Source: Seeking Alpha
Verizon Communications Inc. (NYSE:VZ)
Q2 2014 Earnings Conference Call
July 22, 2014 7:30 AM ET
Michael Stefanski – SVP, IR
Fran Shammo – EVP and CFO
Phil Cusick – JPMorgan
Michael Rollins – Citi Investment Research
Simon Flannery – Morgan Stanley
David Barden – Bank of America
John Hodulik – UBS
Mike McCormack – Jefferies LLC
Kevin Smithen – Macquarie
Jonathan Schildkraut – Evercore Partners
Jennifer Fritzsche – Wells Fargo
Good morning and welcome to the Verizon Second Quarter 2014 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be opened for questions following the presentation. (Operator instructions) Today’s conference is being recorded. If you have any objections, you may disconnect at this time.
It is now my pleasure to turn the call over to your host, Mr. Michael Stefanski, Senior Vice President, Investor Relations.
Thanks, David. Good morning and welcome to our second quarter earnings conference call. This is Mike Stefanski and I’m here with our Chief Financial Officer, Fran Shammo.
We appreciate you joining us earlier than our usual time this morning. Before we get started, let me remind you that our earnings release, financial and operating information, the investor quarterly and the presentation slides are available on our Investor Relations website. Replays and a transcript of this call will be made available on our website.
I would also like to draw your attention to our Safe Harbor statement. Information in this presentation contains statements about expected future events and financial results that are forward-looking and subject to risks and uncertainties. Discussion of factors that may affect future results is contained in Verizon filings with the SEC, which are also available on our website. This presentation contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are also available on our website.
The quarterly growth rates disclosed in this presentation are on a year-over-year basis, unless otherwise noted as sequential.
Before Fran takes you through the details of our quarterly performance, I would like to cover a special item that is included in our reported results on Slide 3. For the second quarter of 2014, we reported earnings of $1.01 per share on a GAAP basis. These reported results include a pre-tax gain of $707 million related to the sale of 700 megahertz A block spectrum licenses.
On the after tax basis, this gain increased reported net income by $434 million or $0.10 per share. As we’ve done in the past, we’ve accounted for the gain on the sale of these licenses at the corporate level, so it is not part of our Wireless segment results. Excluding the effect of this non-operational item, adjusted earnings per share was $0.91 for the second quarter compared with $0.73 a year ago or growth of 24.7%. On a year-to-date basis, adjusted earnings per share were $1.76 compared with $1.41 last year up 24.8%.
Keep in mind that the $1.76 per share first half result does not reflect full ownership of Verizon Wireless for the entire first quarter since the transaction closed on February 21st.
As discussed on our first quarter call, full ownership for the quarter represents as an additional $0.07 per share of earnings. With that, I will now turn the call over to Fran.
Thanks, Mike. Good morning, everyone. We entered 2014 with the great confidence in our ability to grow the business profitably while making the necessary capital investments to position us for the future.
In the first quarter, we closed the Vodafone transaction and delivered strong financial results. On our last earnings call, I indicated that we exited the first quarter with better momentum and expected that to carry forward.
As you can see from our second quarter results, we delivered on what we said, producing very strong customer growth metrics and Wireless and FiOS, in driving excellent top line growth and profitability.
We are competing effectively in all markets and executing our strategy which is focused on providing network reliability and a great customer experience.
Over the past two and a half years, we have delivered consistent high quality earnings results with double-digit year-over-year growth and reported and adjusted earnings per share in nine of the last 10 quarters.