1Q 2012 HIGHLIGHTS
*50 cents in diluted earnings per shared compared with 51 cents per share in 1Q 2011 – a 15.7 percent increase.
*$6.0 billion in cash flow from operating activities, up $922 million compared with 1Q 2011.
*4.6 percent year-over-year quarterly revenue growth.
*7.7 percent year-over-year increase in service revenues in 1Q 2012; 8.9 percent year-over-year increase in retail service revenues; highest growth rate in three years; data revenues up 21.1 percent; 28.6 percent operating income margin and 46.3 percent Segment EBITDA margin on service revenues (non-GAAP).
*734,000 retail net customer additions, excluding acquisitions and adjustments, includes 501,000 retail postpaid net customer additions; continued low retail postpaid churn of 0.96 percent.
*93.0 million total retail customers; 88.0 million total retail postpaid customers.
"Verizon delivered double-digit earnings growth and strong cash flow this quarter," said Lowell McAdam, Verizon chairman and CEO. "We built momentum coming out of 2011, and our results show that we continue to execute in the key growth areas of our business. Verizon Wireless produced both great growth and great margins, and we produced another strong quarter of FiOS growth. We are confident we will improve Wireline margins for the full year. Our repositioning of Verizon Enterprise Solutions has better aligned our strengths in high-growth markets, and we expect our enterprise business to contribute even more to overall Wireline revenue growth and profitability over time."
He added: "We remain confident in our ability to take advantage of the growth opportunities we see, and we are focused on driving operating efficiencies. We are on track with our plans and expect to continue to deliver strong results."
Strong Cash Flows, Increased Capital Efficiency
In first-quarter 2012, Verizon's total operating revenues were $28.2 billion on a consolidated basis, an increase of 4.6 percent compared with first-quarter 2011.
Consolidated operating income was $5.2 billion in first-quarter 2012, compared with $4.5 billion in first-quarter 2011. Consolidated EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $9.2 billion in first-quarter 2012, compared with $8.5 billion in first-quarter 2011.
Cash flow from operating activities totaled $6.0 billion in first-quarter 2012, an increase of $922 million compared with first-quarter 2011. Capital expenditures totaled $3.6 billion in first-quarter 2012, a decrease of $798 million compared with first-quarter 2011, as Verizon improved its capital-to-revenue efficiency. Free cash flow (non-GAAP, cash flow from operations less capex) was $2.4 billion in first-quarter 2012, compared with $672 million in first-quarter 2011. Verizon expects increasing free cash flow levels through 2012.
Verizon Wireless Delivers Strong Financial, Operational Results
In first-quarter 2012, Verizon Wireless delivered strong growth in revenues and retail customers; increased retail postpaid ARPU (average monthly service revenue per user) and smartphone penetration; and delivered a strong EBITDA margin.
Wireless Financial Highlights
*Service revenues in the quarter totaled $15.4 billion, up 7.7 percent year over year. Retail service revenues grew 8.9 percent year over year, to $14.9 billion, an increase of 110 basis points over fourth-quarter 2011 and the highest growth rate in three years.
*Data revenues were $6.6 billion, up $1.1 billion – or 21.1 percent – year over year, and represent 42.9 percent of all service revenues. Total revenues were $18.3 billion, up 8.2 percent year over year.
*Retail postpaid ARPU grew 3.6 percent over first-quarter 2011, to $55.43. Retail postpaid data ARPU increased to $23.80, up 16.0 percent year over year. Retail service ARPU grew 3.4 percent, to $53.66.
*Wireless operating income margin was 28.6 percent. Segment EBITDA margin on service revenues (non-GAAP) was 46.3 percent.
Wireless Operational Highlights
*Verizon Wireless added 734,000 retail net customers in the first quarter, including 501,000 retail postpaid net customers. These additions exclude acquisitions and adjustments.
*At the end of the first quarter, the company had 93.0 million retail customers, a 5.2 percent increase year over year, including 88.0 million retail postpaid customers.
*At the end of the first quarter, nearly 47 percent of Verizon Wireless' retail postpaid customer phone base were smartphones, up from 43.5 percent at the end of fourth-quarter 2011.
*Retail postpaid churn was 0.96 percent, an improvement of 5 basis points year over year. Total retail churn was 1.24 percent, an improvement of 9 basis points year over year.
*Verizon Wireless continued to roll out its 4G LTE mobile broadband network, the largest such network in the U.S. As of today, Verizon Wireless 4G LTE service is available to more than 200 million people in 230 markets across the U.S. – more than two-thirds of the population.
*Verizon Wireless introduced five new 4G LTE devices in the first quarter 2012: the Droid 4 and Droid Razr Maxx by Motorola, the Spectrum and Lucid by LG, and the Samsung Galaxy Tab 7.7. In addition, the Apple iPad with Wi-Fi + 4G became available from Verizon Wireless in mid-March.