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At&T Inc. 3Q-2015 News Release

The following excerpt is from the company's SEC filing.

For more information, contact:

Fletcher Cook

Jaquelyn Scharnick

Phone: (214) 757-7629

Phone: (214) 254-3790

Email:

fletcher.cook@att.com

jscharnick@brunswickgroup.com

AT&T REPORTS DOUBLE-DIGIT GROWTH IN:

REVENUE, ADJUSTED OPERATING MARGIN, ADJUSTED

EPS AND FREE CASH FLOW IN THIRD-QUARTER RESULTS

Adjusted EPS Guidance Increased to $2.68 to $2.74 Range

Free Cash Flow Guidance Increased to $15 Billion Range or Better;

Strong Mobility Subscriber Gains; Positive DIRECTV U.S. Net Adds

Highlights

Third-quarter consoli dated revenues of $39.1 billion, up nearly 19% versus the year-earlier period primarily due to the acquisition of DIRECTV

Including merger-related expenses, Leap network decommissioning and other one-time costs, $0.50 diluted earnings per share in the third quarter compared to $0.60 diluted EPS in the year-ago quarter; excluding these items, diluted EPS was $0.74 versus $0.65 a year ago, up nearly 14% year over year

Continued adjusted consolidated margin expansion with best-ever service EBITDA margins in wireless operations

Strong cash flows including $10.8 billion in cash from operations and $5.5 billion in free cash flow

Business Solutions revenues up 1.2% year over year

Growth in wireline business data revenues for the fourth consecutive quarter

Strategic business services revenues of $2.8 billion, up 12.6% and up 15.2% when adjusted for foreign exchange

26,000 domestic DIRECTV net adds

192,000 IP broadband net adds

2.5 million AT&T Mobility domestic wireless net adds with gains in every customer category

755,000 branded net adds including solid phone net adds

289,000 postpaid and 466,000 prepaid net adds, best prepaid net add quarter in nearly

8 years

Record 1.6 million connected device net adds including 1 million connected cars

Nearly 1 million branded (postpaid and prepaid) smartphones added to base

Continued growth in phone-only postpaid ARPU plus AT&T Next

monthly billings up nearly 5% year over year

Total churn of 1.33%, down year over year; postpaid churn at 1.16%

Note: AT&T's third-quarter earnings conference call will be broadcast live via the Internet at

4:30 p.m. ET on Thursday, October 22, 2015. The conference call and related materials are available on AT&T's Investor Relations website at

www.att.com/investor.relations

AT&T Inc.

NYSE:T

today reported double-digit revenue, adjusted operating margin, adjusted EPS and free cash flow growth in the third quarter.

"We now have integrated solutions that are unlike any competitor in the market," said Randall Stephenson, AT&T chairman and CEO. "With our national wireless and video capabilities, as well as our extensive broadband network, we now have assets that make us a unique competitor and the first scaled, fully-integrated U.S. service provider.

"We turned in outstanding financial results in the quarter. Our early integration efforts with DIRECTV are going very well and we've just begun to scratch the surface on the video, wireless and broadband cross-selling opportunities," Stephenson added.

Consolidated Financial Results

AT&T's consolidated revenues for the third quarter totaled $39.1 billion, up nearly 19% versus the year-earlier period largely due to the acquisition of DIRECTV. Compared with results for the third quarter of 2014, operating expenses were $33.2 billion versus $27.4 billion; operating income was $5.9 billion versus $5.6 billion; and operating income margin was 15.2%, down from 17.0% in the year-ago quarter. When adjusting for amortization, merger and integration-related items, and other expenses, operating income was $7.9 billion versus $5.9 billion; and operating income margin was 20.3%, up 250 basis points from a year ago.

Third-quarter 2015 net income attributable to AT&T totaled $3.0 billion, or $0.50 per diluted share, compared to net income of $3.1 billion, or $0.60 per diluted share in the year-ago quarter. Adjusting for $0.13 of amortization costs, $0.05 of merger and integration-related items, $0.03 of Cricket network decommissioning and $0.03 of other expenses, earnings per share was $0.74 compared to an adjusted $0.65 in the year-ago quarter, an increase of nearly 14%.

Cash from operating activities totaled $10.8 billion in the third quarter and $26.7 billion year to date; and capital expenditures totaled $5.3 billion and $13.9 billion year to date. Free cash flow — cash from operating activities minus capital expenditures — totaled $5.5 billion for the quarter and $12.8 billion year to date, an increase over the year-ago quarter even as the company continues to invest in its high-quality networks and in its customers.

The free cash flow dividend payout ratio was 57% year to date, improved from 67% in the second quarter.

Updated Outlook

The company also is increasing its adjusted EPS and free cash flow outlook for the year. For the full year, AT&T now expects adjusted EPS in the $2.68 to $2.74 range and free cash flow in the

$15 billion range or better.

For detailed segment results, please go to the Investor Briefing and Financial and Operational Results on the

AT&T Investor Relations website

*Free cash flow dividend payout ratio is...


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