AT&T today reported solid second-quarter results with strong adjusted EPS growth, expanding margins and growing free cash flow.
Ã¢â‚¬Å“These results reaffirm our transformation strategy,Ã¢â‚¬Â said Randall Stephenson, AT&T chairman and CEO.
Ã¢â‚¬Å“We grew revenues, expanded margins and delivered double-digit adjusted EPS and cash flow growth. We added more than 2 million new wireless subscribers as the repositioning of our smartphone base nears completion. We also began expanding high-quality, high-speed wireless service to Mexican consumers and businesses.
Ã¢â‚¬Å“This is a pivotal time for us. We look forward to closing DIRECTV and building on this momentum by delivering a new TV everywhere experience integrated with mobile and high-speed Internet service.Ã¢â‚¬Â
Consolidated Financial Results
AT&T’s consolidated revenues for the second quarter totaled $33.0 billion, up 1.4 percent versus the year-earlier period. When excluding the divested Connecticut wireline property, revenues were up
2.2 percent. Compared with results for the second quarter of 2014, operating expenses were
$27.3 billion versus $27.0 billion; operating income was $5.7 billion versus $5.6 billion in the second quarter a year ago, and operating income margin was 17.3 percent, up slightly from 17.2 percent in the year-ago quarter. When adjusting for merger and integration-related expenses, operating income was $6.5 billion versus $5.8 billion a year ago; and operating income margin was 19.6 percent, up 190 basis points from a year ago.
Second-quarter 2015 net income attributable to AT&T totaled $3.0 billion, or $0.58 per diluted share, compared to net income of $3.5 billion, or $0.68 per diluted share in the year-ago quarter. Adjusting for $0.05 of Leap network decommissioning, $0.03 of wireless integration expenses and $0.03 of DIRECTV and Mexico merger and integration-related expenses, earnings per share was $0.69 compared to an adjusted $0.62 in the year-ago quarter, an increase of more than 11 percent.
Cash from operating activities totaled $9.2 billion in the second quarter and $15.9 billion year to date; and capital expenditures totaled $4.7 billion and $8.7 billion year to date. Free cash flow Ã¢â‚¬â€ cash from operating activities minus capital expenditures Ã¢â‚¬â€ totaled $4.5 billion for the quarter and $7.2 billion year to date, an increase over the year-ago quarter even as the company continues to invest in its high-quality network and customers. The free cash flow dividend payout ratio was 55 percent in the second quarter and 67 percent year to date.
Second-quarter consolidated revenues of $33.0 billion, up 1.4 percent versus the year-earlier period reflecting Mexican acquisitions and pressure from foreign exchange and global hubbing exit; up 2.2 percent when adjusting for the sale of the Connecticut wireline property in the fourth quarter of 2014; wireline business and total revenue growth rates were impacted by foreign exchange
Strong cash flows generated, including $9.2 billion in cash from operations and $4.5 billion in free cash flow
Free cash flow dividend payout ratio* of 55 percent in the second quarter and 67 percent year to date
2.1 million net adds including 410,000 postpaid, 331,000 prepaid and 1 million connected cars
About 1.2 million branded (postpaid and prepaid) smartphones added to base
Positive branded phone net adds
Strong churn levels with continued low wireless postpaid churn of 1.01 percent and total churn of 1.31 percent
Strong phone-only postpaid ARPU with AT&T Next monthly billings growth, increased 6.1 percent year over year and 3.3 percent sequentially
Wireless operating margin of 25.6 percent; total EBITDA margin of 36.9 percent with a best-ever adjusted EBITDA service margin of 48.5 percent
Strategic business services revenues of $2.7 billion, up 13.0 percentÃ‚Â and up 13.6 percent when adjusted for the Connecticut wireline sale; now one-third of total wireline business revenues
U-verse consumer revenues of $4.1 billion with adjusted growth of 19.2 percent year over year
Completion of Nextel Mexico acquisition
Integration with Iusacell underway
Established plans to own and operate 4G LTE network in Mexico with plans to cover 100 million POPs with a calling plan footprint of 400 million POPs across North America