.8 percent, up 80 basis points over second-quarter 2012.

On the wireless operational side, Verizon added 161,000 new FiOS connections and 140,000 new FiOS Video connections for 2Q 2013. According to the press release FiOS penetration continued to increase with a 38.6 percentage for the end of the quarter.

The end of 2Q 2013 saw 35 percent of FiOS Internet customers subscribed to FiOS Quantum. This plan provides speeds ranging from 50 to 300 megabits per second. Broadband connections totaled 8.9 million at the end of the second quarter representing a 1.9 percent year-over-year increase.

Verizon Enterprise Solutions completed agreements with and has begun to deploy innovative business technology solutions for a variety of corporations and organizations around the world in the quarter.