StockSelector.com
  Research, Select, & Monitor Tuesday, May 21, 2019 9:33:17 PM ET  
Trade Ideas The Market Industries Stocks Portfolio

 
Ticker Lookup
AT&T Corp.$32.41$.22.68%

  Quote | Ranking | Chart | Valuations | Sentiment | Industry | News | Earnings | Analysts | More...

Your Target?

 AT&T Completes Time Warner Acquisition; Agrees to Acquire AppNexus; Reports Second-Quarter Results
   Tuesday, July 24, 2018 4:14:00 PM ET

Consolidated results include 16 days of Time Warner results for the second quarter

  • Diluted EPS of $0.81 as reported compared to $0.63 in the year-ago quarter
  • Adjusted EPS of $0.91 compared to $0.79 in the year-ago quarter
  • Consolidated revenues of $39.0 billion
  • Cash from operations of $10.2 billion, up 17.5%
  • Capital expenditures of $5.1 billion
  • Free cash flow of $5.1 billion, up 46.4%

Company Updates 2018 Guidance1

  • Raising adjusted EPS to high end of $3.50 range
  • Raising free cash flow to high end of $21 billion range (inclusive of all deal and integration costs)
  • Capital Investment of approximately $25 billion; $22 billion net of expected FirstNet reimbursements and vendor financing


Note: AT&T’s second-quarter earnings conference call will be webcast at 4:30 p.m. ET on Tuesday, July 24, 2018. The webcast and related materials will be available on AT&T’s Investor Relations website at https://investors.att.com .

DALLAS--(BUSINESS WIRE)-- “It was an exciting quarter for AT&T as we completed the acquisition of Time Warner on June 14 and created a modern media company built around premium content, 170 million direct-to-customer relationships, advertising technology and high-speed networks,” said Randall Stephenson, AT&T chairman and CEO.2

“Time Warner joins us coming off an impressive second-quarter. Turner turned in solid subscription and advertising revenue growth, Warner Bros. is in high gear with a record number of series in production, and HBO delivered strong subscriber revenue growth.

“Since we closed the Time Warner deal, we’ve also announced an agreement to acquire ad-tech leader AppNexus, which will be an important step to strengthen our leadership in advanced TV advertising.

“Our goal is to reshape the way media and entertainment work for consumers, and you will see us continue to do exactly that.”


AT&T Inc. (NYSE:T ) reported solid wireless results in the second quarter, including postpaid phone gains, continued strong prepaid phone growth and stable postpaid churn. On a GAAP basis, service revenue declined; however, on a comparable basis service revenue grew. Including the acquisition of Time Warner in mid-June, AT&T reported consolidated revenue growth on a comparable basis, which offset pressure from its entertainment and business segments, and strong earnings and free cash flow growth.

  • Strong subscriber gains:
    • 3.8 million total wireless net adds
      • 3.1 million in U.S., driven by connected devices and prepaid
      • 756,000 in Mexico
    • 219,000 total video net adds (U.S. and Latin America)
  • U.S. wireless results:
    • Service revenue growth on a comparable basis
    • 46,000 postpaid phone net adds with continued strong year-over-year improvement
    • Continued prepaid growth with 356,000 phone net adds
    • Nearly 400,000 branded smartphones added to base
    • Second-quarter postpaid phone churn of 0.82%
  • Entertainment Group results:
    • 342,000 DIRECTV NOW net adds to reach more than 1.8 million subscribers
    • 80,000 total video net adds; total video customer base stable with DIRECTV NOW; AT&T WatchTV launched
    • 76,000 IP broadband net adds; 23,000 total broadband net adds; more than 9 million customer locations passed with fiber
    • AdWorks continues double-digit revenue growth
  • Time Warner acquisition closed on June 14; full second-quarter results include:
    • HBO and Turner year-over-year subscription revenue growth
    • Turner ad revenues up 3%
    • Record number of series in production at Warner Bros.
    • 166 Primetime Emmy Awards nominations

Consolidated Financial Results

AT&T adopted new U.S. accounting standards as required that deal with revenue recognition (ASC 606), post-employment benefit costs and certain cash receipts on installment receivables. These changes impact the company’s income statements and cash flows. With the adoption of ASC 606, the company made a policy decision to record Universal Service Fees (USF) and other regulatory fees on a net basis. The company is providing comparable results in addition to GAAP to help investors better understand the impact on financials from ASC 606 and the policy decision. Historical income statements and cash flows have been recast to show only the impact of the adoption of the other two accounting standards.

The company’s consolidated results include 16 days of Time Warner results for the second quarter. Time Warner’s total second-quarter results on a historical basis are located on AT&T’s Investor Relations website. Pro forma schedules are expected to be filed in August.

AT&T’s consolidated revenues for the second quarter totaled $39.0 billion versus $39.8 billion in the year-ago quarter, primarily due to the impact of ASC 606 which included netting of approximately $900 million of USF with operating expenses. On a comparative basis, declines in domestic video and legacy wireline services were offset by adding approximately $1.1 billion from Time Warner net of eliminations and growth in wireless, strategic business services and advertising. On a comparative basis, revenues were $39.9 billion, an increase of 0.2% primarily due to the second-quarter close of the Time Warner acquisition.

Operating expenses were $32.5 billion versus $33.3 billion, primarily due to the netting of USF and other regulatory fee revenues and the deferral of commissions under ASC 606. Excluding those impacts, operating expenses were $34.0 billion, an increase of about $700 million due to inclusion of Time Warner results, content cost pressure and higher wireless equipment costs partially offset by cost efficiencies.

Versus results from the second quarter of 2017, operating income was $6.5 billion, stable versus the year-ago quarter; and operating income margin was 16.6% versus 16.4%. On a comparative basis, operating income was $5.9 billion and operating income margin was 14.8%. When adjusting for a non-cash actuarial gain on benefit plans, amortization, merger- and integration-related expenses and other items, operating income was $8.2 billion, or $7.7 billion on a comparative basis, versus $8.1 billion in the year-ago quarter and operating income margin was 21.1%, or 19.2% on a comparative basis, versus 20.3% in the year-ago quarter.

Second-quarter net income attributable to AT&T was $5.1 billion, or $0.81 per diluted share, versus $3.9 billion, or $0.63 per diluted share, in the year-ago quarter. Adjusting for a $0.21 non-cash actuarial gain on benefit plans and $0.31 of costs for amortization, merger- and integration-related expenses and other items, earnings per diluted share was $0.91 compared to an adjusted $0.79 in the year-ago quarter, a 15.2% increase.

Cash from operating activities was $10.2 billion, and capital expenditures were $5.1 billion. Capital investment included about $275 million in FirstNet capital costs and reflects about $300 million in FirstNet reimbursements. Free cash flow — cash from operating activities minus capital expenditures — was $5.1 billion for the quarter.

2018 Outlook1

AT&T expects in 2018:

  • Raising adjusted EPS to high end of the $3.50 range
  • Raising free cash flow to high end of the $21 billion range; inclusive of all deal and integration costs
  • Capital Investment of approximately $25 billion; $22 billion net of expected FirstNet reimbursements and vendor financing

______________________________________
1Adjustments include a non-cash mark-to-market benefit plan gain/loss, merger-related interest expense, merger integration and amortization costs and other adjustments. We expect the mark-to-market adjustment which is driven by interest rates and investment returns that are not reasonably estimable at this time, to be the largest of these items. Accordingly, we cannot provide a reconciliation between forecasted adjusted diluted EPS and reported diluted EPS without unreasonable effort.
2 Represents cumulative video-capable D2C relationships across the following services: Postpaid, prepaid and reseller wireless; US and LatAm pay-TV, including DIRECTV NOW; Mexico wireless; and US consumer broadband.


*About AT&T

AT&T Inc. (NYSE:T) is a diversified, global leader in telecommunications, media and entertainment, and technology. It executes in the market under four operating units. WarnerMedia’s HBO, Turner and Warner Bros. divisions are world leaders in creating premium content, operate the world’s largest TV and film studio, and own a world-class library of entertainment. AT&T Communications provides more than 100 million U.S. consumers with entertainment and communications experiences across TV, mobile and broadband services. Plus, it serves more than 3 million business customers with high-speed, highly secure connectivity and smart solutions. AT&T International provides pay-TV services across 11 countries and territories in Latin America and the Caribbean, and is the fastest growing wireless provider in Mexico, serving consumers and businesses. AT&T ad and analytics provides marketers with innovative, targeted, data-driven advertising solutions around premium video content.

AT&T products and services are provided or offered by subsidiaries and affiliates of AT&T Inc. under the AT&T brand and not by AT&T Inc. Additional information is available at about.att.com . © 2018 AT&T Intellectual Property. All rights reserved. AT&T, the Globe logo and other marks are trademarks and service marks of AT&T Intellectual Property and/or AT&T affiliated companies. All other marks contained herein are the property of their respective owners.

Cautionary Language Concerning Forward-Looking Statements

Information set forth in this news release contains financial estimates and other forward-looking statements that are subject to risks and uncertainties, and actual results might differ materially. A discussion of factors that may affect future results is contained in AT&T’s filings with the Securities and Exchange Commission. AT&T disclaims any obligation to update and revise statements contained in this news release based on new information or otherwise.

This news release may contain certain non-GAAP financial measures. Reconciliations between the non-GAAP financial measures and the GAAP financial measures are available on the company’s website at https://investors.att.com .

Discussion and Reconciliation of Non-GAAP Measures

We believe the following measures are relevant and useful information to investors as they are part of AT&T’s internal management reporting and planning processes and are important metrics that management uses to evaluate the operating performance of AT&T and its segments. Management also uses these measures as a method of comparing performance with that of many of our competitors.

Certain amounts have been conformed to the current period’s presentation, including our adoption of new accounting standards; ASU No. 2017-07, “Compensation – Retirement Benefits (Topic 715): Improving the Presentation of Net Periodic Pension Cost and Net Periodic Postretirement Benefit Cost,” ASU No. 2016-15, “Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments,” and ASU No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash; and our realignment of certain responsibilities and operations within our segments, the most significant of which is to report wireless accounts with employer discounts in our Consumer Mobility segment.

Free cash flow is defined as cash from operations minus Capital expenditures. Free cash flow after dividends is defined as cash from operations minus Capital expenditures and dividends. Free cash flow dividend payout ratio is defined as the percentage of dividends paid to free cash flow. We believe these metrics provide useful information to our investors because management views free cash flow as an important indicator of how much cash is generated by routine business operations, including Capital expenditures, and makes decisions based on it. Management also views free cash flow as a measure of cash available to pay debt and return cash to shareowners.

 
Free Cash Flow and Free Cash Flow Dividend Payout Ratio
 

Dollars in millions

       

Three Months Ended

   

Six Months Ended

June 30, June 30,
            2018       2017       2018       2017
Net cash provided by operating activities $ 10,229     $ 8,705 $ 19,176     $ 17,670
Less: Capital expenditures           (5,108 )       (5,208 )       (11,226 )       (11,223 )
Free Cash Flow           5,121         3,497         7,950         6,447  
 
Less: Dividends paid           (3,074 )       (3,012 )       (6,144 )       (6,021 )
Free Cash Flow after Dividends         $ 2,047       $ 485       $ 1,806       $ 426  
Free Cash Flow Dividend Payout Ratio           60.0 %       86.1 %       77.3 %       93.4 %
 

Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For AT&T, EBITDA excludes other income (expense) – net, and equity in net income (loss) of affiliates, as these do not reflect the operating results of our subscriber base or operations that are not under our control. Equity in net income (loss) of affiliates represents the proportionate share of the net income (loss) of affiliates in which we exercise significant influence, but do not control. Because we do not control these entities, management excludes these results when evaluating the performance of our primary operations. EBITDA also excludes interest expense and the provision for income taxes. Excluding these items eliminates the expenses associated with our capital and tax structures. Finally, EBITDA excludes depreciation and amortization in order to eliminate the impact of capital investments. EBITDA does not give effect to cash used for debt service requirements and thus does not reflect available funds for distributions, reinvestment or other discretionary uses. EBITDA is not presented as an alternative measure of operating results or cash flows from operations, as determined in accordance with U.S. generally accepted accounting principles (GAAP).

EBITDA service margin is calculated as EBITDA divided by service revenues.

When discussing our segment results, EBITDA excludes equity in net income (loss) of affiliates, and depreciation and amortization from segment contribution. For our supplemental presentation of our combined domestic wireless operations (AT&T Mobility) and our supplemental presentation of the Mexico Wireless and Latin America operations of our International segment, EBITDA excludes depreciation and amortization from operating income.

These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect AT&T’s ability to generate and grow subscriber revenues while providing a high level of customer service in a cost-effective manner. Management also uses these measures as a method of comparing segment performance with that of many of its competitors. The financial and operating metrics which affect EBITDA include the key revenue and expense drivers for which segment managers are responsible and upon which we evaluate their performance. Management uses Mexico Wireless EBITDA in evaluating profitability trends after our two Mexico wireless acquisitions in 2015, and our investments in building a nationwide LTE network by end of 2018. Management uses Latin America EBITDA in evaluating the ability of our Latin America operations to generate cash to finance its own operations.

We believe EBITDA Service Margin (EBITDA as a percentage of service revenues) to be a more relevant measure than EBITDA Margin (EBITDA as a percentage of total revenue) for our Consumer Mobility segment operating margin and our supplemental AT&T Mobility operating margin. We also use wireless service revenues to calculate margin to facilitate comparison, both internally and externally with our wireless competitors, as they calculate their margins using wireless service revenues as well.

There are material limitations to using these non-GAAP financial measures. EBITDA, EBITDA margin and EBITDA service margin, as we have defined them, may not be comparable to similarly titled measures reported by other companies. Furthermore, these performance measures do not take into account certain significant items, including depreciation and amortization, interest expense, tax expense and equity in net income (loss) of affiliates. Management compensates for these limitations by carefully analyzing how its competitors present performance measures that are similar in nature to EBITDA as we present it, and considering the economic effect of the excluded expense items independently as well as in connection with its analysis of net income as calculated in accordance with GAAP. EBITDA, EBITDA margin and EBITDA service margin should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP.

 
EBITDA, EBITDA Margin and EBITDA Service Margin
 
Dollars in millions         Three Months Ended     Six Months Ended
June 30, June 30,
            2018       2017       2018       2017
Net Income $ 5,248     $ 4,014 $ 10,007     $ 7,588
Additions:
Income Tax (Benefit) Expense 1,532 2,056 2,914 3,860
Interest Expense 2,023 1,395 3,794 2,688
Equity in Net (Income) Loss of Affiliates 16 (14 ) 7 159
Other (Income) Expense - Net (2,353 ) (925 ) (4,055 ) (1,413 )
Depreciation and amortization           6,378         6,147         12,372         12,274  
EBITDA           12,844         12,673         25,039         25,156  
 
Total Operating Revenues 38,986 39,837 77,024 79,202
Service Revenues 33,773 36,538 67,419 72,994
 
EBITDA Margin 32.9 % 31.8 % 32.5 % 31.8 %
EBITDA Service Margin           38.0 %       34.7 %       37.1 %       34.5 %
 
 
Supplemental EBITDA, EBITDA Margin and EBITDA Service Margin
 
Dollars in millions        

Three Months

Ended

            June 30, 2018
Net Income $ 4,823
Additions:
Income Tax (Benefit) Expense 1,394
Interest Expense 2,023
Equity in Net (Income) Loss of Affiliates 16
Other (Income) Expense - Net (2,353 )
Depreciation and amortization           6,378  
EBITDA           12,281  
 
Total Operating Revenues 39,909
Service Revenues 35,163
 
EBITDA Margin 30.8 %
EBITDA Service Margin           34.9 %
 
 
Segment EBITDA, EBITDA Margin and EBITDA Service Margin
 

Dollars in millions

       

Three Months Ended

   

Six Months Ended

June 30, June 30,
            2018       2017       2018       2017
Consumer Mobility Segment                                    
Segment Contribution $ 4,978     $ 4,739 $ 9,633     $ 9,269
Additions:
Depreciation and amortization           1,806         1,716         3,613         3,432  
EBITDA           6,784         6,455         13,246         12,701  
 
Total Segment Operating Revenues 14,869 15,091 29,855 29,897
Service Revenues 11,853 12,467 23,465 24,932
 
Segment Operating Income Margin 33.5 % 31.4 % 32.3 % 31.0 %
EBITDA Margin 45.6 % 42.8 % 44.4 % 42.5 %
EBITDA Service Margin 57.2 % 51.8 % 56.5 % 50.9 %
                                     
Business Solutions Segment                                    
Segment Contribution $ 1,961 $ 2,131 $ 4,024 $ 4,294
Additions:
Equity in Net (Income) Loss of Affiliates (1 ) - - -
Depreciation and amortization           1,487         1,483         2,945         2,943  
EBITDA           3,447         3,614         6,969         7,237  
 
Total Segment Operating Revenues 9,063 9,667 18,179 19,288
 
Segment Operating Income Margin 21.6 % 22.0 % 22.1 % 22.3 %
EBITDA Margin 38.0 % 37.4 % 38.3 % 37.5 %
                                     
Entertainment Group Segment                                    
Segment Contribution $ 1,432 $ 1,630 $ 2,767 $ 3,200
Additions:
Equity in Net (Income) Loss of Affiliates 20 12 11 18
Depreciation and amortization           1,346         1,458         2,658         2,878  
EBITDA           2,798         3,100         5,436         6,096  
 
Total Segment Operating Revenues 11,650 12,661 23,227 25,262
 
Segment Operating Income Margin 12.5 % 13.0 % 12.0 % 12.7 %
EBITDA Margin 24.0 % 24.5 % 23.4 % 24.1 %
                                     
International Segment                                    
Segment Contribution $ (150 ) $ (32 ) $ (261 ) $ (132 )
Additions:
Equity in Net (Income) of Affiliates (15 ) (25 ) (15 ) (45 )
Depreciation and amortization           313         311         645         601  
EBITDA           148         254         369         424  
 
Total Segment Operating Revenues 1,951 2,026 3,976 3,955
 
Segment Operating Income Margin -8.5 % -2.8 % -6.9 % -4.5 %
EBITDA Margin           7.6 %       12.5 %       9.3 %       10.7 %
 
 
 
Supplemental AT&T Mobility EBITDA, EBITDA Margin and EBITDA Service Margin
 

Dollars in millions

       

Three Months Ended

   

Six Months Ended

June 30, June 30,
            2018       2017       2018       2017
AT&T Mobility                                    
Operating Income $ 5,506     $ 5,376 $ 10,664     $ 10,596
Add: Depreciation and amortization           2,113         1,988         4,208         3,980  
EBITDA           7,619         7,364         14,872         14,576  
 
Total Operating Revenues 17,282 17,455 34,637 34,552
Service Revenues 13,682 14,471 27,085 28,939
 
Operating Income Margin 31.9 % 30.8 % 30.8 % 30.7 %
EBITDA Margin 44.1 % 42.2 % 42.9 % 42.2 %
EBITDA Service Margin           55.7 %       50.9 %       54.9 %       50.4 %
 
 
 
Supplemental Latin America EBITDA and EBITDA Margin
 

Dollars in millions

Three Months Ended

Six Months Ended

June 30, June 30,
            2018       2017       2018       2017
International - Latin America                                    
Operating Income $ 52 $ 141 $ 200 $ 218
Add: Depreciation and amortization           186         222         391         436  
EBITDA           238         363         591         654  
 
Total Operating Revenues 1,254 1,361 2,608 2,702
 
Operating Income Margin 4.1 % 10.4 % 7.7 % 8.1 %
EBITDA Margin           19.0 %       26.7 %       22.7 %       24.2 %
 
 
 
Supplemental Mexico EBITDA and EBITDA Margin
 

Dollars in millions

Three Months Ended

Six Months Ended

June 30, June 30,
            2018       2017       2018       2017
International - Mexico                                    
Operating Income (Loss) $ (217 ) $ (198 ) $ (476 ) $ (395 )
Add: Depreciation and amortization           127         89         254         165  
EBITDA           (90 )       (109 )       (222 )       (230 )
 
Total Operating Revenues 697 665 1,368 1,253
 
Operating Income Margin -31.1 % -29.8 % -34.8 % -31.5 %
EBITDA Margin           -12.9 %       -16.4 %       -16.2 %       -18.4 %
 
 
 
 

Adjusting items include revenues and costs we consider nonoperational in nature, such as items arising from asset acquisitions or dispositions. We also adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often significant impact on our fourth-quarter results, unless earlier remeasurement is required (we immediately recognize this gain or loss in the income statement, pursuant to our accounting policy for the recognition of actuarial gains and losses.) Consequently, our adjusted results reflect an expected return on plan assets rather than the actual return on plan assets, as included in the GAAP measure of income.

The tax impact of adjusting items is calculated using the effective tax rate during the quarter except for adjustments that, given their magnitude, can drive a change in the effective tax rate, reflect the actual tax expense or combined marginal rate of approximately 38% for transactions prior to tax reform and 25% for transactions after tax reform.

 
 
Adjusting Items

 

Dollars in millions

   

Three Months Ended

 

Six Months Ended

June 30, June 30,
        2018     2017     2018     2017
Operating Expenses    
Time Warner and other merger costs 321 78 388 119
Employee separation costs 133 60 184 60
Natural disaster costs - - 104 -
DIRECTV merger integration costs - 123 - 250
Mexico merger integration costs - 80 - 119
(Gain) loss on transfer of wireless spectrum - (63 ) - (181 )
Foreign currency devaluation       18       98       43       98  
Adjustments to Operations and Support Expenses       472       376       719       465  
Amortization of intangible assets       1,278       1,170       2,340       2,372  
Adjustments to Operating Expenses       1,750       1,546       3,059       2,837  
Other
Merger-related interest and fees1 636 158 1,029 267
Actuarial (gain) loss (1,796 ) (259 ) (2,726 ) (259 )
(Gain) loss on sale of assets,

impairments and other adjustments

      48       (36 )     48       221  
Adjustments to Income Before Income Taxes       638       1,409       1,410       3,066  
Tax impact of adjustments 44 445 217 1,001
Tax related items       (96 )     -       (96 )     -  
Adjustments to Net Income     $ 690     $ 964     $ 1,289     $ 2,065  

1 Includes interest expense incurred on debt issued, redemption premiums and interest income earned on cash held prior to the close of merger transactions.

 
 

Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS are non-GAAP financial measures calculated by excluding from operating revenues, operating expenses and income tax expense certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs. Management believes that these measures provide relevant and useful information to investors and other users of our financial data in evaluating the effectiveness of our operations and underlying business trends.

Adjusted Operating Revenues, Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted EBITDA service margin and Adjusted diluted EPS should be considered in addition to, but not as a substitute for, other measures of financial performance reported in accordance with GAAP. AT&T’s calculation of Adjusted items, as presented, may differ from similarly titled measures reported by other companies.

 
 
Adjusted Operating Income, Adjusted Operating Income Margin,

Adjusted EBITDA, Adjusted EBITDA Margin and Adjusted EBITDA Service Margin

 

Dollars in millions

   

Three Months Ended

 

Six Months Ended

June 30, June 30,
        2018     2017     2018     2017
Operating Income $ 6,466   $ 6,526 $ 12,667   $ 12,882
Adjustments to Operating Expenses       1,750       1,546       3,059       2,837  
Adjusted Operating Income       8,216       8,072       15,726       15,719  
                           
EBITDA 12,844 12,673 25,039 25,156
Adjustments to Operations and Support Expenses       472       376       719       465  
Adjusted EBITDA       13,316       13,049       25,758       25,621  
WarnerMedia Operating Income       1,236             3,047        
Pro Forma
Additions:
Depreciation and amortization 168 339
Merger costs       548             694  
WarnerMedia Adjusted EBITDA 1,952 4,080
WarnerMedia segment income (post acquisition) (451 ) (451 )

WarnerMedia segment depreciation and amortization (post acquisition)

(30 ) (30 )
WarnerMedia merger costs (post acquisition) (159 ) (159 )
Film and television cost amortization (release prior to June 14)       1,324             2,693  
Pro Forma Adjusted EBITDA 1       15,952             31,891  
 
Total Operating Revenues 38,986 39,837 77,024 79,202
Service Revenues 33,773 36,538 67,419 72,994
 
Operating Income Margin 16.6 % 16.4 % 16.4 % 16.3 %
Adjusted Operating Income Margin 21.1 % 20.3 % 20.4 % 19.8 %
Adjusted EBITDA Margin 34.2 % 32.8 % 33.4 % 32.3 %
Adjusted EBITDA Service Margin 39.4 % 35.7 % 38.2 % 35.1 %
 
Supplemental Results under Historical Accounting Method
Operating Income 5,903
Adjustments to Operating Expenses       1,750  
Adjusted Supplemental Operating Income       7,653  
 
EBITDA 12,281
Adjustments to Operations and Support Expenses       472  
Adjusted Supplemental EBITDA       12,753  
 
Supplemental Operating Revenues 39,909
 
Adjusted Supplemental Operating Income Margin 19.2 %
Adjusted Supplemental EBITDA margin 32.0 %
                           

1 Pro Forma Adjusted EBITDA reflects the combined results operations of the combined company based on the historical financial statements of AT&T and Time Warner, after giving effect to the merger and certain adjustments, and is intended to reflect the impact of the Time Warner acquisition on AT&T. WarnerMedia operating income, depreciation and amortization expense and merger costs are provided on Item 7.01 Form 8-K filed by AT&T on July 24, 2018. Pro Forma adjustments are to (1) remove the duplication of operating results for the 16-period in which AT&T also reported Time Warner results and (2) to recognize the purchase accounting classification of released content as intangible assets and accordingly reclassify associated content amortization from operating expense to amortization expense. Intercompany revenue and expense eliminations net and do not impact EBITDA.

 
 
Adjusted Diluted EPS

 

   

Three Months Ended

 

Six Months Ended

June 30, June 30,
        2018     2017     2018     2017
Diluted Earnings Per Share (EPS) $ 0.81   $ 0.63 $ 1.56   $ 1.19
Amortization of intangible assets 0.16 0.13 0.29 0.26
Merger items1 0.14 0.05 0.20 0.08
(Gain) loss on sale of assets, impairments and other adjustments2 0.01 0.01 0.05 0.03
Actuarial (gain) loss3       (0.21 )     (0.03 )     (0.33 )     (0.03 )
Adjusted EPS     $ 0.91     $ 0.79     $ 1.77     $ 1.53  
Year-over-year growth - Adjusted       15.2 %           15.7 %      
Weighted Average Common Shares Outstanding

with Dilution (000,000)

      6,374       6,184       6,277       6,185  

1 Includes combined merger integration items and merger-related interest income and expense, and redemption premiums.

2 Includes natural disaster, employee-related, and other costs.

3 Includes adjustments for actuarial gains or losses associated with our postemployment benefit plans, which we immediately recognize in the income statement, pursuant to our accounting policy for the recognition of actuarial gains/losses. We recorded an actuarial gain of $930 million in the first quarter of 2018 associated with our postretirement plan and a gain of $1,796 million in the second quarter associated with our pension plan. As a result, adjusted EPS reflects (1) in the first quarter and for the first six months, an expected return on plan assets of $77 million (based on an average expected return on plan assets of 5.75% for our VEBA trusts), rather than the actual return on plan assets of $31 million loss (VEBA return of -3.08%) and (2) in the second quarter and for the first six months, an expected return on plan assets of $754 million (based on an average expected return on plan assets of 7.00% for our Pension trusts), rather than the actual return on plan assets of $186 million loss (Pension return of -0.56%), both of which are included in the GAAP measure of income.

 
 
 

Net Debt to EBITDA ratios are non-GAAP financial measures frequently used by investors and credit rating agencies and management believes these measures provide relevant and useful information to investors and other users of our financial data. Our Net Debt to Pro Forma Adjusted EBITDA ratio is calculated by dividing the Net Debt by Annualized Pro Forma Adjusted EBITDA. Net Debt is calculated by subtracting cash and cash equivalents and certificates of deposit and time deposits that are greater than 90 days, from the sum of debt maturing within one year and long-term debt. Annualized Pro Forma Adjusted EBITDA is calculated by annualizing the year-to-date Pro Forma Adjusted EBITDA.

 
 
Net Debt to Pro Forma Adjusted EBITDA
 
Dollars in millions      
Three Months Ended
Mar. 31,     Jun. 30,    
          2018       2018       YTD 2018
Pro Forma Adjusted EBITDA $ 15,939 $ 15,952 $ 31,891
Add back severance (51 ) (133 ) (184 )
Net Debt Pro Forma Adjusted EBITDA 15,888 15,819 31,707
Annualized Pro Forma Adjusted EBITDA 63,414
End-of-period current debt 21,672
End-of-period long-term debt 168,495
Total End-of-Period Debt 190,167
Less: Cash and Cash Equivalents 13,523
Net Debt Balance                         176,644  
Annualized Net Debt to Pro Forma Adjusted EBITDA Ratio                         2.79  
 
 
 

We provide a supplemental discussion of our domestic wireless operations that is calculated by combining our Consumer Mobility and Business Solutions segments, and then adjusting to remove non-wireless operations. The following table presents a reconciliation of our supplemental AT&T Mobility results.

 
 
Supplemental Operational Measure
 
        Three Months Ended
  June 30, 2018       June 30, 2017
           

Consumer

Mobility

     

Business

Solutions

      Adjustments1       AT&T Mobility  

Consumer

Mobility

     

Business

Solutions

      Adjustments1       AT&T Mobility
Operating Revenues                        
Wireless service $ 11,853 $ 1,829 $ - $ 13,682 $ 12,467 $ 2,004 $ - $ 14,471
Strategic services - 3,039 (3,039 ) - - 2,958 (2,958 ) -
Legacy voice and data services - 2,723 (2,723 ) - - 3,423 (3,423 ) -
Other services and equipment - 888 (888 ) - - 922 (922 ) -
Wireless equipment           3,016       584       -         3,600   2,624       360       -         2,984
Total Operating Revenues           14,869       9,063       (6,650 )       17,282   15,091       9,667       (7,303 )       17,455
 
Operating Expenses
Operations and support 8,085 5,616 (4,038 ) 9,663 8,636 6,053 (4,598 ) 10,091
EBITDA 6,784 3,447 (2,612 ) 7,619 6,455 3,614 (2,705 ) 7,364
Depreciation and amortization           1,806       1,487       (1,180 )       2,113   1,716       1,483       (1,211 )       1,988
Total Operating Expenses           9,891       7,103       (5,218 )       11,776   10,352       7,536       (5,809 )       12,079
Operating Income         $ 4,978     $ 1,960     $ (1,432 )     $ 5,506     $ 4,739     $ 2,131     $ (1,494 )     $ 5,376

1 Business wireline operations reported in Business Solutions segment.

 
 
Supplemental Operational Measure
Six Months Ended
  June 30, 2018   June 30, 2017
           

Consumer

Mobility

     

Business

Solutions

      Adjustments1       AT&T Mobility  

Consumer

Mobility

     

Business

Solutions

      Adjustments1       AT&T Mobility
Operating Revenues
Wireless service $ 23,465 $ 3,620 $ - $ 27,085 $ 24,932 $ 4,007 $ - $ 28,939
Strategic services - 6,109 (6,109 ) - - 5,862 (5,862 ) -
Legacy voice and data services - 5,561 (5,561 ) - - 6,971 (6,971 ) -
Other services and equipment - 1,727 (1,727 ) - - 1,800 (1,800 ) -
Wireless equipment           6,390       1,162       -         7,552   4,965       648       -         5,613
Total Operating Revenues           29,855       18,179       (13,397 )       34,637   29,897       19,288       (14,633 )       34,552
 
Operating Expenses
Operations and support 16,609 11,210 (8,054 ) 19,765 17,196 12,051 (9,271 ) 19,976
EBITDA 13,246 6,969 (5,343 ) 14,872 12,701 7,237 (5,362 ) 14,576
Depreciation and amortization           3,613       2,945       (2,350 )       4,208   3,432       2,943       (2,395 )       3,980
Total Operating Expenses           20,222       14,155       (10,404 )       23,973   20,628       14,994       (11,666 )       23,956
Operating Income         $ 9,633     $ 4,024     $ (2,993 )     $ 10,664     $ 9,269     $ 4,294     $ (2,967 )     $ 10,596

1 Business wireline operations reported in Business Solutions segment.

 
 
 

We provide a supplemental presentation of the Mexico Wireless and Latin America operations within our International segment. The following table presents a reconciliation of our International segment.

 
 
Supplemental International
 
        Three Months Ended
  June 30, 2018     June 30, 2017
            Latin America       Mexico       International   Latin America       Mexico       International
Operating Revenues                
Video service $ 1,254 $ - $ 1,254 $ 1,361 $ - $ 1,361
Wireless service - 417 417 - 535 535
Wireless equipment           -       280         280     -       130         130  
Total Operating Revenues           1,254       697         1,951     1,361       665         2,026  
 
Operating Expenses
Operations and support 1,016 787 1,803 998 774 1,772
Depreciation and amortization           186       127         313     222       89         311  
Total Operating Expenses           1,202       914         2,116     1,220       863         2,083  
Operating Income (Loss)           52       (217 )       (165 )   141       (198 )       (57 )
Equity in Net Income of Affiliates           15       -         15     25       -         25  
Segment Contribution         $ 67     $ (217 )     $ (150 )     $ 166     $ (198 )     $ (32 )
 
 
 
Supplemental International
Six Months Ended
  June 30, 2018 June 30, 2017
            Latin America       Mexico       International   Latin America       Mexico       International
Operating Revenues
Video service $ 2,608 $ - $ 2,608 $ 2,702 $ - $ 2,702
Wireless service - 821 821 - 1,010 1,010
Wireless equipment           -       547         547     -       243         243  
Total Operating Revenues           2,608       1,368         3,976     2,702       1,253         3,955  
 
Operating Expenses
Operations and support 2,017 1,590 3,607 2,048 1,483 3,531
Depreciation and amortization           391       254         645     436       165         601  
Total Operating Expenses           2,408       1,844         4,252     2,484       1,648         4,132  
Operating Income (Loss)           200       (476 )       (276 )   218       (395 )       (177 )
Equity in Net Income of Affiliates           15       -         15     45       -         45  
Segment Contribution         $ 215     $ (476 )     $ (261 )     $ 263     $ (395 )     $ (132 )
 
 
 
 

AT&T Inc.
Corporate Communications:
Erin McGrath, 214-862-0651
Erin.McGrath@att.com

Source: AT&T Inc.



Register |  Password |  Feedback |  Copyright |  Usage Agreement |  Privacy Policy |  Advertising |  About Us |  Contact Us |  FAQ 

Past performance is not indicative of future results

StockSelector.com, the StockSelector.com logo, and News Selects are trademarks of StockSelector.com.
Copyright © 1998 - 2019 StockSelector.com. All rights reserved.