Verizon Communications Inc. (NYSE:VZ) Q2 2020 Earnings Conference Call - Final Transcript
Jul 24, 2020 • 08:30 am ET
Good morning and welcome to the Verizon's Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Today's conference is being recorded. If you have any objections, you may disconnect at this time.
It is now my pleasure to turn over the call to your host, Mr. Brady Connor, Senior Vice President, Investor Relations.
Good morning and welcome to our second quarter earnings conference call. This is Brady Connor 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 2. 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 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.
Now, let's take a look at consolidated earnings for the second quarter. In the second quarter, we reported earnings of $1.13 per share on a GAAP basis. Reported results included a pre-tax loss from special items of approximately $255 million, including a net pre-tax loss of $102 million related to early debt redemption costs and a net charge of $153 million related to a mark-to-market adjustment for our pension liability. Excluding the effects of these special items, adjusted earnings per share was $1.18 in the second quarter compared to $1.23 a year ago.
Let's now move to Slide 4 and take a closer look at our second quarter earnings profile. Consistent with the approach we have shown for several quarters, we have illustrated the ongoing impacts to earnings from the adoption of accounting standard ASC 606 for revenue recognition in 2018.
As a reminder, we expect 2020 to be the final year that the adoption of this standard will have a material year-over-year impact on our income statement.
As we illustrated in previous quarters, we realized a lesser benefit from the adoption of ASC 606 during the second quarter compared to the prior year primarily due to the deferral of commission expense. The reduction of the benefit realized creates a year-over-year headwind to both reported and adjusted earnings per share, which will continue throughout 2020. The impact was $0.02 for the quarter and $0.05 year-to-date. For full year 2020, we continue to expect the headwinds from the deferral of commission expense to be approximately $0.09.
Matt will go through the COVID impacts that we