Fourth-Quarter Consolidated Results
- Consolidated revenues of $41.0 billion
- Reported EPS of $0.69 compared to ($1.95) in the
year-ago quarter, which included non-cash charges
- Adjusted EPS of $0.78 compared to $0.75 in the year-ago
quarter
- Cash from operations of $11.3 billion
- Capital expenditures of $3.8 billion; gross capital
investment1 of $4.9 billion and cash content spend of $4.6
billion
- Free cash flow2 of $8.7 billion
Full-Year Consolidated Results
- Consolidated revenues of $168.9 billion
- Reported EPS of $2.76 compared to ($0.75) in the prior
year, which included non-cash charges
- Adjusted EPS of $3.40 compared to $3.18 in the prior
year
- Cash from operations of $42.0 billion
- Capital expenditures of $16.5 billion; gross capital
investment1 of $21.6 billion
- Free cash flow2 of $26.8 billion; total dividend payout
ratio3 of 56%
Note: AT&T’s fourth-quarter earnings conference call will be
webcast at 8:30 a.m. ET on Wednesday, January 26, 2022. The webcast
and related materials will be available on AT&T’s Investor
Relations website at https://investors.att.com.
AT&T Inc. (NYSE:T) reported fourth-quarter results that
showed continuing customer growth in wireless, fiber and HBO Max.
For the full year, AT&T continued to lead the industry in
postpaid phone net adds, gaining more subscribers than in the prior
10 years combined; added more than 1 million fiber subscribers —
the fourth consecutive year in which it has added 1 million or more
subscribers; and surpassed the high end of its guidance for global
HBO Max and HBO subscribers with nearly 74 million subscribers at
the end of 2021.
“A year and a half ago, we began simplifying our business to
reposition AT&T for growth and we’re extremely pleased with how
we’ve executed on that commitment,” said John Stankey, AT&T
CEO. “We ended 2021 the way we started it – by growing our customer
relationships, running our operations more effectively and
efficiently, and sharpening our focus. Our momentum is strong and
we’re confident there is more opportunity to continue to grow our
customer base and drive costs from the business.
“We’re at the dawn of a new age of connectivity. Our focus now
is to be America’s best connectivity provider and also ensure our
media assets are positioned to grow and truly become a global media
distribution leader. Once we do this, we’ll unlock the true value
of these businesses and provide a great opportunity for
shareholders.”
Fourth-Quarter Highlights
Communications
- Mobility:
- 884,000 postpaid phone net adds; 3.2 million for full year
- 1.3 million postpaid net adds; 4.5 million for full year
- Postpaid phone churn of 0.85%; 0.76% for full year
- Revenues up 5.1%; service revenues up 4.6%; equipment revenues
up 6.2%
- Operating income of $5.4 billion, up 5.2% year over year;
EBITDA4 up 4.3%
- Operating income margin of 25.3%; EBITDA service margin5
50.5%
- Business Wireline
- Operating income margin of 15.2%; EBITDA margin4 37.5%, up 50
basis points due to cost efficiencies
- Consumer Wireline:
- 271,000 AT&T Fiber net adds; 1.0 million for full year
- Revenues up 1.4%; broadband revenues up 5.4% with ARPU growth
of 4.2%
WarnerMedia
- Total global HBO Max and HBO subscribers6 of 73.8 million, up
13.1 million year over year; domestic subscribers7 of 46.8 million,
up 5.3 million for full year
- Domestic HBO Max and HBO subscriber ARPU8 of $11.15
- Total revenues up 15.4% in fourth quarter to $9.9 billion
- Direct-to-Consumer subscription revenues up 11.5% in fourth
quarter
Consolidated Financial Results
Consolidated revenues for the fourth quarter totaled $41.0
billion versus $45.7 billion in the year-ago quarter, down 10.4%
reflecting the impact of divested businesses, mainly U.S. Video in
the third quarter and Vrio in the fourth quarter, and lower
Business Wireline revenues. Decreases were partially offset by
higher WarnerMedia revenues, including a partial recovery from
prior-year pandemic impacts, and higher Mobility and Consumer
Wireline revenues. Excluding impacts of the U.S. Video business and
Vrio from both quarters, consolidated revenues totaled $40.6
billion9 compared to $39.0 billion in the year-ago quarter.
Operating expenses were $35.7 billion versus $56.4 billion in
the year-ago quarter. Expenses declined due to $16.4 billion of
non-cash asset impairments in the prior year, the separation of the
U.S. Video operations, and impacts of Vrio and other divested
businesses. These declines were partially offset by higher
WarnerMedia programming, marketing and selling costs, and higher
domestic wireless equipment costs, including 3G network shutdown
costs. Additionally, depreciation and amortization expense was $1.3
billion lower year over year, largely due to the impairments of
long-lived assets taken in 2020 and ceasing depreciation and
amortization of held-for-sale businesses.
Operating income (loss) was $5.3 billion versus ($10.7) billion
in the year-ago quarter primarily due to non-cash asset impairments
in the prior year. When adjusting for merger-amortization costs and
other items, adjusted operating income was $6.6 billion10 versus
$7.8 billion in the year-ago quarter. Adjusted operating income was
comparable when excluding the U.S. Video business and Vrio from
both quarters.
Fourth-quarter net income (loss) attributable to common stock
was $5.0 billion, or $0.69 per diluted common share, versus ($13.9)
billion, or ($1.95) per common share in the year-ago quarter.
Adjusting for $0.09, which includes merger-amortization costs, a
proportionate share of intangible amortization at the DIRECTV
equity method investment, an actuarial gain on benefit plans, and
other items, earnings per diluted common share was $0.78 compared
to $0.75 in the year-ago quarter.
Cash from operating activities was $11.3 billion, up $1.2
billion year over year, including content spend of $4.6 billion.
Capital expenditures were $3.8 billion in the quarter. Gross
capital investment totaled $4.9 billion, which includes $0.6
billion of cash payments for vendor financing and excludes $0.5
billion of FirstNet reimbursements. Free cash flow, including $1.3
billion of distributions from DIRECTV classified as investing
activities, was $8.7 billion for the quarter. Net debt decreased by
$1.7 billion sequentially, and net debt-to-adjusted EBITDA at the
end of the fourth quarter was 3.22x.11
Full-Year Results
For full-year 2021 when compared with 2020 results, AT&T's
consolidated revenues totaled $168.9 billion versus $171.8 billion,
reflecting the separation of the U.S. Video business in the third
quarter of 2021, and the impacts from other divested businesses.
These decreases were partially offset by higher revenues in
WarnerMedia and Communications. Excluding impacts of U.S. Video and
Vrio from both years, consolidated revenues totaled $153.2 billion9
compared to $144.6 billion in 2020.
Operating expenses were $145.5 billion in 2021 compared with
$165.4 billion in 2020. Expenses declined due to $14.0 billion
lower non-cash asset impairments year over year, a partial year of
U.S. Video in 2021, and impacts of other divested businesses. These
declines were partially offset by higher WarnerMedia programming,
marketing and selling costs, and higher domestic wireless equipment
costs. Additionally, depreciation and amortization expense was $5.7
billion lower year over year, largely due to the impairments of
long-lived assets taken in 2020 and ceasing depreciation and
amortization of held-for-sale businesses.
Operating income was $23.3 billion compared to $6.4 billion in
the prior year, and operating income margin was 13.8% versus 3.7%.
With adjustments for both years, operating income was $32.8
billion10 versus $34.1 billion in 2020, and operating income margin
was 19.4% versus 19.8%. Excluding impacts of U.S. Video and Vrio
from both years, adjusted operating income totaled $30.5 billion12
compared to $32.4 billion in 2020.
Equity in net income (loss) of affiliates of $0.6 billion
includes $0.6 billion from the DIRECTV investment for the five
months after separation. With adjustment for a proportionate share
of intangible amortization, adjusted equity in net income from the
DIRECTV investment was $1.4 billion.13
2021 net income (loss) attributable to common stock was $19.9
billion, or $2.76 per diluted common share, versus ($5.4) billion,
or ($0.75) per common share, in 2020. With adjustments for both
years, earnings per diluted common share was $3.40 compared to
$3.18 in 2020.
Cash from operating activities was $42.0 billion, down $1.2
billion year over year, including content spend of $19.2 billion,
which was up $4.3 billion year over year. Capital expenditures were
$16.5 billion for the year. Gross capital investment totaled $21.6
billion, which includes $4.6 billion of cash payments for vendor
financing and excludes $0.5 billion of FirstNet reimbursements.
Full-year free cash flow2, which includes $1.3 billion of
distributions from DIRECTV classified as investing activities, was
$26.8 billion for the year compared to $27.5 billion in 2020. The
company’s free cash flow to total dividend payout ratio3 for the
full year was 56%. Net debt increased by $8.7 billion in the
year.
Communications Operational Highlights
Fourth-quarter revenues were $30.2 billion, up 2.4% year
over year due to increases in Mobility and Consumer Wireline more
than offsetting a decline in Business Wireline. Operating
contribution was $6.5 billion, up 1.4% year over year, with
operating income margin of 21.4%, compared to 21.6% in the
year-ago quarter.
Mobility
- Revenues were up 5.1% year over year to $21.1 billion
due to higher service and equipment revenues. Service
revenues were $14.7 billion, up 4.6% year over year due to
subscriber gains and the lapping of pandemic impacts on
international roaming revenues. Equipment revenues were $6.5
billion, up 6.2% year over year, driven by increased sales of
higher-priced smartphones.
- Operating expenses were $15.8 billion, up 5.1% year over
year due to higher equipment costs, including 3G network shutdown
costs of approximately $130 million, and higher HBO Max bundling
costs, partially offset by lower marketing and support.
- Operating income was $5.4 billion, up 5.2% year over
year. Operating income margin was 25.3%, flat with the
year-ago quarter.
- EBITDA was $7.4 billion, up 4.3% year over year with
EBITDA margin of 35.0%, down from 35.3% in the
year-ago quarter. EBITDA service margin was
50.5%, compared to 50.6% in the year-ago quarter.
- Total net adds were 5.3 million including:
- 1,285,000 postpaid net adds, with
- 884,000 postpaid phone net adds
- 31,000 postpaid tablet and other branded computing
device net adds
- 370,000 other net adds
- 24,000 prepaid phone net adds
- Postpaid churn was 1.02% versus 0.94% in the year-ago
quarter. Postpaid phone churn was 0.85% versus 0.76% in the
year-ago quarter . Prepaid phone churn was less than 3% with
Cricket substantially lower.
- Postpaid phone-only ARPU was $54.06, down 0.7% versus
the year-ago quarter, due to the impacts of promotional discount
amortization.
Business Wireline
- Revenues were $5.9 billion, down 5.6% year over year,
partially due to the prior-year increase for pandemic-related
connectivity, lower demand for legacy voice and data services, and
a strategic decision to deemphasize non-core services.
- Operating expenses were $5.0 billion, down 4.8% year
over year due to the impact of ongoing operational cost
efficiencies.
- Operating income was $0.9 billion, down 10.0% with
operating income margin of 15.2%, compared to 15.9% in the
year-ago quarter.
- EBITDA was $2.2 billion, down 4.3% year over year with
EBITDA margin of 37.5%, compared to 37.0% in the year-ago
quarter.
- More than 675,000 U.S. business buildings are lit with fiber
from AT&T, enabling high-speed fiber connections to more than
2.75 million U.S. business customer locations. Nationwide, more
than 9.5 million business customer locations are on or within 1,000
feet of AT&T fiber.14
Consumer Wireline
- Revenues were $3.2 billion, up 1.4% year over year due
to gains in broadband more than offsetting declines in legacy voice
and data services and other services. Broadband revenues
increased 5.4%, which reflects fiber subscriber growth and higher
ARPU resulting from increases in higher-revenue fiber
customers.
- Operating expenses were $3.0 billion, up 4.1% year over
year largely driven by higher advertising, network and technology,
and higher depreciation costs, partially offset by lower
amortization of deferred fulfillment costs.
- Operating income was $201 million, down 26.9% year over
year, with operating income margin of 6.4%, compared to 8.8%
in the year-ago quarter.
- EBITDA was $1.0 billion, down 2.3% year over year with
EBITDA margin of 31.3%, compared to 32.5% in the year-ago
quarter.
- Total broadband and DSL subscriber net losses were
20,000, reflecting growth in fiber subscribers mostly offsetting
losses in slower-speed services. Full-year 2021 fiber net adds
totaled about 1.0 million, the fourth consecutive year in which the
company added 1 million or more fiber subscribers. AT&T Fiber
is marketed to about 16 million customer locations.
WarnerMedia Operational Highlights
Revenues were $9.9 billion, up 15.4% versus the year-ago
quarter, driven by higher content and other revenues, including the
partial recovery from prior-year impacts of the pandemic and higher
subscription revenues, partially offset by lower advertising
revenues. Subscription revenues were $3.8 billion, up 5.4%,
primarily reflecting growth of HBO Max. Content and Other
revenues were $4.4 billion, up 45.0%, driven by higher TV
licensing and theatrical. Advertising revenues were $1.6
billion, down 12.9% when compared to the prior year due to lower
audiences with tough comparisons to the prior year political
environment.
- Operating expenses totaled $8.3 billion, up 38.0% when
compared to the fourth quarter of 2020, driven by higher
programming and marketing costs, and incremental selling costs
associated with DIRECTV advertising revenue sharing
arrangements.
- Operating contribution was $1.6 billion, down 37.8%.
Operating income was $1.6 billion, down 37.9% year over
year, as continued HBO Max investments and incremental advertising
revenue sharing costs were partially offset by higher revenues and
cost savings initiatives. Operating income margin was 16.0%,
compared to 29.7% in the year-ago quarter.
- At the end of the quarter, there were 73.8 million
global HBO Max and HBO subscribers, up 13.1 million
year over year and up 4.3 million sequentially, driven by
international as well as domestic retail subscriber gains. At the
end of the quarter, there were 46.8 million domestic HBO
Max and HBO subscribers versus 41.5 million in the year-ago
quarter, up 5.3 million year over year. Domestic subscriber
ARPU was $11.15.
Latin America Operational Highlights
Revenues were $1.1 billion, down 29.0% year over year due
to the sale of Vrio on November 15, 2021. Operating
contribution was ($80) million compared to ($167) million in
the year-ago quarter reflecting ceasing depreciation on Vrio
held-for-sale assets. Operating income margin was (7.4%),
compared to (11.0%) in the prior-year quarter.
Mexico
- Revenues were $704 million, down 4.3% year over year
primarily due to lower equipment revenues partially offset by
increased growth in service revenues. Service revenues were
$485 million, up 5.7% year over year, driven by a growing
subscriber base and growth in other services. Equipment
revenues were $219 million, down 20.9% year over year driven by
lower volumes. Operating loss was ($117) million versus
($126) million in the year-ago quarter.
- Total wireless net adds were 889,000 including 858,000
prepaid net adds, 26,000 postpaid net adds, and 5,000
reseller net adds.
2022 Outlook
The company is planning to host a virtual analyst event in the
first half of March. At that event, the company expects to provide
additional insight and expectations for financial and operational
performance of the Communications Company following the close of
the pending WarnerMedia transaction, which the company now expects
to close in the second quarter.
For the full year, including WarnerMedia and Xandr, the company
expects:
- Consolidated revenue growth in the low-single digits range
compared to 2021 consolidated revenues of $153.2 billion9, which
excludes U.S. Video and Vrio.
- Adjusted EPS15 from $3.10 to $3.15.
- Gross capital investment1 in the $24 billion range with capital
expenditures in the $20 billion range.
- 2022 free cash flow16 in the $23 billion range.
For the full year, the company expects the contribution for
WarnerMedia and Xandr to be:
- Revenues in the $37 to $39 billion range.
- EBITDA in the $6 to $7 billion range.
- Free cash flow16 of approximately $3 billion.
1 Gross capital investment includes capital expenditures and
cash payments for vendor financing and excludes FirstNet
reimbursements. In 4Q21, gross capital investment included $0.6
billion in vendor financing payments and excluded $0.5 billion in
FirstNet reimbursements. In 2021, gross capital investment included
$4.6 billion in vendor financing payments and excluded $0.5 billion
in FirstNet reimbursements. In 2022, vendor financing payments are
expected to be in the $4 billion range.
2 Free cash flow is a non-GAAP financial measure that is
frequently used by investors and credit rating agencies to provide
relevant and useful information. In 4Q21, free cash flow is cash
from operating activities of $11.3 billion, plus cash distributions
from DIRECTV classified as investing activities of $1.3 billion,
minus capital expenditures of $3.8 billion. In 2021, free cash flow
is cash from operating activities of $42.0 billion, plus cash
distributions from DIRECTV classified as investing activities of
$1.3 billion, minus capital expenditures of $16.5 billion.
3 Free cash flow total dividend payout ratio is total dividends
paid divided by free cash flow. For full-year 2021, dividends paid
totaled $15.1 billion.
4 EBITDA is operating income before depreciation and
amortization. EBITDA margin is operating income before depreciation
and amortization, divided by total revenues.
5 EBITDA service margin is operating income before depreciation
and amortization, divided by total service revenues.
6 Global HBO Max and HBO subscribers consist of domestic and
international HBO Max and HBO subscribers, and exclude free trials,
basic and Cinemax subscribers.
7 Domestic HBO Max and HBO subscribers consist of U.S. accounts
with access to HBO Max (including wholesale subscribers that may
not have signed in) and HBO accounts, and exclude free trials and
Cinemax subscribers.
8 Domestic subscriber ARPU is defined as domestic HBO Max and
HBO subscriber revenues during the period divided by average
domestic HBO Max and HBO subscribers during the period, excluding
HBO Commercial and other bulk-billed revenues and subscribers
during the period.
9 Operating Revenues, excluding impacts of the U.S. Video
business and Vrio, of $40.6 billion for 4Q21 is calculated as
Operating Revenues of $41.0 billion minus Vrio operating revenues
of $0.4 billion. For full-year 2021, Operating Revenues, excluding
impacts of the U.S. Video business and Vrio, of $153.2 billion is
calculated as Operating Revenues of $168.9 billion minus Video
operating revenues of $15.5 billion, minus Vrio operating revenues
of $2.6 billion, plus WarnerMedia sales for content and advertising
of $2.5 billion that are external after close of the transactions.
Further information is included in our Form 8-K dated January 26,
2022.
10 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. Adjusted
Operating Income for 4Q21 of $6.6 billion is calculated as
Operating Income of $5.3 billion plus $1.3 billion of adjustments
as detailed in the Discussion and Reconciliation of Non-GAAP
Measures included in our Form 8-K dated January 26, 2022. Adjusted
Operating Income for 2021 of $32.8 billion is calculated as
Operating Income of $23.3 billion plus $9.5 billion of
adjustments.
11 Net Debt to adjusted EBITDA ratios are non-GAAP financial
measures that are frequently used by investors and credit rating
agencies to provide relevant and useful information. Our Net Debt
to Adjusted EBITDA ratio is calculated by dividing the Net Debt of
$156.2 billion (Total Debt of $177.4 billion at December 31, 2021
less Cash and Cash Equivalents of $21.2 billion) by the sum of the
most recent four quarters of Pro Forma Adjusted EBITDA of $48.5
billion ($12.5 billion for March 31, 2021; $12.2 billion for June
30, 2021; $12.5 billion for September 30, 2021; and $11.3 billion
for December 31, 2021).
12 Adjusted Operating Income, excluding impacts of the U.S.
Video business and Vrio, of $30.5 billion for 2021 is calculated as
Adjusted Operating Income of $32.8 billion minus $2.4 billion of
adjustments to reflect the impacts of the July 31, 2021 U.S. Video
separation and the November 15, 2021 Vrio sale. Further detail of
these adjustments and information is included in our Form 8-K dated
January 26, 2022.
13 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.
14 The more than 2.75 million U.S. business customer locations
are included within the 9.5+ million U.S. business customer
locations on or within 1,000 feet of AT&T fiber.
15 The company expects adjustments to 2022 reported diluted EPS
(that excludes impact of adoption of new accounting standards) to
include merger-related amortization in the range of $1 billion per
quarter (prior to close of the WarnerMedia-Discovery transaction)
and other adjustments, the proportionate share of intangible
amortization at the DIRECTV equity method investment in the range
of $1.5 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 2022 EPS depends on future levels of revenues and expenses
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.
16 Free cash flow is cash from operating activities plus cash
distributions from DIRECTV classified as investing activities,
minus capital expenditures. Due to high variability and difficulty
in predicting items that impact cash from operating activities,
cash distributions from DIRECTV, and capital expenditures, the
company is not able to provide a reconciliation between projected
free cash flow and the most comparable GAAP metric without
unreasonable effort.
*About AT&T
AT&T Inc. (NYSE:T) is a diversified, global leader in
telecommunications, media and entertainment, and technology.
AT&T Communications provides more than 100 million U.S.
consumers with communications and entertainment experiences across
mobile and broadband. Plus, it serves high-speed, highly secure
connectivity and smart solutions to nearly 3 million business
customers. WarnerMedia is a leading media and entertainment company
that creates and distributes premium and popular content to global
audiences through its consumer brands, including: HBO, HBO Max,
Warner Bros., TNT, TBS, truTV, CNN, DC Entertainment, New Line,
Cartoon Network, Adult Swim and Turner Classic Movies. AT&T
Latin America provides wireless services to consumers and
businesses in Mexico.
AT&T products and services are provided or offered by
subsidiaries and affiliates of AT&T Inc. under the AT&T
brand and not by AT&T Inc. Additional information is available
at about.att.com. © 2022 AT&T Intellectual Property. All rights
reserved. AT&T, the Globe logo and other marks are trademarks
and service marks of AT&T Intellectual Property and/or AT&T
affiliated companies. All other marks contained herein are the
property of their respective owners.
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.
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. Free cash flow after dividends is
defined as cash from operations minus capital expenditures 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 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
Fourth Quarter
Year Ended
2021
2020
2021
2020
Net cash provided by operating
activities1
$
11,254
$
10,082
$
41,957
$
43,130
Add: Distributions from DIRECTV classified
as investing
activities
1,323
—
1,323
—
Less: Capital expenditures
(3,831
)
(2,392
)
(16,527
)
(15,675
)
Free Cash Flow
8,746
7,690
26,753
27,455
Less: Dividends paid
(3,749
)
(3,741
)
(15,068
)
(14,956
)
Free Cash Flow after Dividends
$
4,997
$
3,949
$
11,685
$
12,499
Free Cash Flow Dividend Payout
Ratio
42.9
%
48.6
%
56.3
%
54.5
%
1
Includes distributions from DIRECTV of
$489 in the fourth quarter and $619 for the year ended December 31,
2021. Total distributions from DIRECTV were $1,812 in the fourth
quarter and $1,942 for the year ended December 31, 2021.
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
Fourth Quarter
Year Ended
2021
2020
2021
2020
Capital Expenditures
$
(3,831
)
$
(2,392
)
$
(16,527
)
$
(15,675
)
Cash paid for vendor financing
(583
)
(1,001
)
(4,596
)
(2,966
)
Cash paid for Capital
Investment
$
(4,414
)
$
(3,393
)
$
(21,123
)
$
(18,641
)
FirstNet reimbursement
(515
)
(920
)
(515
)
(1,063
)
Gross Capital Investment
$
(4,929
)
$
(4,313
)
$
(21,638
)
$
(19,704
)
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.
When discussing our segment, business unit and supplemental
results, EBITDA excludes equity in net income (loss) of affiliates,
and depreciation and amortization from operating contribution.
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 operating performance 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
Fourth Quarter
Year Ended
2021
2020
2021
2020
Net Income (Loss)
$
5,390
$
(13,515
)
$
21,479
$
(3,821
)
Additions:
Income Tax Expense
1,056
(2,038
)
5,468
965
Interest Expense
1,663
1,894
6,884
7,925
Equity in Net (Income) Loss of
Affiliates
(447
)
(106
)
(631
)
(95
)
Other (Income) Expense - Net
(2,354
)
3,020
(9,853
)
1,431
Depreciation and amortization
5,673
6,979
22,862
28,516
EBITDA
10,981
(3,766
)
46,209
34,921
Merger costs and revenue adjustments
132
37
299
468
Employee separation costs and
benefit-related (gain) loss
—
253
57
1,177
Impairments
188
16,365
4,904
18,880
Gain on spectrum transactions
—
—
—
(900
)
Adjusted EBITDA1
$
11,301
$
12,889
$
51,469
$
54,546
1
See page 5 for additional discussion and
reconciliation of adjusted items.
Segment and Business Unit
EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
Fourth Quarter
Year Ended
2021
2020
2021
2020
Communications Segment
Operating Contribution
$
6,451
$
6,360
$
28,279
$
28,313
Additions:
Depreciation and amortization
4,156
4,062
16,409
16,216
EBITDA
10,607
10,422
44,688
44,529
Total Operating Revenues
30,206
29,486
114,730
109,965
Operating Income Margin
21.4
%
21.6
%
24.6
%
25.7
%
EBITDA Margin
35.1
%
35.3
%
39.0
%
40.5
%
Mobility
Operating Contribution
$
5,353
$
5,088
$
23,312
$
22,372
Additions:
Depreciation and amortization
2,050
2,008
8,122
8,086
EBITDA
7,403
7,096
31,434
30,458
Total Operating Revenues
21,146
20,119
78,254
72,564
Service Revenues
14,669
14,022
57,590
55,542
Operating Income Margin
25.3
%
25.3
%
29.8
%
30.8
%
EBITDA Margin
35.0
%
35.3
%
40.2
%
42.0
%
EBITDA Service Margin
50.5
%
50.6
%
54.6
%
54.8
%
Business Wireline
Operating Contribution
$
897
$
997
$
3,990
$
4,564
Additions:
Depreciation and amortization
1,317
1,316
5,192
5,216
EBITDA
2,214
2,313
9,182
9,780
Total Operating Revenues
5,901
6,251
23,937
25,083
Operating Income Margin
15.2
%
15.9
%
16.7
%
18.2
%
EBITDA Margin
37.5
%
37.0
%
38.4
%
39.0
%
Consumer Wireline
Operating Contribution
$
201
$
275
$
977
$
1,377
Additions:
Depreciation and amortization
789
738
3,095
2,914
EBITDA
990
1,013
4,072
4,291
Total Operating Revenues
3,159
3,116
12,539
12,318
Operating Income Margin
6.4
%
8.8
%
7.8
%
11.2
%
EBITDA Margin
31.3
%
32.5
%
32.5
%
34.8
%
Segment and Business Unit
EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
Fourth Quarter
Year Ended
2021
2020
2021
2020
WarnerMedia Segment
Operating Contribution
$
1,573
$
2,529
$
7,277
$
8,210
Additions:
Equity in Net (Income) Loss of
Affiliates
6
13
(38
)
(18
)
Depreciation and amortization
165
177
656
671
EBITDA
1,744
2,719
7,895
8,863
Total Operating Revenues
9,873
8,554
35,632
30,442
Operating Income Margin
16.0
%
29.7
%
20.3
%
26.9
%
EBITDA Margin
17.7
%
31.8
%
22.2
%
29.1
%
Segment and Business Unit
EBITDA, EBITDA Margin and EBITDA Service Margin
Dollars in millions
Fourth Quarter
Year Ended
2021
2020
2021
2020
Latin America Segment
Operating Contribution
$
(80
)
$
(167
)
$
(430
)
$
(729
)
Additions:
Equity in Net (Income) Loss of
Affiliates
1
2
(6
)
(24
)
Depreciation and amortization
153
260
836
1,033
EBITDA
74
95
400
280
Total Operating Revenues
1,063
1,498
5,354
5,716
Operating Income Margin
-7.4
%
-11.0
%
-8.1
%
-13.2
%
EBITDA Margin
7.0
%
6.3
%
7.5
%
4.9
%
Mexico
Operating Contribution
$
(117
)
$
(126
)
$
(510
)
$
(587
)
Additions:
Depreciation and amortization
153
140
605
513
EBITDA
36
14
95
(74
)
Total Operating Revenues
704
736
2,747
2,562
Operating Income Margin
-16.6
%
-17.1
%
-18.6
%
-22.9
%
EBITDA Margin
5.1
%
1.9
%
3.5
%
-2.9
%
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.
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
Fourth Quarter
Year Ended
2021
2020
2021
2020
Operating Expenses
Merger costs
132
37
299
468
Employee separation costs and
benefit-related (gain) loss1
—
253
57
1,177
Asset impairments and abandonment
188
16,365
4,904
18,880
Gain (loss) on spectrum transaction
—
—
—
(900
)
Adjustments to Operations and Support
Expenses
320
16,655
5,260
19,625
Amortization of intangible assets
1,021
1,890
4,233
8,012
Impairments
—
14
—
14
Adjustments to Operating
Expenses
1,341
18,559
9,493
27,651
Other
DIRECTV intangible amortization
(proportionate share)
434
—
826
—
(Gain) loss on sale of assets
172
43
(660
)
(50
)
Debt redemption, impairments and other
adjustments
22
(29
)
235
1,735
Actuarial (gain) loss
(1,119
)
4,106
(4,140
)
4,169
Employee benefit-related (gain) loss1
—
(149
)
—
(172
)
Adjustments to Income Before Income
Taxes
850
22,530
5,754
33,333
Tax impact of adjustments
(40
)
3,186
580
4,977
Tax-related items
264
41
505
41
Impairment attributable to noncontrolling
interest
—
—
81
105
Adjustments to Net Income
$
626
$
19,303
$
4,588
$
28,210
1
Mark-to-market gains and losses on
benefit-related investments were adjusted in 2020 reflecting more
significant market volatility and uncertainty experienced as a
result of the onset of the COVID-19 pandemic. Benefit-related
investment gains were approximately $160 and $430 in the fourth
quarter and for the year ended December 31, 2021, and $205 and $330
in the fourth quarter and for the year ended December 31, 2020.
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, severance 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
Fourth Quarter
Year Ended
2021
2020
2021
2020
Operating Income
$
5,308
$
(10,745
)
$
23,347
$
6,405
Adjustments to Operating Expenses
1,341
18,559
9,493
27,651
Adjusted Operating Income
6,649
7,814
32,840
34,056
EBITDA
10,981
(3,766
)
46,209
34,921
Adjustments to Operations and Support
Expenses
320
16,655
5,260
19,625
Adjusted EBITDA
11,301
12,889
51,469
54,546
Total Operating Revenues
40,958
45,691
168,864
171,760
Operating Income Margin
13.0
%
(23.5
) %
13.8
%
3.7
%
Adjusted Operating Income Margin
16.2
%
17.1
%
19.4
%
19.8
%
Adjusted EBITDA Margin
27.6
%
28.2
%
30.5
%
31.8
%
Adjusted Diluted EPS
Fourth Quarter
Year Ended
2021
2020
2021
2020
Diluted Earnings Per Share
(EPS)
$
0.69
$
(1.95
)
$
2.76
$
(0.75
)
Amortization of intangible assets
0.12
0.22
0.47
0.90
DIRECTV intangible amortization
(proportionate share)
0.05
—
0.09
—
Impairments
0.02
2.02
0.56
2.37
(Gain) loss on sale of assets
0.04
0.03
(0.05
)
0.02
Actuarial (gain) loss 1
(0.12
)
0.43
(0.43
)
0.44
Debt redemption, merger and other
adjustments
0.02
0.01
0.07
0.21
Tax-related items
(0.04
)
(0.01
)
(0.07
)
(0.01
)
Adjusted EPS
$
0.78
$
0.75
$
3.40
$
3.18
Year-over-year growth - Adjusted
4.0
%
6.9
%
Weighted Average Common Shares Outstanding with
Dilution (000,000)
7,204
7,176
7,199
7,183
1
Includes adjustments for actuarial gains
or losses associated with our postemployment benefit plans, 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 $4.1 billion in 2021. As a
result, adjusted EPS reflects an expected return on plan assets of
$3.7 billion (based on an average expected return on plan assets of
6.75% for our pension trust and 4.50% for our VEBA trusts), rather
than the actual return on plan assets of $5.9 billion gain (actual
pension return of 11.4% and VEBA return of 6.3%), included in the
GAAP measure of income.
Net Debt to Pro Forma 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 Pro Forma Adjusted EBITDA ratio is calculated by
dividing the Net Debt by the sum of the most recent four quarters
Pro Forma 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 Pro Forma Adjusted
EBITDA - 2021
Dollars in millions
Three Months Ended
March 31,
June 30,
Sept. 30,
Dec. 31,
Four Quarters
2021 1
2021 1
2021 1
2021
Adjusted EBITDA
$
13,564
$
13,585
$
13,019
$
11,301
$
51,469
Less: Historical Video
(1,065
)
(1,364
)
(418
)
—
(2,847
)
Add: WarnerMedia sale of DIRECTV
advertising
349
372
99
—
820
Add: WarnerMedia/DIRECTV revenue share
(271
)
(287
)
(78
)
—
(636
)
Less: Historical Vrio
(82
)
(89
)
(96
)
(38
)
(305
)
Pro Forma Adjusted EBITDA
12,495
12,217
12,526
11,263
48,501
End-of-period current debt
24,630
End-of-period long-term debt
152,724
Total End-of-Period Debt
177,354
Less: Cash and Cash Equivalents
21,169
Net Debt Balance
156,185
Annualized Net Debt to Pro
Forma
Adjusted EBITDA Ratio 2
3.22
1
Adjusted EBITDA as reported in AT&T's
Form 8-K filed April 22, 2021, July 22, 2021 and October 21,
2021.
2
Annualized Net Debt to Adjusted EBITDA
Ratio of 3.03 (excluding pro forma).
Net Debt to Adjusted EBITDA -
2020
Dollars in millions
Three Months Ended
March 31,
June 30,
Sept. 30,
Dec. 31,
Four Quarters
2020 1
2020 1
2020 1
2020
Adjusted EBITDA
$
14,232
$
14,112
$
13,313
$
12,889
$
54,546
End-of-period current debt
3,470
End-of-period long-term debt
153,775
Total End-of-Period Debt
157,245
Less: Cash and Cash Equivalents
9,740
Net Debt Balance
147,505
Annualized Net Debt to Adjusted EBITDA
Ratio
2.70
1
As reported in AT&T's Form 8-K filed
April 22, 2020, July 23, 2020, and October 22, 2020.
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
Fourth Quarter
December 31, 2021
December 31, 2020
Mobility
Business
Wireline
Adjustments1
Business
Solutions
Mobility
Business
Wireline
Adjustments1
Business
Solutions
Operating Revenues
Wireless service
$
14,669
$
—
$
(12,561
)
$
2,108
$
14,022
$
—
$
(12,074
)
$
1,948
Wireline services
—
5,727
—
5,727
—
6,042
—
6,042
Wireless equipment
6,477
—
(5,447
)
1,030
6,097
—
(5,172
)
925
Wireline equipment
—
174
—
174
—
209
—
209
Total Operating Revenues
21,146
5,901
(18,008
)
9,039
20,119
6,251
(17,246
)
9,124
Operating Expenses
Operations and support
13,743
3,687
(11,419
)
6,011
13,023
3,938
(10,926
)
6,035
EBITDA
7,403
2,214
(6,589
)
3,028
7,096
2,313
(6,320
)
3,089
Depreciation and amortization
2,050
1,317
(1,700
)
1,667
2,008
1,316
(1,686
)
1,638
Total Operating Expenses
15,793
5,004
(13,119
)
7,678
15,031
5,254
(12,612
)
7,673
Operating Income
5,353
897
(4,889
)
1,361
5,088
997
(4,634
)
1,451
Equity in Net Income (Loss) of
Affiliates
—
—
—
—
—
—
—
—
Operating Contribution
$
5,353
$
897
$
(4,889
)
$
1,361
$
5,088
$
997
$
(4,634
)
$
1,451
1
Non-business wireless reported in the
Communication segment under the Mobility business unit.
Supplemental Operational
Measure
Year Ended
December 31, 2021
December 31, 2020
Mobility
Business
Wireline
Adjustments1
Business
Solutions
Mobility
Business
Wireline
Adjustments1
Business
Solutions
Operating Revenues
Wireless service
$
57,590
$
—
$
(49,429
)
$
8,161
$
55,542
$
—
$
(47,810
)
$
7,732
Wireline service
—
23,224
—
23,224
—
24,313
—
24,313
Wireless equipment
20,664
—
(17,250
)
3,414
17,022
—
(14,140
)
2,882
Wireline equipment
—
713
—
713
—
770
—
770
Total Operating Revenues
78,254
23,937
(66,679
)
35,512
72,564
25,083
(61,950
)
35,697
Operating Expenses
Operations and support
46,820
14,755
(38,749
)
22,826
42,106
15,303
(34,927
)
22,482
EBITDA
31,434
9,182
(27,930
)
12,686
30,458
9,780
(27,023
)
13,215
Depreciation and amortization
8,122
5,192
(6,744
)
6,570
8,086
5,216
(6,802
)
6,500
Total Operating Expenses
54,942
19,947
(45,493
)
29,396
50,192
20,519
(41,729
)
28,982
Operating Income
23,312
3,990
(21,186
)
6,116
22,372
4,564
(20,221
)
6,715
Equity in Net Income (Loss) of
Affiliates
—
—
—
—
—
—
—
—
Operating Contribution
$
23,312
$
3,990
$
(21,186
)
$
6,116
$
22,372
$
4,564
$
(20,221
)
$
6,715
1
Non-business wireless reported in the
Communication segment under the Mobility business unit.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20220125006250/en/
Fletcher Cook AT&T Inc. Phone: (214) 912-8541 Email:
fletcher.cook@att.com
Daphne Avila AT&T Inc. Phone: (972) 266-3866 Email:
daphne.avila@att.com
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