AT&T Reports Fourth-Quarter and Full-Year Results
AT&T (NYSE: T) reported robust subscriber growth, with 656,000 postpaid phone net adds and 280,000 AT&T Fiber net adds, marking the twelfth consecutive quarter of over 200,000 Fiber net adds. The company achieved a 5.2% increase in domestic wireless service revenues and 7.2% growth in consumer broadband revenues driven by Fiber's substantial rise of over 31%. Despite substantial non-cash charges leading to a reported EPS loss of ($3.20), adjusted EPS improved to $0.61. Looking forward, AT&T anticipates 4%+ wireless revenue growth and a free cash flow of $16 billion+ for 2023.
- 656,000 postpaid phone net adds in Q4 2022.
- 280,000 AT&T Fiber net adds, maintaining over 200,000 net adds for 12 quarters.
- 5.2% increase in domestic wireless service revenues.
- 7.2% growth in consumer broadband revenues, boosted by AT&T Fiber's 31% growth.
- Adjusted EPS increased to $0.61, compared to $0.56 in the previous year.
- Anticipated free cash flow of $16 billion or higher for 2023.
- Reported EPS loss of ($3.20) due to significant non-cash charges.
- Total revenue decreased by 9.9% year-over-year to $120.7 billion.
- Operating loss of ($4.6 billion) for the full year 2022.
Continued strong subscriber growth
- 656,000 postpaid phone net adds; nearly 2.9 million for the full year
- 280,000 AT&T Fiber net adds, 12 straight quarters with more than 200,000 net adds; more than 1.2 million net adds for full-year 2022, fifth straight year with 1 million or more AT&T Fiber net adds
Subscriber additions driving revenue growth
- Domestic wireless service revenues up
5.2% ;5.1% for the full year - Consumer broadband revenues up
7.2% driven by AT&T Fiber revenue growth of more than31% ; full-year broadband revenues grew6.4% with AT&T Fiber revenues up nearly29%
Network deployment on or ahead of schedule
- Mid-band 5G spectrum covering 150 million people, more than two times higher than original end-of-year target
- Ability to serve more than 19 million consumer locations and more than 3 million business customer locations in more than 100 U.S. metro areas with fiber
Transformation supporting margin growth
- Achieved more than
of$5 billion -plus run-rate cost savings target at year end$6 billion
Fourth-Quarter Consolidated Results
- Revenues from continuing operations1 of
$31.3 billion - Reported EPS from continuing operations of (
)2 due to non-cash charges compared to$3.20 in the prior year$0.66 - Adjusted EPS* from continuing operations of
compared to$0.61 in the prior year$0.56 - Cash from operating activities from continuing operations of
$10.3 billion - Capital expenditures from continuing operations of
; capital investment* from continuing operations of$4.2 billion $4.7 billion - Free cash flow* from continuing operations of
$6.1 billion
Full-Year Consolidated Results
- Revenues from continuing operations of
$120.7 billion - Reported EPS from continuing operations of (
)2 due to non-cash charges$1.10 - Adjusted EPS* from continuing operations of
$2.57 - Cash from operations of
$35.8 billion - Capital expenditures of
; capital investment* of$19.6 billion $24.3 billion - Free cash flow* of
$14.1 billion
2023 Outlook – Continuing Operations
For the full year
- Wireless service revenue growth of
4% or higher - Broadband revenue growth of
5% or higher - Adjusted EBITDA* growth of
3% or higher - Capital investment* of about
, consistent with 2022 levels$24 billion - Free cash flow* of
or better, up$16 billion from 2022$2 billion - Adjusted EPS* of
to$2.35 , which includes an expected ($2.45 ) of impacts from higher non-cash pension costs related to higher interest rates, lower capitalized interest and impacts from an expected higher effective tax rate of$0.25 23% to24%
Note:
"We're committed to connecting people to greater possibility, and our results demonstrate that our customers are responding to this," said
"We met or surpassed all of our profitability targets for the year all while investing at record levels to bring the benefits of our 5G and fiber technologies to even more people. As we enter 2023, I'm confident in the trajectory of our business and in our team's ability to deliver profitable and durable growth for our shareholders."
Consolidated Financial Results
Revenues from continuing operations for the fourth quarter totaled
Operating expenses from continuing operations were
Operating income (loss) from continuing operations was (
Equity in net income of affiliates of
Income (loss) from continuing operations was (
Cash from operating activities from continuing operations was
Free cash flow* from continuing operations was
Full-Year Results
Revenues from continuing operations for the full year totaled
Operating expenses from continuing operations were
Operating income (loss) from continuing operations was (
Equity in net income of affiliates of
Income (loss) from continuing operations was
Cash from operating activities from continuing operations was
Free cash flow* from continuing operations was
Communications Operational Highlights
Fourth-quarter revenues were
Mobility
- Revenues were up
1.7% year over year to due to higher service revenues. Service revenues were$21.5 billion , up$15.4 billion 5.2% year over year, primarily driven by subscriber and postpaid ARPU growth. Equipment revenues were , down$6.1 billion 6.3% year over year, driven by lower volumes. - Operating expenses were
, down$15.5 billion 2.3% year over year primarily due to lower equipment costs including the absence of 3G network shutdown costs, gains from tower transactions, decreased advertising costs and lower content costs. These decreases were partially offset by higher bad debt expense, increased amortization of customer acquisition costs and the elimination ofCAF II government credits. - Operating income was
, up$6.0 billion 13.4% year over year. Operating income margin was28.1% , compared to25.2% in the year-ago quarter. - EBITDA* was
, up$8.1 billion 10.1% year over year with EBITDA margin* of37.8% , up from34.9% a year ago. EBITDA service margin* was52.6% , up from50.3% in the year-ago quarter. - Total wireless net adds were 6.4 million including:
- 1.1 million postpaid net adds with:
- 656,000 postpaid phone net adds
- 39,000 postpaid tablet and other branded computing device net adds
- 409,000 other net adds
- (13,000) prepaid phone net adds
- Postpaid churn was
1.01% versus1.02% in the year-ago quarter. - Postpaid phone churn was
0.84% versus0.85% in the year-ago quarter. - Prepaid churn was less than
3% , with Cricket substantially lower. - Postpaid phone-only ARPU was
, up$55.43 2.5% versus the year-ago quarter, due to pricing actions, higher international roaming and a mix shift to higher-priced unlimited plans. - FirstNet® connections reached approximately 4.4 million across more than 24,000 agencies. FirstNet is the nationwide communications platform dedicated to public safety. The
AT&T and FirstNet networks cover more than99% of theU.S. population, and FirstNet covers more first responders than any other network in America.
Business Wireline
- Revenues were
, down$5.6 billion 4.5% year over year due to lower demand for legacy voice and data services and product simplification, partly offset by growth in connectivity services. The quarter also included approximately in revenues from intellectual property sales, an increase of about$90 million year over year.$15 million - Operating expenses were
, down$4.8 billion 3.8% year over year due to ongoing operational cost efficiencies, credits associated with a retirement benefit plan change in the third quarter of 2022 and lower amortization of deferred fulfillment costs, partly offset by higher wholesale network access costs and higher depreciation expense. - Operating income was
, down$801 million 8.6% , with operating income margin of14.2% compared to14.8% in the year-ago quarter. - EBITDA* was
, down$2.2 billion 1.5% year over year with EBITDA margin* of38.3% , compared to37.2% in the year-ago quarter. EBITDA margin for both periods includes the impacts from intellectual property sales. - AT&T Business serves the largest global companies, government agencies and small businesses. More than 750,000
U.S. business buildings are lit with fiber fromAT&T , enabling high-speed fiber connections to more than 3 millionU.S. business customer locations. Nationwide, more than 10 million business customer locations are on or within 1,000 feet of our fiber.3
Consumer Wireline
- Revenues were
, up$3.2 billion 2.2% year over year due to gains in broadband more than offsetting declines in legacy voice and data and other services. Broadband revenues increased7.2% due to fiber growth of more than31% , partly offset by non-fiber revenue declines of12.6% . - Operating expenses were
, down$2.9 billion 3.5% year over year due to lower network and customer support costs, decreased advertising costs, credits associated with a retirement benefit plan change in the third quarter of 2022, and lower content costs, partly offset by the elimination ofCAF II government credits, higher depreciation expense and higher bad debt expense. - Operating income was
, up$376 million 86.1% year over year with operating income margin of11.6% , compared to6.4% in the year-ago quarter. - EBITDA* was
, up$1.2 billion 20.5% year over year with EBITDA margin* of37.0% , up from31.4% in the year-ago quarter. - Total broadband losses, excluding DSL, were 43,000, reflecting AT&T Fiber net adds of 280,000, more than offset by losses in non-fiber services. AT&T Fiber now has the ability to serve more than 19 million customer locations and offers symmetrical, multi-gig speeds across parts of its entire footprint of more than 100 metro areas.
Revenues were
Operating loss was (
Total wireless net adds were 605,000, including 515,000 prepaid net adds, 71,000 postpaid net adds and 19,000 reseller net adds.
FirstNet and the FirstNet logo are registered trademarks and service marks of the |
1 With the closing of the WarnerMedia transaction in |
2 Reported Earnings per Common Share from continuing operations is calculated using Income (Loss) from Continuing Operations, less Net Income Attributable to Noncontrolling Interest and Preferred Stock Dividends and adjustment for distributions on Mobility II preferred interests and share-based payments (in periods of net income) or adjustment of carrying value of noncontrolling interest (in periods of net loss), divided by the weighted average common shares outstanding for the period. |
3 The more than 3 million |
4 |
About
We help more than 100 million
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
Non-GAAP Measures and Reconciliations to GAAP Measures
Schedules and reconciliations of non-GAAP financial measures cited in this document to the most directly comparable financial measures under generally accepted accounting principles (GAAP) can be found at https://investors.att.com and in our Form 8-K dated
Adjusted diluted EPS from continuing operations includes adjusting items to revenues and costs that we consider non-operational in nature, including items arising from asset acquisitions or dispositions. We adjust for net actuarial gains or losses associated with our pension and postemployment benefit plans due to the often-significant impact on our results (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, in these cases we use the actual tax expense or combined marginal rate of approximately
For 4Q22, Adjusted EPS from continuing operations of
For 4Q21, Adjusted EPS from continuing operations of
For 2022, Adjusted EPS from continuing operations of
For 2021, Adjusted EPS from continuing operations of
The company expects adjustments to 2023 reported diluted EPS to include our proportionate share of intangible amortization at the DIRECTV equity method investment in the range of
Capital investment from continuing operations is a non-GAAP financial measure that provides an additional view of cash paid for capital investment to provide a comprehensive view of cash used to invest in our networks, product developments and support systems. In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. Capital investment from continuing operations includes capital expenditures from continuing operations and cash paid for vendor financing (
Free cash flow from continuing operations for 4Q22 of
For 2022, free cash flow from continuing operations of
Due to high variability and difficulty in predicting items that impact cash from operating activities, cash distributions from DIRECTV, capital expenditures and vendor financing payments, the company is not able to provide a reconciliation between projected free cash flow and the most comparable GAAP metric without unreasonable effort.
EBITDA is operating income before depreciation and amortization. EBITDA margin is operating income before depreciation and amortization, divided by total revenues. EBITDA service margin is operating income before depreciation and amortization, divided by total service revenues.
Adjusted EBITDA is calculated by excluding from operating revenues and operating expenses certain significant items that are non-operational or non-recurring in nature, including dispositions and merger integration and transaction costs, significant abandonments and impairment, benefit-related gains and losses, employee separation and other material gains and losses.
EBITDA and Adjusted EBITDA estimates depend on future levels of revenues and expenses which are not reasonably estimable at this time. Accordingly, we cannot provide a reconciliation between projected EBITDA and projected Adjusted EBITDA and the most comparable GAAP metrics without unreasonable effort.
Standalone AT&T results reflect the historical operating results of the company presented as continuing operations, and also excludes
Operating Revenues of standalone
Adjusted Operating Income of standalone
Standalone AT&T Adjusted diluted EPS for 2021 of
Adjusted Operating Income from continuing operations is operating income from continuing operations adjusted for revenues and costs we consider non-operational in nature, including items arising from asset acquisitions or dispositions. For 4Q22, Adjusted Operating Income from continuing operations of
For 2022, Adjusted Operating Income from continuing operations of
Adjusted Equity in Net Income from DIRECTV investment of
Net Debt of
Discussion and Reconciliation of Non-GAAP Measures for Continuing Operations
We believe the following measures are relevant and useful information to investors as they are part of
On
Free Cash Flow
Free cash flow is defined as cash from operations and cash distributions from DIRECTV (classified as investing activities) minus capital expenditures and cash paid for vendor financing (classified as financing activities). Free cash flow after dividends is defined as cash from operations and cash distributions from DIRECTV, minus capital expenditures, cash paid for vendor financing and dividends on common and preferred shares. Free cash flow dividend payout ratio is defined as the percentage of dividends paid on common and preferred shares 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 vendor financing, and from our continued economic interest in the
Free Cash Flow and Free Cash Flow Dividend Payout Ratio | |||||
Dollars in millions | |||||
Fourth Quarter | Year Ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Net cash provided by operating activities from continuing operations1 | $ 10,348 | $ 8,077 | $ 35,812 | $ 37,170 | |
Add: Distributions from DIRECTV classified as investing activities | 444 | 1,323 | 2,649 | 1,323 | |
Less: Capital expenditures | (4,229) | (3,494) | (19,626) | (15,545) | |
Less: Cash paid for vendor financing | (460) | (583) | (4,697) | (4,596) | |
Free Cash Flow2 | 6,103 | 5,323 | 14,138 | 18,352 | |
Less: Dividends paid | (2,014) | (3,749) | (9,859) | (15,068) | |
Free Cash Flow after Dividends | $ 4,089 | $ 1,574 | $ 4,279 | $ 3,284 | |
Free Cash Flow Dividend Payout Ratio | 33.0 % | 70.4 % | 69.7 % | 82.1 % | |
1 Includes distributions from DIRECTV of | |||||
2 For Standalone free cash flow see Exhibit 99.4 |
Cash Paid for
In connection with capital improvements, we negotiate with some of our vendors to obtain favorable payment terms of 120 days or more, referred to as vendor financing, which are excluded from capital expenditures and reported in accordance with GAAP as financing activities. We present an additional view of cash paid for capital investment to provide investors with a comprehensive view of cash used to invest in our networks, product developments and support systems.
Cash Paid for | |||||
Dollars in millions | |||||
Fourth Quarter | Year Ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Capital Expenditures | $ (4,229) | $ (3,494) | $ (19,626) | $ (15,545) | |
Cash paid for vendor financing | (460) | (583) | (4,697) | (4,596) | |
Cash paid for | $ (4,689) | $ (4,077) | $ (24,323) | $ (20,141) |
EBITDA
Our calculation of EBITDA, as presented, may differ from similarly titled measures reported by other companies. For
EBITDA service margin is calculated as EBITDA divided by service revenues.
These measures are used by management as a gauge of our success in acquiring, retaining and servicing subscribers because we believe these measures reflect
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 Mobility business unit 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. For market comparability, management analyzes 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 | |||||
Fourth Quarter | Year Ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Income (Loss) from Continuing Operations | $ (23,120) | $ 5,202 | $ (6,874) | $ 23,776 | |
Additions: | |||||
Income Tax Expense (Benefit) | (77) | 939 | 3,780 | 5,395 | |
Interest Expense | 1,560 | 1,626 | 6,108 | 6,716 | |
Equity in Net (Income) of Affiliates | (374) | (444) | (1,791) | (603) | |
Other (Income) Expense - Net | 919 | (2,429) | (5,810) | (9,387) | |
Depreciation and amortization | 4,595 | 4,500 | 18,021 | 17,852 | |
EBITDA | (16,497) | 9,394 | 13,434 | 43,749 | |
Transaction and other cost | 84 | (2) | 425 | 41 | |
Benefit-related (gain) loss | (109) | (20) | 108 | (128) | |
Assets impairments and abandonment and restructuring | 26,753 | 108 | 27,498 | 213 | |
Adjusted EBITDA1 | $ 10,231 | $ 9,480 | $ 41,465 | $ 43,875 | |
Less: Video and Other dispositions | — | 4 | — | (3,807) | |
Standalone AT&T Adjusted EBITDA2 | $ 10,231 | $ 9,484 | $ 41,465 | $ 40,068 | |
1 See page 5 for additional discussion and reconciliation of adjusted items. | |||||
2 See Exhibit 99.4 for reconciliation of Standalone AT&T Adjusted EBITDA. |
Segment and Business Unit EBITDA, EBITDA Margin and EBITDA Service Margin | |||||
Dollars in millions | |||||
Fourth Quarter | Year Ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Communications Segment | |||||
Operating Income | $ 7,221 | $ 6,410 | $ 29,107 | $ 28,393 | |
Additions: | |||||
Depreciation and amortization | 4,258 | 4,156 | 16,681 | 16,409 | |
EBITDA | 11,479 | 10,566 | 45,788 | 44,802 | |
Total Operating Revenues | 30,365 | 30,206 | 117,067 | 114,730 | |
Operating Income Margin | 23.8 % | 21.2 % | 24.9 % | 24.7 % | |
EBITDA Margin | 37.8 % | 35.0 % | 39.1 % | 39.0 % | |
Mobility | |||||
Operating Income | $ 6,044 | $ 5,332 | $ 24,528 | $ 23,370 | |
Additions: | |||||
Depreciation and amortization | 2,080 | 2,050 | 8,198 | 8,122 | |
EBITDA | 8,124 | 7,382 | 32,726 | 31,492 | |
Total Operating Revenues | 21,501 | 21,146 | 81,780 | 78,254 | |
Service Revenues | 15,434 | 14,669 | 60,499 | 57,590 | |
Operating Income Margin | 28.1 % | 25.2 % | 30.0 % | 29.9 % | |
EBITDA Margin | 37.8 % | 34.9 % | 40.0 % | 40.2 % | |
EBITDA Service Margin | 52.6 % | 50.3 % | 54.1 % | 54.7 % | |
Business Wireline | |||||
Operating Income | $ 801 | $ 876 | $ 3,252 | $ 4,027 | |
Additions: | |||||
Depreciation and amortization | 1,360 | 1,317 | 5,314 | 5,192 | |
EBITDA | 2,161 | 2,193 | 8,566 | 9,219 | |
Total Operating Revenues | 5,635 | 5,901 | 22,538 | 23,937 | |
Operating Income Margin | 14.2 % | 14.8 % | 14.4 % | 16.8 % | |
EBITDA Margin | 38.3 % | 37.2 % | 38.0 % | 38.5 % | |
Consumer Wireline | |||||
Operating Income | $ 376 | $ 202 | $ 1,327 | $ 996 | |
Additions: | |||||
Depreciation and amortization | 818 | 789 | 3,169 | 3,095 | |
EBITDA | 1,194 | 991 | 4,496 | 4,091 | |
Total Operating Revenues | 3,229 | 3,159 | 12,749 | 12,539 | |
Operating Income Margin | 11.6 % | 6.4 % | 10.4 % | 7.9 % | |
EBITDA Margin | 37.0 % | 31.4 % | 35.3 % | 32.6 % | |
Latin America Segment - | |||||
Operating Income | $ (79) | $ (117) | $ (326) | $ (510) | |
Additions: | |||||
Depreciation and amortization | 164 | 153 | 658 | 605 | |
EBITDA | 85 | 36 | 332 | 95 | |
Total Operating Revenues | 861 | 704 | 3,144 | 2,747 | |
Operating Income Margin | -9.2 % | -16.6 % | -10.4 % | -18.6 % | |
EBITDA Margin | 9.9 % | 5.1 % | 10.6 % | 3.5 % |
Adjusting Items
Adjusting items include revenues and costs we consider non-operational in nature, including 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 results (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. Prior periods have been recast for consistency to include gains on benefit-related and other cost investments.
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, in these cases we use the actual tax expense or combined marginal rate of approximately
Adjusting Items | |||||
Dollars in millions | |||||
Fourth Quarter | Year Ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Operating Expenses | |||||
Transaction and other costs | 84 | (2) | 425 | 41 | |
Benefit-related (gain) loss | (109) | (20) | 108 | (128) | |
Asset impairments and abandonment and restructuring | 26,753 | 108 | 27,498 | 213 | |
Adjustments to Operations and Support Expenses | 26,728 | 86 | 28,031 | 126 | |
Amortization of intangible assets | 16 | 28 | 76 | 170 | |
Adjustments to Operating Expenses | 26,744 | 114 | 28,107 | 296 | |
Other | |||||
DIRECTV intangible amortization (proportionate share) | 359 | 434 | 1,547 | 826 | |
Benefit-related (gain) loss, transaction financing costs and other | 420 | (84) | 1,242 | (421) | |
Actuarial (gain) loss | 1,839 | (1,119) | (1,999) | (4,140) | |
Adjustments to Income Before Income Taxes | 29,362 | (655) | 28,897 | (3,439) | |
Tax impact of adjustments | 1,082 | (131) | 882 | (854) | |
Tax-related items | 329 | 240 | 977 | 608 | |
Adjustments to Net Income | $ 27,951 | $ (764) | $ 27,038 | $ (3,193) | |
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, actuarial gains and losses, significant abandonments and impairment, benefit-related gains and losses, employee separation and other material gains and losses. 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.
Adjusted Operating Income, Adjusted Operating Income Margin, Adjusted EBITDA and Adjusted EBITDA Margin | |||||
Dollars in millions | |||||
Fourth Quarter | Year Ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Operating Income | $ (21,092) | $ 4,894 | $ (4,587) | $ 25,897 | |
Adjustments to Operating Expenses | 26,744 | 114 | 28,107 | 296 | |
Adjusted Operating Income | 5,652 | 5,008 | 23,520 | 26,193 | |
EBITDA | (16,497) | 9,394 | 13,434 | 43,749 | |
Adjustments to Operations and Support Expenses | 26,728 | 86 | 28,031 | 126 | |
Adjusted EBITDA | 10,231 | 9,480 | 41,465 | 43,875 | |
Total Operating Revenues | 31,343 | 31,095 | 120,741 | 134,038 | |
Operating Income Margin | (67.3) % | 15.7 % | (3.8) % | 19.3 % | |
Adjusted Operating Income Margin | 18.0 % | 16.1 % | 19.5 % | 19.5 % | |
Adjusted EBITDA Margin | 32.6 % | 30.5 % | 34.3 % | 32.7 % |
Adjusted Diluted EPS | |||||
Fourth Quarter | Year Ended | ||||
2022 | 2021 | 2022 | 2021 | ||
Diluted Earnings Per Share (EPS) | $ (3.20) | $ 0.66 | $ (1.10) | $ 3.02 | |
DIRECTV intangible amortization (proportionate share) | 0.04 | 0.05 | 0.16 | 0.09 | |
Actuarial (gain) loss 1 | 0.19 | (0.11) | (0.20) | (0.42) | |
Impairments, abandonments and restructuring | 3.57 | 0.01 | 3.59 | 0.02 | |
Benefit-related, transaction and other costs1, 2 | 0.05 | (0.02) | 0.25 | — | |
Tax-related items | (0.04) | (0.03) | (0.13) | (0.08) | |
Adjusted EPS | $ 0.61 | $ 0.56 | $ 2.57 | $ 2.63 | |
Less: Video and Other dispositions | — | — | — | (0.22) | |
Standalone AT&T Adjusted EPS | $ 0.61 | $ 0.56 | $ 2.57 | $ 2.41 | |
Year-over-year growth - Adjusted | 8.9 % | 6.6 % | |||
Weighted Average Common Shares Outstanding with Dilution (000,000) | 7,533 | 7,541 | 7,587 | 7,503 |
1 Includes adjustments for actuarial gains or losses associated with our pension and 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 total net actuarial gains of | |||||
2 As of | |||||
Additionally, in the fourth quarter of 2022, all outstanding Mobility II preferred interests were put to us, with approximately one-third redeemed in the fourth-quarter; approximately 107 million interests will be redeemed primarily in | |||||
Given our intent to settle the Mobility II preferred interests in cash, and the nonoperational fair value adjustment recorded as "Additional Paid in Capital," we have excluded these impacts from our adjusted EPS calculation. The per share impact was to decrease reported diluted EPS | |||||
3 See Exhibit 99.4 for reconciliation of Standalone AT&T Adjusted EPS. |
Net Debt to Adjusted EBITDA
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 Adjusted EBITDA ratio is calculated by dividing the Net Debt by the sum of the most recent four quarters 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.
Net Debt to Adjusted EBITDA - 2022 | ||||||||||
Dollars in millions | ||||||||||
Three Months Ended | ||||||||||
March. 31 | Four Quarters | |||||||||
2022 1 | 2022 1 | 2022 1 | 2022 1 | |||||||
Adjusted EBITDA | $ 10,190 | $ 10,330 | $ 10,714 | $ 10,231 | $ 41,465 | |||||
End-of-period current debt | 7,467 | |||||||||
End-of-period long-term debt | 128,423 | |||||||||
Total End-of-Period Debt | 135,890 | |||||||||
Less: Cash and Cash Equivalents | 3,701 | |||||||||
Net Debt Balance | 132,189 | |||||||||
Annualized Net Debt to Adjusted EBITDA Ratio | 3.19 | |||||||||
1 As reported in Exhibit 99.4 |
Net Debt to Adjusted EBITDA - 2021 | ||||||||||
Dollars in millions | ||||||||||
Three Months Ended | ||||||||||
Four Quarters | ||||||||||
2021 1 | 2021 1 | 2021 1 | 2021 1 | |||||||
Adjusted EBITDA | $ 11,661 | $ 11,931 | $ 10,803 | $ 9,480 | $ 43,875 | |||||
End-of-period current debt | 24,620 | |||||||||
End-of-period long-term debt | 151,011 | |||||||||
Total End-of-Period Debt | 175,631 | |||||||||
Less: Cash and Cash Equivalents | 19,223 | |||||||||
Net Debt Balance | 156,408 | |||||||||
Annualized Net Debt to Adjusted EBITDA Ratio | 3.56 | |||||||||
1 As reported in Exhibit 99.4 |
Supplemental Operational Measures
We provide a supplemental discussion of our business solutions operations that is calculated by combining our Mobility and Business Wireline operating units, and then adjusting to remove non-business operations. The following table presents a reconciliation of our supplemental Business Solutions results.
Supplemental Operational Measure | |||||||||
Fourth Quarter | |||||||||
Mobility | Business Wireline | Adjustments1 | Business Solutions | Mobility | Business Wireline | Adjustments1 | Business Solutions | ||
Operating Revenues | |||||||||
Wireless service | $ 15,434 | $ — | $ (13,176) | $ 2,258 | $ 14,669 | $ — | $ (12,561) | $ 2,108 | |
Wireline services | — | 5,473 | — | 5,473 | — | 5,727 | — | 5,727 | |
Wireless equipment | 6,067 | — | (5,130) | 937 | 6,477 | — | (5,447) | 1,030 | |
Wireline equipment | — | 162 | — | 162 | — | 174 | — | 174 | |
Total Operating Revenues | 21,501 | 5,635 | (18,306) | 8,830 | 21,146 | 5,901 | (18,008) | 9,039 | |
Operating Expenses | |||||||||
Operations and support | 13,377 | 3,474 | (11,195) | 5,656 | 13,764 | 3,708 | (11,437) | 6,035 | |
EBITDA | 8,124 | 2,161 | (7,111) | 3,174 | 7,382 | 2,193 | (6,571) | 3,004 | |
Depreciation and amortization | 2,080 | 1,360 | (1,716) | 1,724 | 2,050 | 1,317 | (1,700) | 1,667 | |
Total Operating Expenses | 15,457 | 4,834 | (12,911) | 7,380 | 15,814 | 5,025 | (13,137) | 7,702 | |
Operating Income | 6,044 | 801 | (5,395) | 1,450 | 5,332 | 876 | (4,871) | 1,337 | |
1 Non-business wireless reported in the Communications segment under the Mobility business unit. | |||||||||
Results have been recast to conform to the current period's classification. |
Supplemental Operational Measure | |||||||||
Year Ended | |||||||||
Mobility | Business Wireline | Adjustments1 | Business Solutions | Mobility | Business Wireline | Adjustments1 | Business Solutions | ||
Operating Revenues | |||||||||
Wireless service | $ 60,499 | $ — | $ (51,710) | $ 8,789 | $ 57,590 | $ — | $ (49,429) | $ 8,161 | |
Wireline service | — | 21,891 | — | 21,891 | — | 23,224 | — | 23,224 | |
Wireless equipment | 21,281 | — | (17,712) | 3,569 | 20,664 | — | (17,250) | 3,414 | |
Wireline equipment | — | 647 | — | 647 | — | 713 | — | 713 | |
Total Operating Revenues | 81,780 | 22,538 | (69,422) | 34,896 | 78,254 | 23,937 | (66,679) | 35,512 | |
Operating Expenses | |||||||||
Operations and support | 49,054 | 13,972 | (40,547) | 22,479 | 46,762 | 14,718 | (38,702) | 22,778 | |
EBITDA | 32,726 | 8,566 | (28,875) | 12,417 | 31,492 | 9,219 | (27,977) | 12,734 | |
Depreciation and amortization | 8,198 | 5,314 | (6,763) | 6,749 | 8,122 | 5,192 | (6,744) | 6,570 | |
Total Operating Expenses | 57,252 | 19,286 | (47,310) | 29,228 | 54,884 | 19,910 | (45,446) | 29,348 | |
Operating Income | 24,528 | 3,252 | (22,112) | 5,668 | 23,370 | 4,027 | (21,233) | 6,164 | |
1 Non-business wireless reported in the Communications segment under the Mobility business unit. | |||||||||
Results have been recast to conform to the current period's classification. |
* Further clarification and explanation of non-GAAP measures and reconciliations to their most comparable GAAP measures can be found in the "Non-GAAP Measures and Reconciliations to GAAP Measures" section of the release and at https://investors.att.com.
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