Verizon Communications Inc.

Good morning and welcome to the Verizon fourth quarter 2018 earnings conference call. At this time all participants have been placed in a listen only mode and the floor will be opened for questions following the presentation. To ask a question, press star 1 on your touch tone phone. If at any point your question has been answered, you may remove yourself by pressing star 2. Today's conference is being recorded. If you have any objections, you may disconnect at this time. It is now my pleasure to turn the call over to your host, Mr. Brady Conner, Senior Vice President, Investor Relations.

Thanks, Brad. Good morning, and welcome to our fourth quarter earnings conference call. This is Brady Conner, and I'm here with our Chief Executive Officer, Hans Vestberg, and our Chief Financial Officer, Matt Ellis. As a reminder, our earnings release, financial and operating information, and the presentation slides are available on our Investor Relations website. A replay and a transcript of this call will also be made available on our website. Before we get started, I'd like to draw your attention to our safe harbor statement on slide two. Information in this presentation contains statements about expected future events and financial results that are forward looking and subject to risks and uncertainties. Discussion of factors that may affect future results is contained in Verizon's filings with the SEC, which are available on our website. This presentation contains certain non-GAAP financial measures. Reconciliations of these non-GAAP measures to the most directly comparable GAAP measures are included in the financial materials we have posted on our website. The quarterly growth rates disclosed in our presentation slides and during our formal remarks are on a year-over-year basis unless otherwise noted as sequential. In addition to our comments today, on February 21st, Verizon will be hosting an Investor Day event in New York City, and we will be webcasting presentations by Hans and the leadership team. More information about this event will be posted on our IR website. Now let's take a look at consolidated earnings for the fourth quarter and full year. In the fourth quarter of 2018, we reported earnings of $0.47 per share and full year earnings of $3.76 per share on a gap basis. These reported results include several special items that I would like to highlight. Our reported earnings for the fourth quarter include a net pre-tax loss from special items of about $4.9 billion. This net loss consists of a previously announced goodwill impairment for oath of $4.6 billion, acquisition and integration charges of $189 million, and severance and annual mark-to-market for our pension and OPEB liabilities of $165 million. In addition, we recognize the deferred tax benefit of $2.1 billion related to an internal reorganization of wireless legal entities. Excluding the effect of these items, adjusted earnings per share was $1.12 in the fourth quarter. Excluding the effect of these special items and the net effects of tax reform and the adoption of the Revenue Recognition Standard, Adjusted earnings per share was $0.90 in the fourth quarter, up 4.7% compared to $0.86 a year ago. On the same basis for the full year, adjusted earnings per share, excluding tax reform and the adoption of the revenue recognition standard, was $3.87, up 3.5% compared to $3.74 a year ago. It has now been a full year since the adoption of the new accounting standard for revenue recognition. The effect of this change is illustrated in the table on slide four. As a reminder, it results in a reduction of wireless service revenue, offset by an increase in wireless equipment revenue, and the deferral of commission expense in both our wireless and wireline segments. The impact from this change was nine cents per share in the fourth quarter and 28 cents per share for the full year. The effect has been fairly consistent throughout 2018, with the fourth quarter slightly higher due to seasonality in wireless volumes. In 2019, we expect a smaller benefit from the adoption of the standard due to the deferral of commission costs. The reduction in benefit creates a year-over-year EPS headwind, which is expected to be about half of the 2018 impact in each of 2019 and 2020. For the remainder of this call, unless otherwise noted, financial results will exclude the impact of the revenue recognition accounting change to provide clear comparability with prior periods. With that, I'll now turn the call over to Hans to take you through a recap of 2018.

Thank you, Brady, and good morning to everyone. This was truly a great year for Verizon. I'm so proud of our team and what they've accomplished in 2018. As I've traveled around and met with our employees and loyal customers, I've seen firsthand the great work that they are doing in pioneering solutions focused on creating value and meeting customer needs. We're on the forefront of technology innovation as we provide our customers with fantastic experience on our networks. 2018 was a remarkable year. We delivered solid financials, returned value to our shareholders, and strengthen our balance sheet as we continue on our trajectory to achieve a pre-Vodafone credit rating profile. Our capital allocation remains disciplined and focused on as we invest in our networks and put our board in a position to maintain our consistent approach to the dividend. Financially, on a like-for-like basis, 2018 was highlighted by a strong wireless service revenue and earnings growth. This is a testament to Verizon providing the best wireless experience on the nation's best network. Our bottom line performance was delivered through a combination of this revenue growth and our business excellence initiatives which drove cash savings across the company. We widened our network leadership position in 2018 and continued our momentum in delivering solid financial and operational performance. Our networks remain best in class and are performing better than ever as an evidence by our recent wins from JD Power and Root Metrics. We extended our lead in wireless performance as we enhanced our network and delivered a personalized experience for all our customers. 2018 was a year of 5G firsts. We were first to complete an over-the-air data transmission on the 5G global standards. We were first to complete a 5G data session on a smartphone. And in October, We proudly were the first in the world to commercially deploy 5G with our 5G home product. As we finish the year, our confidence is high as we're heading into the 5G era and the beginning of what many see as the fourth industrial revolution. Operationally, we announced the vision for Verizon 2.0, which is the realignment of our operations to better focus on our customers. This new operating model realigns our customer-facing units into consumer, business and Verizon Media Group. This will enable us to leverage our scale and infrastructure to create better solutions for our customers. We expect Verizon 2.0 will go live in the second quarter of 2019 and our results for the second quarter will be presented under the new structure. This transformation in how we face our customer is matched with the transformation under our business excellence initiatives, where we recently announced our voluntary separation program and plans for our IT outsourcing. Together, these initiatives, along with our Verizon 2.0 operating model, position us to be even more competitive in a rapidly changing environment. Now I'll hand over to Matt to talk about the financial and operating results of the businesses, starting with slide six. Matt.