AT&T Reports Second-Quarter Results
AT&T Inc. (NYSE: T) reported strong second-quarter results, achieving over 800,000 postpaid phone net adds, the best in a decade. The company also gained over 300,000 AT&T Fiber net adds, totaling nearly 2.3 million in two years. Revenues stood at $29.6 billion, with a diluted EPS of $0.59. Adjusted EPS was $0.65, reflecting a year-over-year revenue decline of 17.1% due to divestitures. AT&T raised its Mobility service revenue guidance to 4.5-5% but reduced full-year free cash flow guidance to approximately $14 billion due to heavy investments. Cash from operations was $7.7 billion, with a net debt of $131.9 billion.
- Over 800,000 postpaid phone net adds, best second quarter in over a decade.
- 316,000 AT&T Fiber net adds, totaling nearly 2.3 million in two years.
- Raised Mobility service revenue guidance to 4.5-5% growth for the full year.
- Operating income of $5.0 billion with a margin of 31.2%, reflecting growth in Mobility.
- Cash from operations of $7.7 billion, highlighting robust operational performance.
- Revenues decreased by 17.1% year over year due to divestitures.
- Reduced full-year free cash flow guidance from $16 billion to $14 billion.
- Diluted EPS down from $0.76 in the previous year to $0.59.
Company posts more than 800,000 postpaid phone net adds for best second quarter in over a decade; more than 300,000 AT&T Fiber net adds
Second-Quarter Highlights
-
MOBILITY:
AT&T continues to see record levels of customer additions, including the best second-quarter postpaid phone net adds in more than a decade and more than 6.1 million postpaid phone net adds over the past two years. We have already achieved our end-of-year target of covering 70 million people with mid-band 5G spectrum and are on track to approach 100 million people with mid-band 5G spectrum by the end of the year.
-
AT&T FIBER:
AT&T delivered subscriber growth near second-quarter record levels with 316,000 AT&T Fiber net adds. This brings total net additions over the past two years to nearly 2.3 million, including 10 straight quarters of more than 200,000 net adds. We now have the ability to serve 18 million customer locations in more than 100 U.S. metro areas with AT&T Fiber.
-
TRANSFORMATION:
AT&T has confidence in its ability to achieve more than$4 billion $6 billion
Second-Quarter Consolidated Results
-
Revenues from continuing operations of
$29.6 billion -
Diluted EPS from continuing operations of
$0.59 -
Adjusted EPS* from continuing operations of
$0.65 -
Cash from operations from continuing operations of
$7.7 billion -
Capital expenditures from continuing operations of
$4.9 billion $6.7 billion -
Free cash flow* from continuing operations of
$1.4 billion
Communications Results
-
Mobility:
- 813,000 postpaid phone net adds
- 1,058,000 postpaid net adds
- 196,000 prepaid phone net adds
-
Postpaid phone churn of
0.75% -
Revenues up
5.2% year over year; service revenues up4.6% ; equipment revenues up7.2% -
Operating income of
$6.2 billion 3.4% year over year; EBITDA* up2.5% -
Operating income margin of
31.2% ; EBITDA service margin*54.8%
-
Business Wireline:
-
Operating income margin of
12.7% ; EBITDA margin*36.2%
-
Operating income margin of
-
Consumer Wireline:
-
316,000 AT&T Fiber net adds; fiber penetration of nearly
37% -
Broadband revenues up
5.6% year over year due to fiber revenue growth of nearly28% -
Broadband ARPU growth of
5.3%
-
316,000 AT&T Fiber net adds; fiber penetration of nearly
Note: AT&T’s second-quarter earnings conference call will be webcast at
With the closing of the WarnerMedia transaction in
“We’re expanding our customer base at an accelerated pace across our twin engines of growth – 5G and fiber,” said
“As a result of our higher-than-forecasted customer growth, we’re increasing our Mobility service revenue guidance to 4.5
Consolidated Financial Results
Revenues from continuing operations for the second quarter totaled
Operating expenses from continuing operations were
Operating income from continuing operations was
Equity in net income (loss) of affiliates of
Income from continuing operations was
Cash from operating activities from continuing operations was
Free cash flow* from continuing operations, including
Communications Operational Highlights
Second-quarter revenues were
Mobility
-
Revenues were up
5.2% year over year, to$19.9 billion $15.0 billion 4.6% year over year, primarily driven by subscriber growth. Equipment revenues were$4.9 billion 7.2% year over year, driven by increased sales of higher priced smartphones. -
Operating expenses were
$13.7 billion 6.1% year over year due to higher equipment costs, network costs, bad debt expense, amortization of customer acquisition costs, HBO Max content costs, FirstNet costs and the elimination of CAFII government credits. -
Operating income was
$6.2 billion 3.4% year over year. Operating income margin was31.2% , compared to31.7% in the year-ago quarter. -
EBITDA* was
$8.2 billion 2.5% year over year with EBITDA margin* of41.3% , down from42.4% a year ago. EBITDA service margin* was54.8% , compared to56.0% in the year-ago quarter. -
Total net adds were 6.6 million including:
-
1,058,000 postpaid net adds with:
- 813,000 postpaid phone net adds
- 7,000 postpaid tablet and other branded computing device net adds
- 238,000 other net adds
- 196,000 prepaid phone net adds
-
1,058,000 postpaid net adds with:
-
Postpaid churn was
0.93% versus0.87% in the year-ago quarter. -
Postpaid phone churn was
0.75% versus0.69% in the year-ago quarter. -
Prepaid churn was less than
3% , with Cricket substantially lower. -
Postpaid phone-only ARPU was
$54.81 1.1% versus the year-ago quarter, due to improved international roaming and a mix shift to higher-priced unlimited plans. -
FirstNet® connections reached approximately 3.7 million across more than 21,800 agencies. FirstNet is the nationwide communications platform dedicated to public safety. The
AT&T and FirstNet networks cover 2.81 million square miles and more than99% of theU.S. population. FirstNet covers more first responders than any other network in America.
Business Wireline
-
Revenues were
$5.6 billion 7.6% year over year due to lower demand for legacy voice and data services, a strategic decision to deemphasize non-core services and lower revenues from the government sector. -
Operating expenses were
$4.9 billion 2.0% year over year due to ongoing operational cost efficiencies and lower amortization of deferred fulfillment costs, partially offset by higher wholesale network access costs and higher depreciation expense. -
Operating income was
$710 million 33.6% with operating income margin of12.7% compared to17.7% in the year-ago quarter. -
EBITDA* was
$2.0 billion 14.4% year over year with EBITDA margin* of36.2% , compared to39.0% in the year-ago quarter, driven by higher wholesale network access costs and decreased government sector spending. -
AT&T Business serves the largest global companies, government agencies and small businesses. More than 675,000
U.S. business buildings are lit with fiber fromAT&T , enabling high-speed fiber connections to approximately 3 millionU.S. business customer locations. Nationwide, more than 9.5 million business customer locations are on or within 1,000 feet of our fiber.2
Consumer Wireline
-
Revenues were
$3.2 billion 1.1% year over year due to gains in broadband more than offsetting declines in legacy voice and data services and other services. Broadband revenues increased5.6% due to fiber growth of nearly28% , partially offset by non-fiber revenue declines of9.8% . -
Operating expenses were
$2.9 billion 1.3% year over year largely driven by higher network and technology costs, the elimination of CAFII government credits, higher advertising costs, higher bad debt and higher depreciation expenses, partially offset by lower amortization of deferred fulfillment costs. -
Operating income was
$304 million 1.3% year over year with operating income margin of9.6% , compared to9.8% in the year-ago quarter. -
EBITDA* was
$1.1 billion 1.1% year over year with EBITDA margin* of34.3% , consistent with34.3% in the year-ago quarter. - Total broadband losses, excluding DSL, were 25,000, reflecting AT&T Fiber net adds of 316,000, more than offset by losses in non-fiber services. AT&T Fiber now has the ability to serve 18 million customer locations, and offers symmetrical speeds up to 5-Gigs across parts of its entire footprint of more than 100 metro areas.
Revenues were
Operating loss was
Total wireless net adds were 197,000, including 187,000 prepaid net adds, 25,000 postpaid net adds and 15,000 reseller net losses.
Free Cash Flow Outlook Update
The company is updating its 2022 free cash flow outlook. Free cash flow from continuing operations was
Given these factors, the company is lowering full-year free cash flow guidance from the
Compared to the first half of the year, this outlook reflects the expectation of lower vendor device payments by more than
Remaining 2022 financial guidance elements remain broadly consistent with previously stated expectations.
1 Diluted Earnings per Common Share from continuing operations is calculated using Income from continuing operations, less Net Income Attributable to Noncontrolling Interest and Preferred Stock Dividends, divided by the weighted average common shares outstanding for the period.
2 The approximately 3 million
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 AT&T’s filings with the
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 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 2Q22, Adjusted EPS from continuing operations of
For 2Q21, Adjusted EPS from continuing operations 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 2Q22 of
For 2Q21, 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 from continuing operations 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.
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 EPS for 2Q21 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 2Q22, Adjusted Operating Income from continuing operations of
Adjusted Equity in Net Income from DIRECTV investment is calculated as equity income from DIRECTV reported in Equity in Net Income (Loss) of Affiliates and excludes AT&T’s proportionate share of the noncash depreciation and amortization of fair value accretion from DIRECTV’s revaluation of assets and purchase price allocation.
Net Debt to Adjusted EBITDA ratio is calculated by dividing the Net Debt of
* 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.
© 2022 AT&T Intellectual Property. All rights reserved.
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 |
|
|
|
|
|||||||||
|
Second Quarter |
|
Six-Month Period |
||||||||||
|
2022 |
2021 |
|
2022 |
2021 |
||||||||
Net cash provided by operating activities1 |
$ |
7,740 |
|
$ |
10,181 |
|
|
$ |
15,370 |
|
$ |
19,783 |
|
Add: Distributions from DIRECTV classified as investing activities |
|
323 |
|
|
— |
|
|
|
1,638 |
|
|
— |
|
Less: Capital expenditures |
|
(4,908 |
) |
|
(3,710 |
) |
|
|
(9,476 |
) |
|
(7,581 |
) |
Less: Cash paid for vendor financing |
|
(1,771 |
) |
|
(1,304 |
) |
|
|
(3,337 |
) |
|
(2,994 |
) |
Free Cash Flow |
|
1,384 |
|
|
5,167 |
|
|
|
4,195 |
|
|
9,208 |
|
|
|
|
|
|
|
||||||||
Less: Dividends paid |
|
(2,086 |
) |
|
(3,830 |
) |
|
|
(5,835 |
) |
|
(7,571 |
) |
Free Cash Flow after Dividends |
$ |
(702 |
) |
$ |
1,337 |
|
|
$ |
(1,640 |
) |
$ |
1,637 |
|
Free Cash Flow Dividend Payout Ratio |
|
150.7 |
% |
|
74.1 |
% |
|
|
139.1 |
% |
|
82.2 |
% |
1 Includes distributions from DIRECTV of |
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 |
|
|
|
|
|||||||||||
|
Second Quarter |
|
Six-Month Period |
||||||||||||
|
2022 |
2021 |
|
2022 |
2021 |
||||||||||
Capital Expenditures |
$ |
(4,908 |
) |
$ |
(3,710 |
) |
|
$ |
(9,476 |
) |
$ |
(7,581 |
) |
||
Cash paid for vendor financing |
|
(1,771 |
) |
|
(1,304 |
) |
|
|
(3,337 |
) |
|
(2,994 |
) |
||
Cash paid for |
$ |
(6,679 |
) |
$ |
(5,014 |
) |
|
$ |
(12,813 |
) |
$ |
(10,575 |
) |
||
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 |
|
|
|
|
|||||||||
|
Second Quarter |
|
Six-Month Period |
||||||||||
|
2022 |
2021 |
|
2022 |
2021 |
||||||||
Income from Continuing Operations |
$ |
4,751 |
|
$ |
5,969 |
|
|
$ |
9,900 |
|
$ |
13,555 |
|
Additions: |
|
|
|
|
|
||||||||
Income Tax Expense |
|
1,509 |
|
|
1,151 |
|
|
|
2,949 |
|
|
3,160 |
|
Interest Expense |
|
1,502 |
|
|
1,640 |
|
|
|
3,128 |
|
|
3,463 |
|
Equity in Net (Income) Loss of Affiliates |
|
(504 |
) |
|
18 |
|
|
|
(1,025 |
) |
|
24 |
|
Other (Income) Expense - Net |
|
(2,302 |
) |
|
(1,206 |
) |
|
|
(4,459 |
) |
|
(5,436 |
) |
Depreciation and amortization |
|
4,450 |
|
|
4,429 |
|
|
|
8,912 |
|
|
8,895 |
|
EBITDA |
|
9,406 |
|
|
12,001 |
|
|
|
19,405 |
|
|
23,661 |
|
Transaction and other costs |
|
185 |
|
|
— |
|
|
|
283 |
|
|
35 |
|
Employee separation costs and benefit-related (gain) loss |
|
108 |
|
|
(70 |
) |
|
|
201 |
|
|
(104 |
) |
Assets impairments and abandonment and restructuring |
|
631 |
|
|
— |
|
|
|
631 |
|
|
— |
|
Adjusted EBITDA 1 |
$ |
10,330 |
|
$ |
11,931 |
|
|
$ |
20,520 |
|
$ |
23,592 |
|
Less: Video and Other dispositions |
|
— |
|
|
(1,776 |
) |
|
|
— |
|
|
(3,243 |
) |
Standalone AT&T Adjusted EBITDA 2 |
$ |
10,330 |
|
$ |
10,155 |
|
|
$ |
20,520 |
|
$ |
20,349 |
|
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 |
|
|
|
|
|||||||||
|
Second Quarter |
|
Six-Month Period |
||||||||||
|
2022 |
2021 |
|
2022 |
2021 |
||||||||
Communications Segment |
|||||||||||||
Operating Income |
$ |
7,226 |
|
$ |
7,384 |
|
|
$ |
14,255 |
|
$ |
14,815 |
|
Additions: |
|
|
|
|
|
||||||||
Depreciation and amortization |
|
4,115 |
|
|
4,085 |
|
|
|
8,239 |
|
|
8,139 |
|
EBITDA |
|
11,341 |
|
|
11,469 |
|
|
|
22,494 |
|
|
22,954 |
|
|
|
|
|
|
|
||||||||
Total Operating Revenues |
|
28,695 |
|
|
28,128 |
|
|
|
57,571 |
|
|
56,306 |
|
|
|
|
|
|
|
||||||||
Operating Income Margin |
|
25.2 |
% |
|
26.3 |
% |
|
|
24.8 |
% |
|
26.3 |
% |
EBITDA Margin |
|
39.5 |
% |
|
40.8 |
% |
|
|
39.1 |
% |
|
40.8 |
% |
Mobility |
|||||||||||||
Operating Income |
$ |
6,212 |
|
$ |
6,007 |
|
|
$ |
12,065 |
|
$ |
12,051 |
|
Additions: |
|
|
|
|
|
||||||||
Depreciation and amortization |
|
2,017 |
|
|
2,023 |
|
|
|
4,076 |
|
|
4,037 |
|
EBITDA |
|
8,229 |
|
|
8,030 |
|
|
|
16,141 |
|
|
16,088 |
|
|
|
|
|
|
|
||||||||
Total Operating Revenues |
|
19,926 |
|
|
18,936 |
|
|
|
40,001 |
|
|
37,970 |
|
Service Revenues |
|
15,004 |
|
|
14,346 |
|
|
|
29,728 |
|
|
28,394 |
|
|
|
|
|
|
|
||||||||
Operating Income Margin |
|
31.2 |
% |
|
31.7 |
% |
|
|
30.2 |
% |
|
31.7 |
% |
EBITDA Margin |
|
41.3 |
% |
|
42.4 |
% |
|
|
40.4 |
% |
|
42.4 |
% |
EBITDA Service Margin |
|
54.8 |
% |
|
56.0 |
% |
|
|
54.3 |
% |
|
56.7 |
% |
Business Wireline |
|||||||||||||
Operating Income |
$ |
710 |
|
$ |
1,069 |
|
|
$ |
1,569 |
|
$ |
2,149 |
|
Additions: |
|
|
|
|
|
||||||||
Depreciation and amortization |
|
1,313 |
|
|
1,293 |
|
|
|
2,612 |
|
|
2,571 |
|
EBITDA |
|
2,023 |
|
|
2,362 |
|
|
|
4,181 |
|
|
4,720 |
|
|
|
|
|
|
|
||||||||
Total Operating Revenues |
|
5,595 |
|
|
6,052 |
|
|
|
11,235 |
|
|
12,098 |
|
|
|
|
|
|
|
||||||||
Operating Income Margin |
|
12.7 |
% |
|
17.7 |
% |
|
|
14.0 |
% |
|
17.8 |
% |
EBITDA Margin |
|
36.2 |
% |
|
39.0 |
% |
|
|
37.2 |
% |
|
39.0 |
% |
Consumer Wireline |
|||||||||||||
Operating Income |
$ |
304 |
|
$ |
308 |
|
|
$ |
621 |
|
$ |
615 |
|
Additions: |
|
|
|
|
|
||||||||
Depreciation and amortization |
|
785 |
|
|
769 |
|
|
|
1,551 |
|
|
1,531 |
|
EBITDA |
|
1,089 |
|
|
1,077 |
|
|
|
2,172 |
|
|
2,146 |
|
|
|
|
|
|
|
||||||||
Total Operating Revenues |
|
3,174 |
|
|
3,140 |
|
|
|
6,335 |
|
|
6,238 |
|
|
|
|
|
|
|
||||||||
Operating Income Margin |
|
9.6 |
% |
|
9.8 |
% |
|
|
9.8 |
% |
|
9.9 |
% |
EBITDA Margin |
|
34.3 |
% |
|
34.3 |
% |
|
|
34.3 |
% |
|
34.4 |
% |
|
|
|
|
|
|
||||||||
Latin America Segment - |
|
|
|
|
|
||||||||
Operating Income |
$ |
(82 |
) |
$ |
(129 |
) |
|
$ |
(184 |
) |
$ |
(263 |
) |
Additions: |
|
|
|
|
|
||||||||
Depreciation and amortization |
|
169 |
|
|
150 |
|
|
|
330 |
|
|
295 |
|
EBITDA |
|
87 |
|
|
21 |
|
|
|
146 |
|
|
32 |
|
|
|
|
|
|
|
||||||||
Total Operating Revenues |
|
808 |
|
|
688 |
|
|
|
1,498 |
|
|
1,319 |
|
|
|
|
|
|
|
||||||||
Operating Income Margin |
|
-10.1 |
% |
|
-18.8 |
% |
|
|
-12.3 |
% |
|
-19.9 |
% |
EBITDA Margin |
|
10.8 |
% |
|
3.1 |
% |
|
|
9.7 |
% |
|
2.4 |
% |
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 |
|
|
|
|
|||||||||
|
Second Quarter |
|
Six-Month Period |
||||||||||
|
2022 |
2021 |
|
2022 |
2021 |
||||||||
Operating Expenses |
|
|
|
|
|
||||||||
Transaction and other costs |
$ |
185 |
|
$ |
— |
|
|
$ |
283 |
|
$ |
35 |
|
Benefit-related (gain) loss and other employee-related costs |
|
108 |
|
|
(70 |
) |
|
|
201 |
|
|
(104 |
) |
Assets impairments and abandonment and restructuring |
|
631 |
|
|
— |
|
|
|
631 |
|
|
— |
|
Adjustments to Operations and Support Expenses |
|
924 |
|
|
(70 |
) |
|
|
1,115 |
|
|
(69 |
) |
Amortization of intangible assets |
|
17 |
|
|
28 |
|
|
|
44 |
|
|
114 |
|
Adjustments to Operating Expenses |
|
941 |
|
|
(42 |
) |
|
|
1,159 |
|
|
45 |
|
Other |
|
|
|
|
|
||||||||
DIRECTV intangible amortization (proportionate share) |
|
396 |
|
|
— |
|
|
|
812 |
|
|
— |
|
Benefit-related (gain) loss, transaction financing costs and other |
|
314 |
|
|
(213 |
) |
|
|
406 |
|
|
(337 |
) |
Actuarial (gain) loss |
|
(1,345 |
) |
|
197 |
|
|
|
(2,398 |
) |
|
(2,647 |
) |
Adjustments to Income Before Income Taxes |
|
306 |
|
|
(58 |
) |
|
|
(21 |
) |
|
(2,939 |
) |
Tax impact of adjustments |
|
38 |
|
|
(1 |
) |
|
|
(65 |
) |
|
(725 |
) |
Tax-related items |
|
(79 |
) |
|
250 |
|
|
|
(79 |
) |
|
368 |
|
Adjustments to Net Income |
$ |
347 |
|
$ |
(307 |
) |
|
$ |
123 |
|
$ |
(2,582 |
) |
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 |
|
|
|
|
|||||||||
|
Second Quarter |
|
Six-Month Period |
||||||||||
|
2022 |
2021 |
|
2022 |
2021 |
||||||||
Operating Income |
$ |
4,956 |
|
$ |
7,572 |
|
|
$ |
10,493 |
|
$ |
14,766 |
|
Adjustments to Operating Expenses |
|
941 |
|
|
(42 |
) |
|
|
1,159 |
|
|
45 |
|
Adjusted Operating Income |
|
5,897 |
|
|
7,530 |
|
|
|
11,652 |
|
|
14,811 |
|
|
|
|
|
|
|
||||||||
EBITDA |
|
9,406 |
|
|
12,001 |
|
|
|
19,405 |
|
|
23,661 |
|
Adjustments to Operations and Support Expenses |
|
924 |
|
|
(70 |
) |
|
|
1,115 |
|
|
(69 |
) |
Adjusted EBITDA |
|
10,330 |
|
|
11,931 |
|
|
|
20,520 |
|
|
23,592 |
|
|
|
|
|
|
|
||||||||
Total Operating Revenues |
|
29,643 |
|
|
35,740 |
|
|
|
59,355 |
|
|
71,617 |
|
|
|
|
|
|
|
||||||||
Operating Income Margin |
|
16.7 |
% |
|
21.2 |
% |
|
|
17.7 |
% |
|
20.6 |
% |
Adjusted Operating Income Margin |
|
19.9 |
% |
|
21.1 |
% |
|
|
19.6 |
% |
|
20.7 |
% |
Adjusted EBITDA Margin |
|
34.8 |
% |
|
33.4 |
% |
|
|
34.6 |
% |
|
32.9 |
% |
Adjusted Diluted EPS |
|||||||||||||
|
Second Quarter |
|
Six-Month Period |
||||||||||
|
2022 |
2021 |
|
2022 |
2021 |
||||||||
Diluted Earnings Per Share (EPS) |
$ |
0.59 |
|
$ |
0.76 |
|
|
$ |
1.23 |
|
$ |
1.73 |
|
DIRECTV intangible amortization (proportionate share) |
|
0.04 |
|
|
— |
|
|
|
0.08 |
|
|
— |
|
Actuarial (gain) loss 1 |
|
(0.13 |
) |
|
0.02 |
|
|
|
(0.24 |
) |
|
(0.27 |
) |
Restructuring and impairments |
|
0.06 |
|
|
— |
|
|
|
0.06 |
|
|
— |
|
Benefit-related, transaction and other costs1, 2 |
|
0.08 |
|
|
(0.02 |
) |
|
|
0.13 |
|
|
(0.01 |
) |
Tax-related items |
|
0.01 |
|
|
(0.03 |
) |
|
|
0.01 |
|
|
(0.05 |
) |
Adjusted EPS |
$ |
0.65 |
|
$ |
0.73 |
|
|
$ |
1.27 |
|
$ |
1.40 |
|
Less: Video and Other dispositions |
|
— |
|
|
(0.09 |
) |
|
|
— |
|
|
(0.18 |
) |
Standalone AT&T Adjusted EPS3 |
$ |
0.65 |
|
$ |
0.64 |
|
|
$ |
1.27 |
|
$ |
1.22 |
|
Year-over-year growth - Adjusted |
|
1.6 |
% |
|
|
|
4.1 |
% |
|
||||
Weighted Average Common Shares Outstanding with Dilution (000,000) |
|
7,611 |
|
|
7,484 |
|
|
|
7,584 |
|
|
7,483 |
|
1 |
Includes adjustments for actuarial gains or losses associated with our pension benefit plan, 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 gain of |
|
2 |
As of |
|
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 |
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
Four Quarters |
|||||
|
|
2021 1 |
|
|
2021 1 |
|
|
2022 1 |
|
|
2022 |
|
||
Adjusted EBITDA |
$ |
10,803 |
|
$ |
9,480 |
|
$ |
10,190 |
|
$ |
10,330 |
|
$ |
40,803 |
End-of-period current debt |
|
|
|
|
|
|
|
|
|
6,210 |
||||
End-of-period long-term debt |
|
|
|
|
|
|
|
|
|
129,747 |
||||
Total End-of-Period Debt |
|
|
|
|
|
|
|
|
|
135,957 |
||||
Less: Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
|
4,018 |
||||
Net Debt Balance |
|
|
|
|
|
|
|
|
|
131,939 |
||||
Annualized Net Debt to Adjusted EBITDA Ratio 2 |
|
|
|
|
|
|
|
|
|
3.23 |
||||
1 |
As reported in Exhibit 99.4. |
|
2 |
Annualized Net Debt to Adjusted EBITDA Ratio of 3.28 when adjusted to remove the impacts for Video and Other dispositions of |
Net Debt to Adjusted EBITDA - 2021 |
||||||||||||||
Dollars in millions |
|
|
|
|
|
|||||||||
|
Three Months Ended |
|
|
|||||||||||
|
|
|
|
|
|
|
|
|
Four Quarters |
|||||
|
|
2020 1 |
|
|
2020 1 |
|
|
2021 1 |
|
|
2021 1 |
|
||
Adjusted EBITDA |
$ |
11,642 |
|
$ |
10,590 |
|
$ |
11,661 |
|
$ |
11,931 |
|
$ |
45,824 |
End-of-period current debt |
|
|
|
|
|
|
|
|
|
23,975 |
||||
End-of-period long-term debt |
|
|
|
|
|
|
|
|
|
154,006 |
||||
Total End-of-Period Debt |
|
|
|
|
|
|
|
|
|
177,981 |
||||
Less: Cash and Cash Equivalents |
|
|
|
|
|
|
|
|
|
9,924 |
||||
Net Debt Balance |
|
|
|
|
|
|
|
|
|
168,057 |
||||
Annualized Net Debt to Adjusted EBITDA Ratio |
|
|
|
|
|
|
|
|
|
3.67 |
||||
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 |
|||||||||||||||||||
|
Second Quarter |
||||||||||||||||||
|
|
|
|
||||||||||||||||
|
Mobility |
Business Wireline |
Adjustments1 |
Business Solutions |
|
Mobility |
Business Wireline |
Adjustments1 |
Business Solutions |
||||||||||
Operating Revenues |
|
|
|
|
|
|
|
|
|
||||||||||
Wireless service |
$ |
15,004 |
$ |
— |
$ |
(12,829 |
) |
$ |
2,175 |
|
$ |
14,346 |
$ |
— |
$ |
(12,321 |
) |
$ |
2,025 |
Wireline service |
|
— |
|
5,416 |
|
— |
|
|
5,416 |
|
|
— |
|
5,860 |
|
— |
|
|
5,860 |
Wireless equipment |
|
4,922 |
|
— |
|
(4,048 |
) |
|
874 |
|
|
4,590 |
|
— |
|
(3,809 |
) |
|
781 |
Wireline equipment |
|
— |
|
179 |
|
— |
|
|
179 |
|
|
— |
|
192 |
|
— |
|
|
192 |
Total Operating Revenues |
|
19,926 |
|
5,595 |
|
(16,877 |
) |
|
8,644 |
|
|
18,936 |
|
6,052 |
|
(16,130 |
) |
|
8,858 |
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
||||||||||
Operations and support |
|
11,697 |
|
3,572 |
|
(9,585 |
) |
|
5,684 |
|
|
10,906 |
|
3,690 |
|
(8,953 |
) |
|
5,643 |
EBITDA |
|
8,229 |
|
2,023 |
|
(7,292 |
) |
|
2,960 |
|
|
8,030 |
|
2,362 |
|
(7,177 |
) |
|
3,215 |
Depreciation and amortization |
|
2,017 |
|
1,313 |
|
(1,664 |
) |
|
1,666 |
|
|
2,023 |
|
1,293 |
|
(1,678 |
) |
|
1,638 |
Total Operating Expenses |
|
13,714 |
|
4,885 |
|
(11,249 |
) |
|
7,350 |
|
|
12,929 |
|
4,983 |
|
(10,631 |
) |
|
7,281 |
Operating Income |
|
6,212 |
|
710 |
|
(5,628 |
) |
|
1,294 |
|
|
6,007 |
|
1,069 |
|
(5,499 |
) |
|
1,577 |
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 |
|||||||||||||||||||
|
Six-Month Period |
||||||||||||||||||
|
|
|
|
||||||||||||||||
|
Mobility |
Business Wireline |
Adjustments1 |
Business Solutions |
|
Mobility |
Business Wireline |
Adjustments1 |
Business Solutions |
||||||||||
Operating Revenues |
|
|
|
|
|
|
|
|
|
||||||||||
Wireless service |
$ |
29,728 |
$ |
— |
$ |
(25,419 |
) |
$ |
4,309 |
|
$ |
28,394 |
$ |
— |
$ |
(24,400 |
) |
$ |
3,994 |
Wireline service |
|
— |
|
10,894 |
|
— |
|
|
10,894 |
|
|
— |
|
11,732 |
|
— |
|
|
11,732 |
Wireless equipment |
|
10,273 |
|
— |
|
(8,500 |
) |
|
1,773 |
|
|
9,576 |
|
— |
|
(8,005 |
) |
|
1,571 |
Wireline equipment |
|
— |
|
341 |
|
— |
|
|
341 |
|
|
— |
|
366 |
|
— |
|
|
366 |
Total Operating Revenues |
|
40,001 |
|
11,235 |
|
(33,919 |
) |
|
17,317 |
|
|
37,970 |
|
12,098 |
|
(32,405 |
) |
|
17,663 |
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Expenses |
|
|
|
|
|
|
|
|
|
||||||||||
Operations and support |
|
23,860 |
|
7,054 |
|
(19,622 |
) |
|
11,292 |
|
|
21,882 |
|
7,378 |
|
(18,098 |
) |
|
11,162 |
EBITDA |
|
16,141 |
|
4,181 |
|
(14,297 |
) |
|
6,025 |
|
|
16,088 |
|
4,720 |
|
(14,307 |
) |
|
6,501 |
Depreciation and amortization |
|
4,076 |
|
2,612 |
|
(3,362 |
) |
|
3,326 |
|
|
4,037 |
|
2,571 |
|
(3,356 |
) |
|
3,252 |
Total Operating Expenses |
|
27,936 |
|
9,666 |
|
(22,984 |
) |
|
14,618 |
|
|
25,919 |
|
9,949 |
|
(21,454 |
) |
|
14,414 |
Operating Income |
|
12,065 |
|
1,569 |
|
(10,935 |
) |
|
2,699 |
|
|
12,051 |
|
2,149 |
|
(10,951 |
) |
|
3,249 |
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. |
View source version on businesswire.com: https://www.businesswire.com/news/home/20220720006041/en/
Phone: (214) 912-8541
Email: fletcher.cook@att.com
Phone: (214) 202-6630
Email: brittany.a.siwald@att.com
Source:
FAQ
What were AT&T's second-quarter revenues for 2022?
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