Verizon(US:VZ)2024-04-25 13:00Financial Performance - Verizon's Consumer segment reported operating revenues of $25.1 billion for the three months ended March 31, 2024, an increase of 0.8% compared to $24.9 billion in the same period of 2023[156]. - The Business segment's operating revenues decreased by 1.6% to $7.4 billion for the three months ended March 31, 2024, down from $7.5 billion in the same period of 2023[157]. - Consolidated operating revenues increased to $32.98 billion for the three months ended March 31, 2024, a slight increase of 0.2% from $32.91 billion in the same period of 2023[165]. - Total operating revenues for the three months ended March 31, 2024, increased to $25,057 million, a 0.8% increase from $24,857 million in the same period of 2023[198]. - Wireless service revenue rose to $16,134 million, reflecting a 3.4% increase compared to $15,599 million in the prior year[198]. - Consolidated Net Income for the three months ended March 31, 2024, was $4,722 million, down from $5,018 million in the same period of 2023[182]. - Consolidated EBITDA increased to $12,155 million, slightly up from $12,025 million year-over-year[182]. - Consolidated Adjusted EBITDA rose to $12,072 million, compared to $11,902 million in the same period of 2023[182]. Expenses and Costs - Cost of wireless equipment decreased by $521 million, or 8.1%, primarily due to a 19% decrease in upgrades[167]. - Selling, general and administrative expenses increased by $637 million, or 8.5%, primarily due to higher personnel costs and increased sales commission expenses[167]. - Total operating expenses decreased slightly to $17,685 million, down 0.4% from $17,758 million in the previous year[203]. - Total operating expenses for the three months ended March 31, 2024, were $6.977 billion, a slight increase of 0.5% compared to $6.943 billion in the same period of 2023[218]. Capital Expenditures and Investments - Capital expenditures for the three months ended March 31, 2024, totaled $4.4 billion, with full-year expectations ranging from $17.0 billion to $17.5 billion[161]. - Capital expenditures decreased by approximately $1.6 billion to $4.4 billion for the three months ended March 31, 2024, compared to $6.0 billion in the same period of 2023[232]. - Verizon continues to focus on enhancing its 5G network and has obtained full access to its C-Band spectrum as of August 2023[162]. - The company is investing in fiber-based networks to support growing demand for reliable high-speed connections[163]. - Verizon's strategy includes significant capital investments to acquire wireless spectrum and enhance network capabilities[150]. Debt and Interest - Total interest expense increased to $1,635 million for the three months ended March 31, 2024, up 35.5% from $1,207 million in the same period of 2023[176]. - Average debt outstanding was $152,754 million, with an effective interest rate of 5.0% for the three months ended March 31, 2024[176]. - Total debt increased to $151.7 billion as of March 31, 2024, from $150.7 billion at December 31, 2023, with an effective interest rate rising to 5.0% from 4.6%[238]. Taxation - Provision for income taxes decreased to $1,353 million, an 8.7% decline from $1,482 million in the prior year[177]. - The effective income tax rate for the three months ended March 31, 2024, was 22.3%, down from 22.8% in the prior year[177]. - Unrecognized tax benefits remained at $2.7 billion as of March 31, 2024, with interest and penalties related to these benefits at $650 million[178]. Cash Flow and Dividends - Net cash provided by operating activities decreased by $1.205 billion to $7.084 billion for the three months ended March 31, 2024, compared to $8.289 billion in the same period of 2023[229]. - Free cash flow for the three months ended March 31, 2024 was $2.708 billion, an increase of $377 million compared to $2.331 billion in the same period of 2023[247]. - The company paid $2.8 billion in cash dividends during the three months ended March 31, 2024, compared to $2.7 billion in the same period of 2023[243]. Competition and Market Conditions - The company faces significant competition in its markets, impacting pricing, promotional incentives, and consumer preferences[263]. - Adverse economic conditions, including inflation and changing interest rates, may affect the company's operations in both U.S. and international markets[263]. Risks and Challenges - There are performance issues and delays in the deployment of the 5G network, which could lead to increased costs and reduced benefits[263]. - Cyber attacks pose a risk to the company's networks and systems, potentially leading to financial and reputational damage[263]. - The company is exposed to disruptions from natural disasters, extreme weather, and geopolitical factors, which could impact operations and infrastructure[263]. - High levels of indebtedness may affect the company's financial stability and operational flexibility[265]. - Changes in tax laws or regulations could result in additional tax expenses or liabilities for the company[265]. - Significant litigation could incur material expenses for the company in defending against lawsuits or paying settlements[265]. - The company is at risk of adverse changes in credit ratings, which could affect financing costs and availability[265]. - Changes in accounting rules or interpretations may impact the company's earnings and financial reporting[265]. Acquisitions and Agreements - The company acquired TracFone Wireless, Inc. for approximately $3.5 billion in cash and stock, with contingent consideration of up to $650 million based on performance measures[260]. - The company amended its revolving credit facility in March 2024, increasing its capacity from $9.5 billion to $12.0 billion and extending the maturity to 2028[241]. - The company recorded a pre-tax charge of $106 million related to a legacy legal matter during the three months ended March 31, 2024[228].