Verizon Communications Inc.

Good morning and welcome to the Verizon Fourth Quarter 2020 Earnings Conference Call. At this time, all participants have been placed in a listen-only mode and the floor will be open 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 Chairman and Chief Executive Officer, Hans Vestberg, and Matt Ellis, our Chief Financial Officer. As a reminder, our earnings release, financial and operating information, and the presentation slides are available on our Investor Relations website. A replay and 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. Discussions 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 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. As a reminder, we are in the quiet period for Spectrum Auction 107. so we will not be able to comment on our mid-band spectrum holdings or strategy at this time. Now let's take a look at consolidated earnings for the fourth quarter and full year. In the fourth quarter, we reported earnings of $1.11 per share, resulting in full year earnings of $4.30 per share on a GAAP basis. Reported fourth quarter earnings include a pre-tax loss from special items of approximately $523 million, This includes a net charge of $404 million, primarily related to severance, including voluntary separations under our existing plans and the annual mark to market for our pension and OPEB liabilities, as well as a net loss of $119 million, primarily related to the disposition of the HuffPost business. Excluding the effects of these special items, adjusted earnings per share was $1.21 in the fourth quarter, and $4.90 for the full year. Let's now move to slide four and take a closer look at our fourth quarter earnings profile. The impact to earnings from the adoption of accounting standards ASC 606 for revenue recognition is illustrated for comparability purposes and reflects a reduction in the benefit realized due to the deferral of commission expense versus the prior year. We also continue to monitor the ongoing impacts of COVID on our business. the year over year impacts of both ASC 606 and COVID were not significant in the fourth quarter. The full year 2020 impacts from ASC 606 and COVID were nine cents and 21 cents respectively on both a reported and adjusted earnings per share basis. We do not expect the adoption of ASC 606 to have a significant impact on the comparability of 2021 results to 2020. Full-year adjusted EPS growth of 1.9%, illustrated on the earnings waterfall slide, reflects the strong underlying performance of the business. With that, I'll now turn the call over to Hans to take you through a recap of 2020.

Thank you, Brady, and Happy New Year to all of you. First of all, 2020. It was a challenging year, and I can only say that I'm super proud how Verizon responded to the changing environment during 2020. And we supported our customers, our employees, and the society in a way that I've never seen before. So all in all, a great year. At the same time, we executed well on our strategy and saw that we had really good financial performance as well. When it comes to our 2020 strategic priorities, let me just walk through the execution of them. First of all, strengthening and grow the core business. I'm really proud to announce that we continue to have the best network in the nation. We just got for the 15th time the overall best network with RootMetrics on all seven different categories. That includes 5G, which is so important to us that we continue to have that lead. I'm also happy to announce that we won for the 26th consecutive time the J.D. Powers Award. It tells a lot about our network and technology team, how they have been building a network, and how we continue to lead this market. When it comes to the customer innovation, you have seen us working with our customers to give them richer offering and also even better performance of the network. This year with Disney+, Discovery+, Also adding in the iPhone 5 from Apple has, of course, supported a lot of our innovation that we're doing in the Verizon Consumer Group. And we see a great migration of our customers to unlimited and to the premium unlimited. Finally, you can see also that Verizon Business Group has a year of investments to see that we are putting a foundation to be even stronger for the future, had good growth in the wireless and also in some areas like the public sector, very good performance and also adding a lot of new customers on the enterprise side. When it comes to us leveraging the assets to drive new growth, The commitments we did in February 2020 when it comes to 5G were all met or exceeded. I'm extremely happy with that. We now have 64 ultra-wideband cities. We have more than 10 cities on our home 5G ultra-wideband. We have 10 mobile edge compute centers public with Amazon. All in all, we deployed more than five times more ultra-wideband sites. doing 2020, and we launched the nationwide 5G that now is covering 230 million POPs in 2,700 cities. On the financial side, a strong year ended where we had more than 2% growth in the wireless service revenue. We also have growth on our EPS in the fourth quarter, over 7%. We had an operational cash flow full year of $41.8 billion, which is a growth of 17%. A very strong year that put us in a good position when we go into 2021. And finally, we have a really large focus on how to include all our four stakeholders in the work we're doing. And I'm really proud of the Citizen Verizon that we launched during last year. which is a great way for us to see that the society aspect is part of our strategy, where, of course, our focus on being carbon neutral is very important. And the second green bond was launched at the second half of 2020. So all in all, I have to say, it was a very different year, but a great execution where we hit all our strategic milestones at the same time as we pivoted and supported all our stakeholders. At the November sell-side event, I presented the five vectors of growth. Those are the vectors that is based on our strategy of network and service. Those are also the enablers for us to get to GDP+. We have great traction on them, and we also have done quite a lot in 2020, all the way from the five-year adoption to the customer differentiation that I talked a lot about, the new markets that we're addressing, still pending the acquisition of TracFone, but we have other segments we are addressing, as well as the next-generation business-to-business application based on our unique mobile edge compute offering that we have with Amazon, also now with Microsoft, and many other partners. And finally, the network monetization with our MVNO partners, which are enjoying the best network that we have and we're building. All in all, this is built on the Verizon Intelligent Edge network that we outlined some three years ago, and they're giving us the opportunity to have great execution in the future. With that, I would like to hand over to Matt to go through the financials in a little bit more detail.