Company's investment-led approach and
connectivity momentum fuels Mobility service and
broadband revenue growth
DALLAS, April 24,
2024 /PRNewswire/ -- AT&T Inc. (NYSE: T)
reported first-quarter results that highlighted consistent 5G and
fiber customer additions and showcased profitable growth driven by
increased Mobility service and broadband
revenues.
First-Quarter Consolidated Results
- Revenues of $30.0
billion
- Diluted EPS of $0.47; adjusted EPS* of
$0.55
- Operating income of $5.8
billion; adjusted operating income* of
$6.0 billion
- Net income of $3.8
billion; adjusted EBITDA* of $11.0 billion
- Cash from operating activities of $7.5 billion, up $0.9
billion year over year
- Capital expenditures of $3.8
billion; capital investment* of $4.6 billion
- Free cash flow* of $3.1
billion, up $2.1 billion
year over year
First-Quarter Highlights
- 349,000 postpaid phone net adds with an expected
industry-leading postpaid phone churn of 0.72%
- Mobility service revenues of $16.0 billion, up 3.3% year over year
- 252,000 AT&T Fiber net adds; 17th
consecutive quarter of 200,000+ net adds
- Consumer broadband revenues of $2.7 billion, up 7.7% year over year
- 27.1 million consumer and business locations passed with
fiber
"Our results this quarter reflect continued strong growth in our
Mobility and Consumer Wireline connectivity businesses, which
represent about 80% of our total revenues," said John Stankey, AT&T CEO. "Customers are
choosing AT&T and staying with us. We achieved a record-low
first-quarter postpaid phone churn, grew consumer broadband
subscribers for the third consecutive quarter, and expanded margins
in Mobility and Consumer Wireline. We're also delivering on our
commitment to grow and improve the quality and cadence of free cash
flow, which increased by more than $2
billion year over year. This consistent, solid performance
driven by our investment-led strategy gives us confidence to
re-affirm our full-year consolidated financial guidance."
2024 Outlook
For the full year, AT&T reiterates
guidance of:
- Wireless service revenue growth in the 3% range.
- Broadband revenue growth of 7%+.
- Adjusted EBITDA* growth in the 3% range.
- Capital investment* in the $21-$22 billion
range.
- Free cash flow* in the $17-$18 billion
range.
- Adjusted EPS* in the $2.15-$2.25
range.
- In 2025, the company expects to deliver Adjusted EPS*
growth.
Note: AT&T's first-quarter earnings conference
call will be webcast at 8:30 a.m. ET on Wednesday, April 24, 2024. The webcast and
related materials, including financial highlights, will be
available at https://investors.att.com.
Consolidated Financial Results
- Revenues for the first quarter totaled $30.0 billion versus $30.1
billion in the year-ago quarter, down 0.4%. This was due to
declines in Mobility equipment revenues, driven mainly by lower
sales volumes, and lower Business Wireline revenues. This was
mostly offset by increased service revenues, driven by Mobility,
Consumer Wireline, and Mexico.
Revenue trends also include increases from favorable impacts of
foreign exchange rates in Mexico.
- Operating expenses were $24.2
billion, essentially stable with $24.1 billion in the year-ago quarter. Operating
expenses increased primarily due to higher depreciation related to
our continued fiber and 5G investment, accelerated depreciation on
wireless network equipment due to Open RAN transformation and
associated restructuring charges. This was largely offset by lower
Mobility equipment costs from lower sales volumes and benefits from
continued transformation.
- Operating income was $5.8
billion versus $6.0 billion in
the year-ago quarter. When adjusting for certain items, adjusted
operating income* was $6.0 billion,
essentially flat with the year-ago quarter.
- Equity in net income of affiliates was $0.3 billion, primarily from the DIRECTV
investment. With adjustment for our proportionate share of
intangible amortization, adjusted equity in net income from the
DIRECTV investment* was $0.6
billion.
- Net income was $3.8
billion versus $4.5 billion in
the year-ago quarter.
- Net income attributable to common stock was $3.4 billion versus $4.2
billion in the year-ago quarter. Earnings per diluted common
share was $0.47 versus $0.57 in the year-ago quarter. Adjusting for
$0.08, which includes restructuring
and non-cash impairments, our proportionate share of intangible
amortization from the DIRECTV equity method investment, and other
items, adjusted earnings per diluted common share* was $0.55 compared to $0.60 in the year-ago quarter.
- Adjusted EBITDA was $11.0
billion versus $10.6 billion
in the year-ago quarter.
- Cash from operating activities was $7.5 billion, up $0.9
billion year over year, due to operational growth and timing
of working capital, including higher receivable sales, partially
offset by higher mobile device payments.
- Capital expenditures were $3.8
billion in the quarter versus $4.3
billion in the year-ago quarter. Capital investment*,
which includes $0.8 billion of cash
payments for vendor financing, totaled $4.6
billion versus $6.4 billion in
the year-ago quarter.
- Free cash flow* was $3.1
billion for the quarter versus $1.0
billion in the year-ago quarter.
- Total debt was $132.8
billion at the end of the first quarter, and net
debt* was $128.7 billion. In the
quarter, the company repaid $4.7
billion of long-term debt. The company continues to expect
to achieve net debt-to-adjusted EBITDA* in the 2.5x range in
the first half of 2025.
Segment and Business Unit Results
Communications
Segment
|
Dollars in
millions
|
First
Quarter
|
Percent
|
Unaudited
|
2024
|
2023
|
Change
|
|
|
|
|
Operating
Revenues
|
$
28,857
|
$
29,152
|
(1.0 %)
|
Operating
Income
|
6,745
|
6,743
|
--- %
|
Operating Income
Margin
|
23.4 %
|
23.1 %
|
30 BP
|
Communications segment revenues were $28.9 billion, down 1.0% year over year,
with operating income essentially flat year over year.
Mobility
|
Dollars in millions;
Subscribers in thousands
|
First
Quarter
|
Percent
|
Unaudited
|
2024
|
2023
|
Change
|
|
|
|
|
Operating
Revenues
|
$
20,594
|
$
20,582
|
0.1 %
|
Service
|
15,994
|
15,483
|
3.3 %
|
Equipment
|
4,600
|
5,099
|
(9.8 %)
|
Operating
Expenses
|
14,126
|
14,311
|
(1.3 %)
|
Operating
Income
|
6,468
|
6,271
|
3.1 %
|
Operating Income
Margin
|
31.4 %
|
30.5 %
|
90 BP
|
|
|
|
|
EBITDA*
|
$
8,955
|
$
8,369
|
7.0 %
|
EBITDA
Margin*
|
43.5 %
|
40.7 %
|
280 BP
|
EBITDA Service
Margin*
|
56.0 %
|
54.1 %
|
190 BP
|
|
|
|
|
Total Wireless Net Adds
(excl. Connected Devices)1
|
741
|
690
|
|
Postpaid
|
389
|
542
|
|
Postpaid
phone
|
349
|
424
|
|
Postpaid
other
|
40
|
118
|
|
Prepaid
phone
|
1
|
40
|
|
|
|
|
|
Postpaid
Churn
|
0.89 %
|
0.99 %
|
(10
BP)
|
Postpaid Phone-Only
Churn
|
0.72 %
|
0.81 %
|
(9 BP)
|
Prepaid
Churn
|
2.77 %
|
2.73 %
|
4 BP
|
|
|
|
|
Postpaid Phone
ARPU
|
$55.57
|
$55.05
|
0.9 %
|
Mobility grew service revenue 3.3% with record-low 1Q
postpaid phone churn of 0.72% that contributed to postpaid phone
net adds of 349,000 and year-over-year margin
expansion.
Mobility revenues were up 0.1% year over year,
driven by service revenue growth of 3.3% from subscriber and
postpaid ARPU growth, offset by lower equipment revenues due to
lower sales volumes. Operating expenses were down 1.3% year
over year due to lower equipment expenses resulting from lower
device sales, partially offset by higher depreciation expense due
to our Open RAN deployment and network transformation. Operating
income was $6.5 billion, up 3.1%
year over year. EBITDA* was $9.0
billion, up $586 million year
over year, reflecting service revenue growth. This was the
company's highest first-quarter Mobility EBITDA*.
Business
Wireline
|
Dollars in
millions
|
First
Quarter
|
Percent
|
Unaudited
|
2024
|
2023
|
Change
|
|
|
|
|
Operating
Revenues
|
$
4,913
|
$
5,331
|
(7.8 %)
|
Operating
Expenses
|
4,849
|
4,953
|
(2.1 %)
|
Operating
Income
|
64
|
378
|
(83.1 %)
|
Operating Income
Margin
|
1.3 %
|
7.1 %
|
(580
BP)
|
|
|
|
|
EBITDA*
|
$
1,426
|
$
1,708
|
(16.5 %)
|
EBITDA
Margin*
|
29.0 %
|
32.0 %
|
(300
BP)
|
Business Wireline revenues and profitability declined year
over year, driven by intensifying secular pressures on legacy voice
and data services that were partially offset by growth in fiber and
other advanced connectivity services.
Business Wireline revenues were down 7.8% year over
year, primarily due to lower demand for legacy voice and data
services as well as product simplification, partially offset by
growth in connectivity services, and non-recurring equipment
revenues. Operating expenses were down 2.1% year over year,
due to lower personnel costs, and lower marketing and customer
support expenses, partially offset by higher equipment costs.
Operating income was $64
million, down 83.1% year over year, and EBITDA* was
$1.4 billion, down $282 million.
Consumer
Wireline
|
Dollars in millions;
Subscribers in thousands
|
First
Quarter
|
Percent
|
Unaudited
|
2024
|
2023
|
Change
|
|
|
|
|
Operating
Revenues
|
$
3,350
|
$
3,239
|
3.4 %
|
Broadband
|
2,722
|
2,527
|
7.7 %
|
Operating
Expenses
|
3,137
|
3,145
|
(0.3 %)
|
Operating
Income
|
213
|
94
|
--- %
|
Operating Income
Margin
|
6.4 %
|
2.9 %
|
350 BP
|
|
|
|
|
EBITDA*
|
$
1,094
|
$
955
|
14.6 %
|
EBITDA
Margin*
|
32.7 %
|
29.5 %
|
320 BP
|
|
|
|
|
Broadband Net Adds
(excluding DSL)
|
55
|
(23)
|
|
Fiber
|
252
|
272
|
|
Non Fiber
|
(197)
|
(295)
|
|
AT&T Internet
Air
|
110
|
-
|
|
|
|
|
|
Broadband
ARPU
|
$65.98
|
$61.31
|
7.6 %
|
Fiber ARPU
|
$68.61
|
$65.92
|
4.1 %
|
Consumer Wireline achieved positive broadband net adds for
the third consecutive quarter, driven by 252,000 AT&T Fiber net
additions and the recent launch of AT&T Internet
Air.
Consumer Wireline revenues were up 3.4% year over
year, driven by growth in broadband revenues attributable to fiber
revenues, which grew 19.5%, partially offset by declines in legacy
voice and data services and other services. Operating
expenses were down 0.3% year over year, largely driven by lower
customer support costs that were offset by increased
network-related costs and depreciation. Operating income was
$213 million versus $94 million in the prior-year quarter, and
EBITDA* was $1.1 billion, up
$139 million year over year.
Latin America
Segment – Mexico
|
Dollars in millions;
Subscribers in thousands
|
First
Quarter
|
Percent
|
Unaudited
|
2024
|
2023
|
Change
|
|
|
|
|
Operating
Revenues
|
$
1,063
|
$
883
|
20.4 %
|
Service
|
690
|
591
|
16.8 %
|
Equipment
|
373
|
292
|
27.7 %
|
Operating
Expenses
|
1,060
|
913
|
16.1 %
|
Operating
Income/(Loss)
|
3
|
(30)
|
--- %
|
EBITDA*
|
180
|
145
|
24.1 %
|
|
|
|
|
Total Wireless Net
Adds
|
143
|
10
|
|
Postpaid
|
116
|
49
|
|
Prepaid
|
79
|
(58)
|
|
Reseller
|
(52)
|
19
|
|
Latin America segment
revenues were up 20.4% year over year, primarily due to
favorable impacts of foreign exchange rates, higher equipment sales
and subscriber growth. Operating expenses were up 16.1% due
to unfavorable impact of foreign exchange and higher equipment
costs attributable to subscriber growth. Operating income
was $3 million compared to ($30) million in the year-ago quarter.
EBITDA* was $180 million, up
$35 million year over year.
* 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.
|
|
1 Effective with our first-quarter
2024 reporting, we have removed connected devices from our total
Mobility subscribers, consistent with industry standards and our
key performance metrics. Connected devices include data-centric
devices such as session-based tablets, monitoring devices and
primarily wholesale automobile systems.
|
About AT&T
We help more than 100 million U.S.
families, friends and neighbors, plus nearly 2.5 million
businesses, connect to greater possibility. From the first phone
call 140+ years ago to our 5G wireless and multi-gig internet
offerings today, we @ATT innovate to improve lives. For more
information about AT&T Inc. (NYSE:T), please visit us at
about.att.com. Investors can learn more at investors.att.com.
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.
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 April 24, 2024.
Adjusted diluted EPS, adjusted operating income, EBITDA, adjusted
EBITDA, free cash flow, net debt and net debt-to-adjusted EBITDA
are non-GAAP financial measures frequently used by investors and
credit rating agencies.
Adjusted diluted EPS is calculated by excluding from
operating revenues, operating expenses, other income (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.
Non-operational items arising from asset acquisitions and
dispositions include the amortization of intangible assets. While
the expense associated with the amortization of certain wireless
licenses and customer lists is excluded, the revenue of the
acquired companies is reflected in the measure and those assets
contribute to revenue generation.
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.
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 25%.
For 1Q24, adjusted EPS of $0.55 is diluted EPS of $0.47 adjusted for $0.06 restructuring and non-cash impairments,
$0.03 proportionate share of
intangible amortization at the DIRECTV equity method investment,
minus $0.01 benefit-related,
transaction and other items.
For 1Q23, adjusted EPS of $0.60 is diluted EPS of $0.57 adjusted for $0.04 proportionate share of intangible
amortization at the DIRECTV equity method investment, minus
$0.01 benefit-related and other
items.
The company expects adjustments to 2024 reported diluted EPS to
include our proportionate share of intangible amortization at the
DIRECTV equity method investment in the range of $0.5-$0.7 billion,
a non-cash mark-to-market benefit plan gain/loss, and other items.
The company expects the mark-to-market adjustment, which is driven
by interest rates and investment returns that are not reasonably
estimable at this time, to be a significant item. Our projected
2024 and 2025 adjusted EPS depend on future levels of revenues
and expenses, most of which are not reasonably estimable at this
time. Accordingly, we cannot provide a reconciliation between these
projected non-GAAP metrics and the reported GAAP metrics without
unreasonable effort.
Adjusted operating income is operating income adjusted
for revenues and costs we consider non-operational in nature,
including items arising from asset acquisitions or dispositions.
For 1Q24, adjusted operating income of $6.0 billion is calculated as operating
income of $5.8 billion plus
$167 million of adjustments. For 1Q23, adjusted
operating income of $6.0 billion is
calculated as operating income of $6.0
billion minus $27 million of
adjustments. Adjustments for all periods are detailed in the
Discussion and Reconciliation of Non-GAAP Measures included in our
Form 8-K dated April 24, 2024.
EBITDA is net income plus income tax, interest, and
depreciation and amortization expenses minus equity in net income
of affiliates and other income (expense) – net. Adjusted
EBITDA is calculated by excluding from EBITDA certain
significant items that are non-operational or non-recurring in
nature, including dispositions and merger integration and
transaction costs, significant abandonments and impairments,
benefit-related gains and losses, employee separation and other
material gains and losses. 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 adjusted EBITDA and the most
comparable GAAP metrics without unreasonable effort.
For 1Q24, adjusted EBITDA of $11.0 billion is calculated as net income of
$3.8 billion, plus income tax expense
of $1.1 billion, plus interest
expense of $1.7 billion, minus equity
in net income of affiliates of $0.3
billion, minus other income (expense) – net of $0.5 billion, plus depreciation and amortization
of $5.0 billion, plus adjustments of
$152 million. For 1Q23,
adjusted EBITDA of $10.6 billion is
calculated as net income of $4.5
billion, plus income tax expense of $1.3 billion, plus interest expense of
$1.7 billion, minus equity in net
income of affiliates of $0.5 billion,
minus other income (expense) – net of $0.9
billion, plus depreciation and amortization of $4.6 billion, minus adjustments of $44 million. Adjustments for all periods are
detailed in the Discussion and Reconciliation of Non-GAAP Measures
included in our Form 8-K dated April 24,
2024.
At the segment or business unit level, 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.
Free cash flow for 1Q24 of $3.1 billion is cash from operating activities of
$7.5 billion, plus cash
distributions from DIRECTV classified as investing activities of
$0.2 billion, minus capital
expenditures of $3.8 billion and
cash paid for vendor financing of $0.8 billion. For 1Q23, free
cash flow of $1.0 billion is cash
from operating activities of $6.7 billion, plus cash distributions from
DIRECTV classified as investing activities of $0.8 billion, minus capital expenditures of
$4.3 billion and cash paid for
vendor financing of $2.1 billion. 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.
Capital investment provides a comprehensive view of cash
used to invest in our networks, product developments and support
systems. In connection with capital improvements, we have favorable
payment terms of 120 days or more with certain vendors, referred to
as vendor financing, which are excluded from capital expenditures
and reported as financing activities. Capital investment includes
capital expenditures and cash paid for vendor financing
($0.8 billion in 1Q24 and
$2.1 billion in 1Q23). For
2024, capital investment is expected to be in the
$21-$22
billion range. Due to high variability and difficulty in
predicting items that impact capital expenditures and vendor
financing payments, the company is not able to provide a
reconciliation between projected capital investment and the most
comparable GAAP metrics without unreasonable effort.
Adjusted equity in net income from DIRECTV
investment of $0.6 billion
for 1Q24 is calculated as equity income from DIRECTV of
$0.3 billion reported in Equity
in Net Income of Affiliates and excludes $0.3 billion of 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 of $128.7 billion
at March 31, 2024, is calculated as
total debt of $132.8 billion less
cash and cash equivalents of $3.5
billion and time deposits (i.e. deposits at financial
institutions that are greater than 90 days) of $0.5 billion.
Net debt-to-adjusted EBITDA is calculated by dividing net
debt by the sum of the most recent four quarters of adjusted
EBITDA. Net debt and adjusted EBITDA are calculated as defined
above. Net debt and adjusted EBITDA estimates depend on future
levels of revenues, expenses and other metrics which are not
reasonably estimable at this time. Accordingly, we cannot provide a
reconciliation between projected net debt-to-adjusted EBITDA and
the most comparable GAAP metrics and related ratios without
unreasonable effort.
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. These measures should be considered in
addition to, but not as a substitute for, other measures of
financial performance reported in accordance with U.S. generally
accepted accounting principles (GAAP).
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 classified as investing activities,
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 U.S. video operations as part of our
DIRECTV equity method investment, 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
|
|
|
First
Quarter
|
|
2024
|
2023
|
Net cash provided by
operating activities1
|
$
7,547
|
$
6,678
|
Add: Distributions from
DIRECTV classified as investing activities
|
194
|
774
|
Less: Capital
expenditures
|
(3,758)
|
(4,335)
|
Less: Cash paid for
vendor financing
|
(841)
|
(2,113)
|
Free Cash Flow
|
3,142
|
1,004
|
|
|
|
Less: Dividends
paid
|
(2,034)
|
(2,014)
|
Free Cash Flow after
Dividends
|
$
1,108
|
$
(1,010)
|
Free Cash Flow Dividend Payout
Ratio
|
64.7 %
|
200.6 %
|
1 Includes
distributions from DIRECTV of $324 in the first quarter of 2024 and
$534 in the first quarter of 2023.
|
Cash Paid for Capital Investment
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 Capital
Investment
|
Dollars in millions
|
|
|
|
First
Quarter
|
|
2024
|
2023
|
Capital
Expenditures
|
$
(3,758)
|
$
(4,335)
|
Cash paid for vendor
financing
|
(841)
|
(2,113)
|
Cash paid for Capital
Investment
|
$
(4,599)
|
$
(6,448)
|
EBITDA
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 GAAP.
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 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 cash generation
potential with that of many of its competitors. The financial and
operating metrics which affect EBITDA include the key revenue and
expense drivers for which management is responsible and upon which
we evaluate performance.
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
|
|
|
First
Quarter
|
|
2024
|
2023
|
Net Income
|
$
3,751
|
$
4,453
|
Additions:
|
|
|
Income Tax
Expense
|
1,118
|
1,314
|
Interest
Expense
|
1,724
|
1,708
|
Equity in Net (Income)
of Affiliates
|
(295)
|
(538)
|
Other (Income) Expense
- Net
|
(451)
|
(935)
|
Depreciation and
amortization
|
5,047
|
4,631
|
EBITDA
|
10,894
|
10,633
|
Transaction and other
costs
|
32
|
—
|
Benefit-related
(gain) loss
|
(39)
|
(44)
|
Asset impairments and
abandonments and restructuring
|
159
|
—
|
Adjusted EBITDA1
|
$
11,046
|
$
10,589
|
1 See
"Adjusting Items" section for additional discussion and
reconciliation of adjusted items.
|
Segment and Business Unit EBITDA, EBITDA Margin and
EBITDA Service Margin
|
Dollars in millions
|
|
|
First
Quarter
|
|
2024
|
2023
|
Communications Segment
|
Operating Income
|
$
6,745
|
$
6,743
|
Add:
Depreciation and amortization
|
4,730
|
4,289
|
EBITDA
|
$
11,475
|
$
11,032
|
|
|
|
Total Operating Revenues
|
$
28,857
|
$
29,152
|
Operating Income Margin
|
23.4 %
|
23.1 %
|
EBITDA Margin
|
39.8 %
|
37.8 %
|
|
|
|
Mobility
|
Operating Income
|
$
6,468
|
$
6,271
|
Add:
Depreciation and amortization
|
2,487
|
2,098
|
EBITDA
|
$
8,955
|
$
8,369
|
|
|
|
Total Operating Revenues
|
$
20,594
|
$
20,582
|
Service
Revenues
|
15,994
|
15,483
|
Operating Income Margin
|
31.4 %
|
30.5 %
|
EBITDA Margin
|
43.5 %
|
40.7 %
|
EBITDA Service Margin
|
56.0 %
|
54.1 %
|
|
|
|
Business Wireline
|
Operating Income
|
$
64
|
$
378
|
Add:
Depreciation and amortization
|
1,362
|
1,330
|
EBITDA
|
$
1,426
|
$
1,708
|
|
|
|
Total Operating Revenues
|
$
4,913
|
$
5,331
|
Operating Income Margin
|
1.3 %
|
7.1 %
|
EBITDA Margin
|
29.0 %
|
32.0 %
|
|
|
|
Consumer Wireline
|
Operating Income
|
$
213
|
$
94
|
Add:
Depreciation and amortization
|
881
|
861
|
EBITDA
|
$
1,094
|
$
955
|
|
|
|
Total Operating Revenues
|
$
3,350
|
$
3,239
|
Operating Income Margin
|
6.4 %
|
2.9 %
|
EBITDA Margin
|
32.7 %
|
29.5 %
|
|
|
|
Latin America Segment
|
|
|
Operating Income (Loss)
|
$
3
|
$
(30)
|
Add:
Depreciation and amortization
|
177
|
175
|
EBITDA
|
$
180
|
$
145
|
|
|
|
Total Operating Revenues
|
$
1,063
|
$
883
|
Operating Income Margin
|
0.3 %
|
-3.4 %
|
EBITDA Margin
|
16.9 %
|
16.4 %
|
Adjusting Items
Adjusting items include revenues and costs we
consider non-operational in nature, including items arising from
asset acquisitions or dispositions, including the amortization of
intangible assets. While the expense associated with the
amortization of certain wireless licenses and customer lists is
excluded, the revenue of the acquired companies is reflected in the
measure and that those assets contribute to revenue generation. 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.
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 25%.
Adjusting Items
|
Dollars in millions
|
|
|
First
Quarter
|
|
2024
|
2023
|
Operating Expenses
|
|
|
Transaction and other
costs
|
$
32
|
$
—
|
Benefit-related
(gain) loss
|
(39)
|
(44)
|
Asset impairments and
abandonments and restructuring
|
159
|
—
|
Adjustments to Operations and Support
Expenses
|
152
|
(44)
|
Amortization of intangible
assets
|
15
|
17
|
Adjustments to Operating
Expenses
|
167
|
(27)
|
Other
|
|
|
DIRECTV
intangible amortization (proportionate share)
|
286
|
341
|
Benefit-related (gain) loss, impairments of investment and
other
|
254
|
(111)
|
Adjustments to Income Before Income
Taxes
|
707
|
203
|
Tax impact of
adjustments
|
162
|
46
|
Adjustments to Net Income
|
$
545
|
$
157
|
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, other income (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 impairments, 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.
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 and Adjusted EBITDA
Margin
|
Dollars in millions
|
|
|
First
Quarter
|
|
2024
|
2023
|
Operating Income
|
$
5,847
|
$
6,002
|
Adjustments to
Operating Expenses
|
167
|
(27)
|
Adjusted Operating Income
|
$
6,014
|
$
5,975
|
|
|
|
EBITDA
|
$
10,894
|
$
10,633
|
Adjustments to
Operations and Support Expenses
|
152
|
(44)
|
Adjusted EBITDA
|
$
11,046
|
$
10,589
|
|
|
|
Total Operating
Revenues
|
$
30,028
|
$
30,139
|
|
|
|
Operating Income
Margin
|
19.5 %
|
19.9 %
|
Adjusted Operating
Income Margin
|
20.0 %
|
19.8 %
|
Adjusted EBITDA Margin
|
36.8 %
|
35.1 %
|
|
Adjusted Diluted EPS
|
|
First
Quarter
|
|
2024
|
2023
|
Diluted Earnings Per Share
(EPS)
|
$
0.47
|
$
0.57
|
DIRECTV
intangible amortization (proportionate share)
|
0.03
|
0.04
|
Restructuring and impairments
|
0.06
|
—
|
Benefit-related, transaction and other costs
|
(0.01)
|
(0.01)
|
Adjusted EPS
|
$
0.55
|
$
0.60
|
Year-over-year growth -
Adjusted
|
-8.3 %
|
|
Weighted Average Common Shares Outstanding with
Dilution (000,000)
|
7,193
|
7,474
|
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
deposits at financial institutions that are greater than 90 days
(e.g., certificates of deposit and time deposits), from the sum of
debt maturing within one year and long-term debt.
Net Debt to Adjusted EBITDA -
2024
|
Dollars in millions
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
|
|
Sept. 30,
|
|
Dec.
31,
|
|
March 31,
|
|
Four Quarters
|
|
20231
|
|
20231
|
|
20231
|
|
2024
|
|
Adjusted
EBITDA
|
$
11,053
|
|
$
11,203
|
|
$
10,555
|
|
$
11,046
|
|
$
43,857
|
End-of-period current
debt
|
|
|
|
|
|
|
|
|
7,060
|
End-of-period
long-term debt
|
|
|
|
|
|
|
|
|
125,704
|
Total End-of-Period Debt
|
|
|
|
|
|
|
|
|
132,764
|
Less: Cash and Cash
Equivalents
|
|
|
|
|
|
|
|
|
3,520
|
Less: Time
Deposits
|
|
|
|
|
|
|
|
|
500
|
Net Debt Balance
|
|
|
|
|
|
|
|
|
128,744
|
Annualized Net Debt to Adjusted EBITDA
Ratio
|
|
|
|
|
|
|
|
|
2.94
|
1 As
reported in AT&T's Form 8-K filed January 24, 2024.
|
|
Net Debt to Adjusted EBITDA -
2023
|
Dollars in millions
|
|
|
|
|
|
|
Three Months
Ended
|
|
|
|
June 30,
|
|
Sept. 30,
|
|
Dec. 31,
|
|
March 31,
|
|
Four
Quarters
|
|
20221
|
|
20221
|
|
20221
|
|
20231
|
|
Adjusted
EBITDA
|
$
10,330
|
|
$
10,714
|
|
$
10,231
|
|
$
10,589
|
|
$
41,864
|
End-of-period current
debt
|
|
|
|
|
|
|
|
|
13,757
|
End-of-period
long-term debt
|
|
|
|
|
|
|
|
|
123,727
|
Total End-of-Period Debt
|
|
|
|
|
|
|
|
|
137,484
|
Less: Cash and Cash
Equivalents
|
|
|
|
|
|
|
|
|
2,821
|
Net Debt Balance
|
|
|
|
|
|
|
|
|
134,663
|
Annualized Net Debt to Adjusted EBITDA
Ratio
|
|
|
|
|
|
|
|
|
3.22
|
1 As
reported in AT&T's Form 8-K filed January 24, 2024.
|
Supplemental Operational Measures
As a supplemental presentation to our
Communications segment operating results, we are providing a view
of our AT&T Business Solutions results which includes both
wireless and fixed operations. This combined view presents a
complete profile of the entire business customer relationship and
underscores the importance of mobile solutions to serving our
business customers. Our supplemental presentation of business
solutions operations 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
|
|
First
Quarter
|
|
|
March 31, 2024
|
|
March 31,
2023
|
|
|
Mobility
|
Business
Wireline
|
Adj.1
|
Business
Solutions
|
|
Mobility
|
Business
Wireline
|
Adj.1
|
Business
Solutions
|
Percent
Change
|
Operating Revenues
|
|
|
|
|
|
|
|
|
|
|
Wireless
service
|
$
15,994
|
$
—
|
$
(13,608)
|
$
2,386
|
|
$
15,483
|
$
—
|
$ (13,203)
|
$
2,280
|
4.6 %
|
Wireline
service
|
—
|
4,700
|
—
|
4,700
|
|
—
|
5,200
|
—
|
5,200
|
(9.6) %
|
Wireless
equipment
|
4,600
|
—
|
(3,834)
|
766
|
|
5,099
|
—
|
(4,326)
|
773
|
(0.9) %
|
Wireline
equipment
|
—
|
213
|
—
|
213
|
|
—
|
131
|
—
|
131
|
62.6 %
|
Total Operating Revenues
|
20,594
|
4,913
|
(17,442)
|
8,065
|
|
20,582
|
5,331
|
(17,529)
|
8,384
|
(3.8) %
|
|
|
|
|
|
|
|
|
|
|
|
Operating Expenses
|
|
|
|
|
|
|
|
|
|
|
Operations and
support
|
11,639
|
3,487
|
(9,526)
|
5,600
|
|
12,213
|
3,623
|
(10,196)
|
5,640
|
(0.7) %
|
EBITDA
|
8,955
|
1,426
|
(7,916)
|
2,465
|
|
8,369
|
1,708
|
(7,333)
|
2,744
|
(10.2) %
|
Depreciation and
amortization
|
2,487
|
1,362
|
(2,033)
|
1,816
|
|
2,098
|
1,330
|
(1,712)
|
1,716
|
5.8 %
|
Total Operating Expenses
|
14,126
|
4,849
|
(11,559)
|
7,416
|
|
14,311
|
4,953
|
(11,908)
|
7,356
|
0.8 %
|
Operating Income
|
$
6,468
|
$
64
|
$
(5,883)
|
$ 649
|
|
$ 6,271
|
$
378
|
$
(5,621)
|
$
1,028
|
(36.9) %
|
|
|
|
|
|
|
|
|
|
|
|
Operating Income
Margin
|
|
|
|
8.0 %
|
|
|
|
|
12.3 %
|
(430)
BP
|
1
Non-business wireless reported in the Communications segment under
the Mobility business unit.
|
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