DENVER, Feb. 4, 2025
/PRNewswire/ -- Lumen Technologies, Inc. (NYSE: LUMN) reported
results for the fourth quarter ended December 31, 2024.
- Drove solid sales growth across enterprise in the fourth
quarter and FY2024, bolstered by improved customer satisfaction
scores in all four segments.
- Strengthened Lumen's balance sheet and overall liquidity
position in 2024. Reduced debt levels and increased access to
capital.
- Continued progress building the AI backbone and cloudifying
telecom, setting the foundation for 2025.
- Continued further adoption of Lumen Digital's
network-as-a-service product in the fourth quarter.
"We made material progress strengthening our financial position,
transforming our corporate functions, and building the backbone for
the AI economy," said Kate Johnson,
president and CEO of Lumen. "This upcoming year, we will continue
to drive operational excellence at Lumen, disrupt the industry by
cloudifying telecom, and deliver connectivity to hyperscalers and
enterprises as their demand for data grows in the era of AI."
Fourth Quarter 2024 Highlights
- Reported Net Income of $85
million for the fourth quarter 2024, compared to reported
Net Loss of $(1.995) billion for the
fourth quarter 2023, which included a non-cash goodwill impairment
charge of $1.9 billion
- Reported diluted earnings per share of $0.09 for the fourth quarter 2024, compared to
diluted loss per share of $(2.03) for
the fourth quarter 2023. Excluding Special Items, diluted earnings
per share was $0.09 for the fourth
quarter 2024, compared to $0.08
diluted earnings per share for the fourth quarter 2023
- Generated Adjusted EBITDA of $1.052
billion1 for the fourth quarter 2024, compared to
$1.099 billion[1] for the fourth
quarter 2023, excluding the effects of Special Items of
$132 million and $211 million, respectively
- Reported Net Cash Provided by Operating Activities of
$688 million for the fourth quarter
2024
- Negative Free Cash Flow of $(174)
million for the fourth quarter 2024, excluding cash paid for
Special Items of $53 million,
compared to Free Cash Flow of $50
million, excluding cash paid for Specials Items of
$87 million, for the fourth quarter
2023
Full Year 2024 Financial Highlights
- Reported Net Loss of $(55)
million for the full year 2024, compared to reported Net
Loss of $(10.298) billion for the
full year 2023, which included non-cash goodwill impairment charges
of $10.693 billion
- Reported diluted loss per share of $(0.06) for the full year 2024, compared to
diluted loss per share of $(10.48)
for the full year 2023. Excluding Special Items, diluted loss per
share was $(0.21) for the full year
2024, compared to $0.20 diluted
earnings per share for the full year 2023
- Generated Adjusted EBITDA of $3.939
billion1 for the full year 2024, compared to
$4.628 billion1 for the
full year 2023, excluding the effects of Special Items of
$494 million and $482 million, respectively
- Reported Net Cash Provided by Operating Activities of
$4.333 billion2 for the
full year 2024
- Generated Free Cash Flow of $1.386
billion2 for the full year 2024, excluding cash
paid for Special Items of $284
million, compared to Negative Free Cash Flow of $(878) million2, excluding cash paid
for Special Items of $62 million, for
the full year 2023
|
1 Adjusted
EBITDA and Adjusted EBITDA excluding Special Items for the fourth
quarter and full year 2023 includes $14 million and $125 million,
respectively, from the EMEA business (defined below), divested
on Nov. 1, 2023 and $10 million and $56 million, respectively, from
those of our Content Delivery Network ("CDN") customer contracts
sold Oct. 10, 2023, which will not recur in subsequent periods. The
net post-closing financial impact of actual amounts received or
paid by the Company under its post-closing agreements with the
purchasers of its businesses divested in 2022 and 2023 were a
reduction of $(29) million and $(40) million for the fourth quarter
2024 and 2023, respectively and $(161) million and $(179) million,
respectively, for the full years 2024 and 2023.
|
|
2 For
the respective periods, includes the impact of (i) $170 million
voluntary pension contribution in third quarter 2024, (ii) $700
million in cash tax refund received in Q1 2024 and (iii) $938
million and $90 million in cash tax payments in Q2 2023 and Q1
2023, respectively, related to our 2022 divestitures.
|
Financial Results
|
Metric, as
reported
|
Fourth
Quarter
|
Full
Year
|
|
($ in millions,
except per share data)
|
2024
|
2023
|
2024
|
2023
|
|
Large
Enterprise(1)
|
$
845
|
894
|
3,379
|
3,618
|
|
Mid-Market
Enterprise
|
452
|
501
|
1,887
|
2,044
|
|
Public
Sector
|
554
|
497
|
1,849
|
1,789
|
|
North America
Enterprise Channels
|
1,851
|
1,892
|
7,115
|
7,451
|
|
Wholesale
|
716
|
750
|
2,875
|
3,152
|
|
North America Business
Revenue
|
2,567
|
2,642
|
9,990
|
10,603
|
|
International and
Other(1)(2)
|
92
|
160
|
373
|
980
|
|
Business Segment
Revenue
|
2,659
|
2,802
|
10,363
|
11,583
|
|
Mass Markets Segment
Revenue
|
670
|
715
|
2,745
|
2,974
|
|
Total
Revenue(3)(4)
|
$
3,329
|
3,517
|
13,108
|
14,557
|
|
Cost of Services and
Products
|
1,706
|
1,737
|
6,703
|
7,144
|
|
Selling, General and
Administrative Expenses
|
711
|
896
|
2,972
|
3,198
|
|
Net Loss on Sale of
Business
|
—
|
9
|
17
|
121
|
|
Stock-based
Compensation Expense
|
8
|
13
|
29
|
52
|
|
Net Income
(Loss)
|
85
|
(1,995)
|
(55)
|
(10,298)
|
|
Net Income (Loss),
Excluding Special Items(5)(6)
|
93
|
83
|
(205)
|
193
|
|
Adjusted
EBITDA(2)(5)(7)(8)
|
920
|
888
|
3,445
|
4,146
|
|
Adjusted EBITDA,
Excluding Special Items(2)(5)(7)(8)(9)
|
1,052
|
1,099
|
3,939
|
4,628
|
|
Net Income (Loss)
Margin
|
2.6 %
|
(56.7) %
|
(0.4) %
|
(70.7) %
|
|
Net Income (Loss)
Margin, Excluding Special Items(5)(6)
|
2.8 %
|
2.4 %
|
(1.6) %
|
1.3 %
|
|
Adjusted EBITDA
Margin(5)
|
27.6 %
|
25.2 %
|
26.3 %
|
28.5 %
|
|
Adjusted EBITDA Margin,
Excluding Special Items(5)(9)
|
31.6 %
|
31.2 %
|
30.1 %
|
31.8 %
|
|
Net Cash Provided by
Operating Activities
|
688
|
784
|
4,333
|
2,160
|
|
Capital
Expenditures(10)
|
915
|
821
|
3,231
|
3,100
|
|
Unlevered Cash
Flow(5)
|
112
|
196
|
2,228
|
158
|
|
Unlevered Cash Flow,
Excluding Cash Special Items(5)(11)
|
165
|
283
|
2,512
|
220
|
|
Free Cash
Flow(5)
|
(227)
|
(37)
|
1,102
|
(940)
|
|
Free Cash Flow,
Excluding Cash Special Items(5)(11)
|
(174)
|
50
|
1,386
|
(878)
|
|
Net Earnings (Loss) per
Common Share - Diluted
|
0.09
|
(2.03)
|
(0.06)
|
(10.48)
|
|
Net Earnings (Loss) per
Common Share - Diluted, Excluding Special
Items(5)(6)
|
0.09
|
0.08
|
(0.21)
|
0.20
|
|
Weighted Average Shares
Outstanding (in millions) - Diluted
|
989.8
|
983.8
|
987.7
|
983.1
|
|
|
(1) International revenue amounts
previously reported in Large Enterprise represent revenue related
to our non-domestic regions including (i) Europe, Middle East and
Africa ("EMEA") through the sale of our EMEA business on Nov. 1,
2023 and (ii) Asia Pacific ("APAC") and any other remaining
international operations, which we do not expect to be significant
or material in future periods. As such, prior period amounts
related to our historical international operations have been
reclassified within our Business Segment Revenue to the
"International and Other" sales channel. These reporting changes
had no impact on total operating revenue, total operating expenses
or net income for any period.
|
|
(2)
Subsequent to the sale of select Content Delivery Network ("CDN")
customer contracts announced on Oct. 10, 2023, certain prior period
amounts related to our historical CDN revenue have been
reclassified from "Harvest" to "International and Other" sales
channel within the "Other" product in the Business Segment Revenue
products to conform to our 2024 reporting presentation. These
reporting changes had no impact on total operating revenue, total
operating expenses or net income for any period. Revenue and
Adjusted EBITDA excluding Special Items for the fourth quarter of
2023 includes $18 million and $10 million, respectively, and for
the full year 2023 includes $93 million and $56 million,
respectively, from our divested CDN customer contracts. The Company
believes that these figures will allow analysts and investors to
understand the amounts associated with recent transactions and to
understand the impacts they had on the Company's past, but not
current or future, financial performance. Therefore, these amounts
will impact the Company's ability to match its past performance in
current and future periods.
|
|
(3) Revenue for the fourth quarter
and full year 2023 includes $39 million and $454 million,
respectively, from the EMEA business divested Nov. 1, 2023, which
will not recur in periods following the divestiture. The Company
believes that these figures will allow analysts and investors to
understand the amounts associated with these transactions and to
understand the impact they had on the Company's past, but not
current or future, financial performance. Therefore, these amounts
will impact the Company's ability to match its past performance in
current and future periods.
|
|
(4) The
post-closing revenue received by the Company under its post-closing
agreements with purchasers of our businesses divested in 2022 and
2023 was (i) $49 million and $189 million for the fourth quarter of
2024 and full year 2024, respectively, and (ii) $39 million and
$117 million for the fourth quarter of 2023 and full year 2023,
respectively. The Company believes that this provides useful
information to investors to understand the impact that the
post-closing agreements have had on the Company's current financial
performance.
|
|
(5) See the
attached schedules for definitions of non-GAAP metrics and
reconciliations to GAAP figures.
|
|
(6) Excludes Special Items (net of
the income tax effect thereof) which (i) positively impacted this
metric by $8 million and negatively impacted this metric by $(150)
million, for the fourth quarter of 2024 and full year 2024,
respectively and (ii) positively impacted this metric by $2.1
billion and $10.5 billion (primarily related to our 2023 goodwill
impairment losses) for the fourth quarter of 2023 and full year
2023, respectively.
|
|
(7) Adjusted EBITDA and Adjusted
EBITDA excluding Special Items for the fourth quarter of 2023 and
full year 2023 includes $14 million and $125 million, respectively,
from the EMEA business, divested in Nov. 1, 2023, which will not
recur in periods following the divestiture. The Company believes
that these figures will allow analysts and investors to understand
the amounts associated with these transactions to understand the
impact they had on the Company's past, but not current or future,
financial performance. Therefore, these amounts will impact the
Company's ability to match its past performance in current and
future periods.
|
|
(8) The
post-closing net financial impacts to adjusted EBITDA of actual
amounts received or paid by the Company under its post-closing
agreements with the purchasers of our businesses divested in 2022
and 2023 were (i) a net reduction of $(29) million and $(161)
million for the fourth quarter of 2024 and full year 2024,
respectively, and (ii) a net reduction of $(40) million and $(179)
million, for the fourth quarter 2023 and full year 2023,
respectively. The Company believes that these figures provide
useful information to investors to understand the impact that the
post-closing agreements have had on the Company's financial
performance following the completion of these
divestitures.
|
|
(9) Excludes
Special Items in the amounts of (i) $132 million and $494 million
for the fourth quarter of 2024 and full year 2024, respectively,
and (ii) $211 million and $482 million for the fourth quarter of
2023 and full year 2023, respectively.
|
|
(10) Capital expenditures for the
fourth quarter of 2023 and full year 2023, includes $7 million and
$98 million, respectively, of capital expenditures relating to EMEA
business divested on Nov. 1, 2023, which will not recur in periods
following the divestiture. The Company believes that these figures
will allow analysts and investors to understand the amounts
associated with these transactions and programs to understand the
impact they had on the Company's past, but not current or future,
capital expenditures. Therefore, these amounts will impact the
Company's ability to match its past capital expenditure activities
in current and future periods.
|
|
(11)
Excludes cash paid for Special Items in the net amounts of (i) $53
million and $284 million for the fourth quarter of 2024 and full
year 2024, respectively, and (ii) $87 million and $62 million for
the fourth quarter of 2023 and full year 2023,
respectively.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Metrics(1)
|
Fourth
Quarter
|
Fourth
Quarter
|
QoQ
Percent
|
Full
Year
|
Full
Year
|
YoY
Percent
|
|
($ in
millions)
|
2024
|
2023
|
Change
|
2024
|
2023
|
Change
|
|
Revenue By Sales
Channel
|
|
|
|
|
|
|
|
Large
Enterprise
|
$
845
|
894
|
(5) %
|
3,379
|
3,618
|
(7) %
|
|
Mid-Market
Enterprise
|
452
|
501
|
(10) %
|
1,887
|
2,044
|
(8) %
|
|
Public
Sector
|
554
|
497
|
11 %
|
1,849
|
1,789
|
3 %
|
|
North America
Enterprise Channels
|
1,851
|
1,892
|
(2) %
|
7,115
|
7,451
|
(5) %
|
|
Wholesale
|
716
|
750
|
(5) %
|
2,875
|
3,152
|
(9) %
|
|
North America Business
Revenue
|
2,567
|
2,642
|
(3) %
|
9,990
|
10,603
|
(6) %
|
|
International and
Other
|
92
|
160
|
(43) %
|
373
|
980
|
(62) %
|
|
Business Segment
Revenue
|
2,659
|
2,802
|
(5) %
|
10,363
|
11,583
|
(11) %
|
|
Mass Markets Segment
Revenue
|
670
|
715
|
(6) %
|
2,745
|
2,974
|
(8) %
|
|
Total
Revenue(2)
|
$
3,329
|
3,517
|
(5) %
|
13,108
|
14,557
|
(10) %
|
|
Business Segment
Revenue by Product Category
|
|
|
|
|
|
|
|
Grow
|
$
1,175
|
1,085
|
8 %
|
4,373
|
4,494
|
(3) %
|
|
Nurture
|
704
|
832
|
(15) %
|
2,961
|
3,493
|
(15) %
|
|
Harvest
|
574
|
620
|
(7) %
|
2,271
|
2,679
|
(15) %
|
|
Subtotal
|
2,453
|
2,537
|
(3) %
|
9,605
|
10,666
|
(10) %
|
|
Other
|
206
|
265
|
(22) %
|
758
|
917
|
(17) %
|
|
Business Segment
Revenue
|
$
2,659
|
2,802
|
(5) %
|
10,363
|
11,583
|
(11) %
|
|
Net Income
(Loss)
|
$ 85
|
(1,995)
|
nm
|
(55)
|
(10,298)
|
(99) %
|
|
Net Income (Loss)
Margin
|
2.6 %
|
(56.7) %
|
nm
|
(0.4) %
|
(70.7) %
|
(99) %
|
|
Net Income (Loss),
Excluding Special Items
|
$ 93
|
83
|
12 %
|
(205)
|
193
|
nm
|
|
Net Income (Loss)
Margin, Excluding Special Items
|
2.8 %
|
2.4 %
|
17 %
|
(1.6) %
|
1.3 %
|
nm
|
|
Adjusted EBITDA,
Excluding Special Items(3)
|
$
1,052
|
1,099
|
(4) %
|
3,939
|
4,628
|
(15) %
|
|
Adjusted EBITDA Margin,
Excluding Special Items
|
31.6 %
|
31.2 %
|
1 %
|
30.1 %
|
31.8 %
|
(5) %
|
|
Capital
Expenditures(4)
|
$
915
|
821
|
11 %
|
3,231
|
3,100
|
4 %
|
|
|
(1) See the
notes to our immediately preceding chart for information about our
use of non-GAAP metrics, Special Items, and reconciliations to
GAAP.
|
|
(2) Revenue
for the fourth quarter of 2023 includes amounts from the 2023
divestiture and sale of CDN contracts. Revenue for the second and
third quarter of 2024 and fourth quarter of 2023 includes amounts
from the post-closing commercial agreements with the purchasers of
our businesses divested in 2022 and 2023. Refer to footnotes 1
through 4 on the preceding table for details.
|
|
(3) Adjusted
EBITDA excluding Special Items for the third quarter of 2023
includes the financial impacts from the 2023 divestiture and sale
of CDN contracts. Adjusted EBITDA excluding Special Items for the
fourth quarter and full year of 2024 and 2023 includes the
financial impacts from the post-closing commercial agreements with
the purchasers of our businesses divested in 2022 and 2023. Refer
to footnotes 2, 7 and 8 on the preceding table for
details.
|
|
(4) Capital
expenditures for the fourth quarter and full year 2023 includes the
impacts of capital expenditures related to our divested businesses,
which will not recur in periods following the completion of these
divestitures. Refer to footnote 10 on the preceding table for
details.
|
|
nm - Percentages
greater than 200% and comparisons between positive and negative
values are considered not meaningful.
|
Revenue
Total Revenue was $3.329 billion
for the fourth quarter 2024, compared to $3.517 billion for the fourth quarter 2023.
Cash Flow
Free Cash Flow, excluding Special Items, was negative
$(174) million in the fourth quarter
2024, compared to $50 million in
the fourth quarter 2023.
Liquidity
As of December 31, 2024, Lumen had
cash and cash equivalents of $1.889
billion.
Lumen Technologies and its financing subsidiary, Level 3
Financing, Inc., have submitted notices to redeem approximately
$202 million aggregate principal
amount of their unsecured senior notes, effective February 15, 2025.
2025 Financial Outlook
The Company updated its full-year 2025 financial outlook, which
is detailed below:
|
Metric (1)(2)
|
Current
Outlook
|
|
Adjusted
EBITDA
|
$3.2 to $3.4
billion
|
|
Free Cash
Flow
|
$700 to $900
million
|
|
Net Cash
Interest
|
$1.2 to $1.3
billion
|
|
Capital Expenditures
|
$4.1 to $4.3
billion
|
|
Cash Income
Taxes
|
$100 to $200
million
|
|
|
(1)
For definitions of non-GAAP metrics and reconciliations to
GAAP figures, see the attached schedules and our Investor Relations
website.
|
|
(2)
Outlook measures in this chart and the accompanying schedules
(i) exclude the effects of Special Items, future changes in our
operating or capital allocation plans, unforeseen changes in
regulation, laws or litigation, and other unforeseen events or
circumstances impacting our financial performance and (ii) speak
only as of Feb. 4, 2025. See "Forward-Looking
Statements."
|
Investor Call
Lumen's management team will host a conference call at
5:00 p.m. ET today, Feb. 4, 2025. The conference call will be
streamed live over the Lumen website at ir.lumen.com. Additional
information regarding fourth quarter 2024 results, including the
presentation materials, will be available on the Investor Relations
website prior to the call. A webcast replay of the call will also
be available on our website for one year.
About Lumen Technologies:
Lumen is unleashing the world's digital potential. We ignite
business growth by connecting people, data, and applications –
quickly, securely, and effortlessly. As the trusted network for AI,
Lumen uses the scale of our network to help companies realize AI's
full potential. From metro connectivity to long-haul data transport
to our edge cloud, security, managed service, and digital platform
capabilities, we meet our customers' needs today and as they build
for tomorrow.
For news and insights visit news.lumen.com, LinkedIn:
/lumentechnologies, X: @lumentechco, Facebook: /lumentechnologies,
Instagram: @lumentechnologies and YouTube: /lumentechnologies.
Lumen and Lumen Technologies are registered trademarks of Lumen
Technologies LLC in the United
States. Lumen Technologies LLC is a wholly-owned affiliate
of Lumen Technologies, Inc.
Forward-Looking Statements
Except for historical and factual information, the matters set
forth in this release and other of our oral or written statements
identified by words such as "estimates," "expects," "anticipates,"
"believes," "plans," "intends," "will," and similar expressions are
forward-looking statements as defined by the federal securities
laws, and are subject to the "safe harbor" protections thereunder.
These forward-looking statements are not guarantees of future
results and are based on current expectations only, are inherently
speculative, and are subject to a number of assumptions, risks and
uncertainties, many of which are beyond our control. Actual events
and results may differ materially from those anticipated,
estimated, projected or implied by us in those statements if one or
more of these risks or uncertainties materialize, or if underlying
assumptions prove incorrect. Factors that could affect actual
results include but are not limited to: the effects of intense
competition from a wide variety of competitive providers, including
decreased demand for our more mature service offerings and
increased pricing pressures; the effects of new, emerging or
competing technologies, including those that could make our
products less desirable or obsolete; our ability to successfully
and timely attain our key operating imperatives, including
simplifying and consolidating our network, simplifying and
automating our service support systems, attaining our Quantum Fiber
buildout schedule, replacing aging or obsolete plant and equipment,
strengthening our relationships with customers and attaining
projected cost savings; our ability to successfully and timely
monetize our network related assets through leases, commercial
service arrangements or similar transactions (including as part of
our Private Connectivity FabricSM solutions), including
the possibility that the benefits of these transactions may be less
than anticipated, that the costs thereof may be more than
anticipated, or that we may be unable to satisfy any conditions of
any such transactions in a timely manner, or at all; our ability to
safeguard our network, and to avoid the adverse impact of
cyber-attacks, security breaches, service outages, system failures,
or similar events impacting our network or the availability and
quality of our services; the effects of ongoing changes in the
regulation of the communications industry, including the outcome of
legislative, regulatory or judicial proceedings relating to content
liability standards, intercarrier compensation, universal service,
service standards, broadband deployment, data protection, privacy
and net neutrality; our ability to generate cash flows sufficient
to fund our financial commitments and objectives, including our
capital expenditures, operating costs, debt obligations, taxes,
pension contributions and other benefits payments; our ability to
effectively retain and hire key personnel and to successfully
negotiate collective bargaining agreements on reasonable terms
without work stoppages; our ability to successfully adjust to
changes in customer demand for our products and services, including
increased demand for high-speed data transmission services and
artificial intelligence services; our ability to enhance our growth
products and manage the decline of our legacy products, including
by maintaining the quality and profitability of our existing
offerings, introducing profitable new offerings on a timely and
cost-effective basis, and transitioning customers from our legacy
products to our newer offerings; our ability to successfully and
timely implement our corporate strategies, including our
transformation, buildout and deleveraging strategies; our ability
to successfully and timely realize the anticipated benefits from
our 2022 and 2023 divestitures, and our 2024 debt modification and
extinguishment transactions; changes in our operating plans,
corporate strategies, or capital allocation plans, whether based
upon changes in our cash flows, cash requirements, financial
performance, financial position, market or regulatory conditions,
or otherwise; the impact of any future material acquisitions or
divestitures that we may transact; the negative impact of increases
in the costs of our pension, healthcare, post-employment or other
benefits, including those caused by changes in capital markets,
interest rates, mortality rates, demographics or regulations; the
impact of events that harm our reputation or brands, including
potential negative impact of customer or shareholder complaints,
government investigations, security breaches or service outages
impacting us or our industry; adverse changes in our access to
credit markets on acceptable terms, whether caused by changes in
our financial position, lower credit ratings, unstable markets,
debt covenant restrictions or otherwise; our ability to meet the
terms and conditions of our debt obligations and covenants,
including our ability to make transfers of cash in compliance
therewith; our ability to maintain favorable relations with our
security holders, key business partners, suppliers, vendors,
landlords and lenders; our ability to timely obtain necessary
hardware, software, equipment, services, governmental permits and
other items on favorable terms; our ability to meet evolving
environmental, social and governance ("ESG") expectations and
benchmarks, and effectively communicate and implement our ESG
strategies; the potential adverse effects arising out of
allegations regarding the release of hazardous materials into the
environment from network assets owned or operated by us or our
predecessors, including any resulting governmental actions, removal
costs, litigation, compliance costs or penalties; our ability to
collect our receivables from, or continue to do business with,
financially-troubled customers; our ability to continue to use
intellectual property used to conduct our operations; any adverse
developments in legal or regulatory proceedings involving us;
changes in tax, trade, pension, healthcare or other laws or
regulations, in governmental support programs, or in general
government funding levels, including those arising from
governmental programs promoting broadband development; our ability
to use our net operating loss carryforwards in the amounts
projected; the effects of changes in accounting policies, practices
or assumptions, including changes that could potentially require
additional future impairment charges; the effects of adverse
weather, terrorism, epidemics, pandemics, war, rioting, vandalism,
societal unrest, political discord or other natural or man-made
disasters or disturbances; the potential adverse effects if our
internal controls over financial reporting have weaknesses or
deficiencies, or otherwise fail to operate as intended; the effects
of changes in interest rates or inflation; the effects of more
general factors such as changes in exchange rates, in operating
costs, in public policy, in the views of financial analysts, or in
general market, labor, economic, public health or geopolitical
conditions; and other risks referenced from time to time in our
filings with the U.S. Securities and Exchange Commission. You are
cautioned not to unduly rely upon our forward-looking statements,
which speak only as of the date made. We undertake no obligation to
publicly update or revise any forward-looking statements for any
reason, whether as a result of new information, future events or
developments, changed circumstances, or otherwise. Furthermore, any
information about our intentions contained in any of our
forward-looking statements reflects our intentions as of the date
of such forward-looking statement, and is based upon, among other
things, our assessment of regulatory, technological, industry,
competitive, economic and market conditions as of such date. We may
change our intentions, strategies or plans (including our capital
allocation plans) at any time and without notice, based upon any
changes in such factors or otherwise.
Reconciliation to GAAP
This release includes certain historical and forward-looking
non-GAAP financial measures, including but not limited to Adjusted
EBITDA and Adjusted EBITDA Margin, Free Cash Flow, Unlevered Cash
Flow and adjustments to GAAP and non-GAAP measures to exclude the
effect of Special Items.
In addition to providing key metrics for management to evaluate
the Company's performance, we believe these above-described
measurements assist investors in their understanding of
period-to-period operating performance and in identifying
historical and prospective trends.
Reconciliations of non-GAAP financial measures to the most
comparable GAAP measures are included in the attached financial
schedules. Non-GAAP measures are not presented to be replacements
or alternatives to the GAAP measures, and investors are urged to
consider these non-GAAP measures in addition to, and not in
substitution for, measures prepared in accordance with GAAP. Lumen
may present or calculate its non-GAAP measures differently from
other companies.
|
Lumen Technologies,
Inc.
|
|
CONSOLIDATED STATEMENTS
OF OPERATIONS
|
|
THREE AND TWELVE MONTHS
ENDED DECEMBER 31, 2024 AND 2023
|
|
(UNAUDITED)
|
|
($ in millions,
except per share amounts; shares in thousands)
|
|
|
Three months
ended
December 31,
|
(Decrease)
/
Increase
|
Twelve months
ended
December 31,
|
(Decrease)
/
Increase
|
|
2024
|
|
2023
|
2024
|
|
2023
|
|
OPERATING
REVENUE
|
$
3,329
|
|
3,517
|
(5) %
|
13,108
|
|
14,557
|
(10) %
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
|
Cost of services and
products (exclusive
of depreciation and amortization)
|
1,706
|
|
1,737
|
(2) %
|
6,703
|
|
7,144
|
(6) %
|
|
Selling, general and
administrative
|
711
|
|
896
|
(21) %
|
2,972
|
|
3,198
|
(7) %
|
|
Net loss on sale of
business
|
—
|
|
9
|
nm
|
17
|
|
121
|
(86) %
|
|
Depreciation and
amortization
|
758
|
|
751
|
1 %
|
2,956
|
|
2,985
|
(1) %
|
|
Goodwill
impairment
|
|
—
|
|
1,900
|
nm
|
—
|
|
10,693
|
nm
|
|
Total operating
expenses
|
3,175
|
|
5,293
|
(40) %
|
12,648
|
|
24,141
|
(48) %
|
|
OPERATING INCOME
(LOSS)
|
154
|
|
(1,776)
|
nm
|
460
|
|
(9,584)
|
nm
|
|
OTHER (EXPENSE)
INCOME
|
|
|
|
|
|
|
|
|
|
Interest
expense
|
(357)
|
|
(290)
|
23 %
|
(1,372)
|
|
(1,158)
|
18 %
|
|
Net gain on early
retirement of debt
|
71
|
|
—
|
nm
|
348
|
|
618
|
(44) %
|
|
Other income (expense),
net
|
13
|
|
(76)
|
nm
|
334
|
|
(113)
|
nm
|
|
Total other expense,
net
|
(273)
|
|
(366)
|
(25) %
|
(690)
|
|
(653)
|
6 %
|
|
Income tax benefit
(expense)
|
204
|
|
147
|
39 %
|
175
|
|
(61)
|
nm
|
|
NET INCOME
(LOSS)
|
$
85
|
|
(1,995)
|
(104) %
|
(55)
|
|
(10,298)
|
(99) %
|
|
|
|
|
|
|
|
|
|
|
BASIC EARNINGS (LOSS)
PER SHARE
|
$
0.09
|
|
(2.03)
|
nm
|
(0.06)
|
|
(10.48)
|
(99) %
|
|
DILUTED EARNINGS (LOSS)
PER
SHARE
|
$
0.09
|
|
(2.03)
|
nm
|
(0.06)
|
|
(10.48)
|
(99) %
|
|
|
|
|
|
|
|
|
|
|
WEIGHTED AVERAGE
SHARES
OUTSTANDING
|
|
|
|
|
|
|
|
|
|
Basic
|
989,831
|
|
983,762
|
1 %
|
987,680
|
|
983,081
|
— %
|
|
Diluted
|
989,831
|
|
983,762
|
1 %
|
987,680
|
|
983,081
|
— %
|
|
|
|
|
|
|
|
|
|
|
Exclude: Special
Items(1)
|
$
8
|
|
2,078
|
(100) %
|
(150)
|
|
10,491
|
nm
|
|
NET INCOME (LOSS)
EXCLUDING
SPECIAL ITEMS
|
$
93
|
|
83
|
12 %
|
(205)
|
|
193
|
nm
|
|
DILUTED EARNINGS (LOSS)
PER
SHARE EXCLUDING SPECIAL ITEMS
|
$
0.09
|
|
0.08
|
13 %
|
(0.21)
|
|
0.20
|
nm
|
|
|
|
|
|
|
|
|
|
|
(1) Excludes
the Special Items described in the accompanying Non-GAAP Special
Items table, net of the income tax effect thereof.
|
|
nm - Percentages
greater than 200% and comparisons between positive and negative
values are considered not meaningful.
|
|
|
|
|
|
|
|
|
|
|
|
Lumen Technologies,
Inc.
|
|
CONSOLIDATED BALANCE
SHEETS
|
|
AS OF DECEMBER 31, 2024
AND DECEMBER 31, 2023
|
|
(UNAUDITED)
|
|
($ in
millions)
|
|
December 31,
2024
|
|
December 31,
2023
|
|
ASSETS
|
|
|
|
|
CURRENT
ASSETS
|
|
|
|
|
Cash and cash
equivalents
|
$
1,889
|
|
2,234
|
|
Accounts receivable,
less allowance of $59 and $67
|
1,231
|
|
1,318
|
|
Other
|
1,274
|
|
1,223
|
|
Total
current assets
|
4,394
|
|
4,775
|
|
Property, plant and
equipment, net of accumulated depreciation of $23,121 and
$21,318
|
20,421
|
|
19,758
|
|
GOODWILL AND OTHER
ASSETS
|
|
|
|
|
Goodwill
|
1,964
|
|
1,964
|
|
Other intangible
assets, net
|
4,806
|
|
5,470
|
|
Other, net
|
1,911
|
|
2,051
|
|
Total goodwill and other assets
|
8,681
|
|
9,485
|
|
TOTAL ASSETS
|
$
33,496
|
|
34,018
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
|
CURRENT
LIABILITIES
|
|
|
|
|
Current maturities of
long-term debt
|
$
412
|
|
157
|
|
Accounts
payable
|
749
|
|
1,134
|
|
Accrued expenses and
other liabilities
|
|
|
|
|
Salaries and
benefits
|
716
|
|
696
|
|
Income and other
taxes
|
272
|
|
251
|
|
Current operating
lease liabilities
|
253
|
|
268
|
|
Interest
|
197
|
|
168
|
|
Other
|
179
|
|
213
|
|
Current portion of
deferred revenue
|
861
|
|
647
|
|
Total current liabilities
|
3,639
|
|
3,534
|
|
LONG-TERM
DEBT
|
17,494
|
|
19,831
|
|
DEFERRED CREDITS AND
OTHER LIABILITIES
|
|
|
|
|
Deferred income taxes,
net
|
2,890
|
|
3,127
|
|
Benefit plan
obligations, net
|
2,205
|
|
2,490
|
|
Deferred
revenue
|
3,733
|
|
1,969
|
|
Other
|
3,071
|
|
2,650
|
|
Total deferred credits
and other liabilities
|
11,899
|
|
10,236
|
|
STOCKHOLDERS'
EQUITY
|
|
|
|
|
Common
stock(1)
|
19,149
|
|
1,008
|
|
Additional paid-in
capital(1)
|
—
|
|
18,126
|
|
Accumulated other
comprehensive loss
|
(723)
|
|
(810)
|
|
Accumulated
deficit
|
(17,962)
|
|
(17,907)
|
|
Total stockholders'
equity
|
464
|
|
417
|
|
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY
|
$
33,496
|
|
34,018
|
|
|
(1) On Dec.
18, 2024, the Company amended is articles of incorporation to
eliminate the par value of its common stock (which was, prior to
such amendment, $1 per share) as approved by the shareholders at
the Company's 2024 annual shareholders meeting. The Company
recognized the change by reclassifying the balance in Additional
paid-in capital to Common stock.
|
|
|
|
Lumen Technologies,
Inc.
|
|
CONDENSED CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
TWELVE MONTHS ENDED
DECEMBER 31, 2024 AND 2023
|
|
(UNAUDITED)
|
|
($ in
millions)
|
|
Twelve months ended
December 31,
|
|
2024
|
|
2023
|
|
OPERATING
ACTIVITIES
|
|
|
|
|
Net loss
|
$
(55)
|
|
(10,298)
|
|
Adjustments to
reconcile net loss to net cash provided by operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
2,956
|
|
2,985
|
|
Net loss on sale of
business
|
17
|
|
121
|
|
Goodwill
impairment
|
—
|
|
10,693
|
|
Impairment of
long-lived assets
|
83
|
|
27
|
|
Deferred income
taxes
|
(209)
|
|
8
|
|
Provision for
uncollectible accounts
|
72
|
|
100
|
|
Net gain on early
retirement and modification of debt
|
(348)
|
|
(618)
|
|
Debt modification
costs and related fees
|
(79)
|
|
—
|
|
Gain on sale of
investments
|
(205)
|
|
—
|
|
Unrealized loss on
investments
|
10
|
|
97
|
|
Stock-based
compensation
|
29
|
|
52
|
|
Changes in current
assets and liabilities, net
|
(68)
|
|
(1,729)
|
|
Retirement
benefits
|
(181)
|
|
(1)
|
|
Change in deferred
revenue
|
1,763
|
|
230
|
|
Changes in other
noncurrent assets and liabilities, net
|
655
|
|
500
|
|
Other, net
|
(107)
|
|
(7)
|
|
Net cash provided by
operating activities
|
4,333
|
|
2,160
|
|
INVESTING
ACTIVITIES
|
|
|
|
|
Capital
expenditures
|
(3,231)
|
|
(3,100)
|
|
Proceeds from sale of
business
|
15
|
|
1,746
|
|
Proceeds from sale of
property, plant and equipment, and other assets
|
366
|
|
165
|
|
Other, net
|
20
|
|
(12)
|
|
Net cash used in
investing activities
|
(2,830)
|
|
(1,201)
|
|
FINANCING
ACTIVITIES
|
|
|
|
|
Net proceeds from
issuance of long-term debt
|
1,325
|
|
—
|
|
Payments of long-term
debt
|
(2,678)
|
|
(185)
|
|
Net (payments of)
proceeds from revolving line of credit
|
(200)
|
|
200
|
|
Dividends
paid
|
(3)
|
|
(11)
|
|
Debt issuance and
extinguishment costs and related fees
|
(283)
|
|
(14)
|
|
Other, net
|
(12)
|
|
(8)
|
|
Net cash used in
financing activities
|
(1,851)
|
|
(18)
|
|
Net (decrease) increase
in cash, cash equivalents and restricted cash
|
(348)
|
|
941
|
|
Cash, cash equivalents
and restricted cash at beginning of period
|
2,248
|
|
1,307
|
|
Cash, cash equivalents
and restricted cash at end of period
|
$
1,900
|
|
2,248
|
|
|
|
|
|
Cash, cash equivalents
and restricted cash:
|
|
|
|
|
Cash and cash
equivalents
|
$
1,889
|
|
2,234
|
|
Restricted
cash
|
11
|
|
14
|
|
Total
|
$
1,900
|
|
2,248
|
|
|
|
Lumen Technologies,
Inc.
|
|
OPERATING
METRICS
|
|
(UNAUDITED)
|
|
|
|
|
|
|
|
Operating
Metrics
|
4Q24
|
|
3Q24
|
|
4Q23
|
|
|
|
|
|
|
|
Mass Markets
broadband subscribers
|
|
|
|
|
|
|
(in
thousands)
|
|
|
|
|
|
|
Fiber broadband
subscribers
|
1,077
|
|
1,035
|
|
916
|
|
Other broadband
subscribers(1)
|
1,469
|
|
1,566
|
|
1,842
|
|
Mass Markets total
broadband subscribers(2)
|
2,546
|
|
2,601
|
|
2,758
|
|
|
|
|
|
|
|
Mass Markets
broadband enabled units(3)
|
|
|
|
|
|
|
(in
millions)
|
|
|
|
|
|
|
Fiber broadband
enabled units
|
4.2
|
|
4.1
|
|
3.7
|
|
Other broadband
enabled units
|
17.8
|
|
17.9
|
|
18.1
|
|
Mass Markets total
broadband enabled units
|
22.0
|
|
22.0
|
|
21.8
|
|
|
|
|
|
|
|
(1) Other
broadband subscribers are customers that primarily subscribe to
lower speed copper-based broadband services marketed under the
CenturyLink brand.
|
|
(2) Mass
Markets broadband subscribers are customers that purchase broadband
connection service through their existing telephone lines,
stand-alone telephone lines, or fiber-optic cables. Our methodology
for counting our Mass Markets broadband subscribers includes only
those lines that we use to provide services to external customers
and excludes lines used solely by us and our affiliates. It also
excludes unbundled loops and includes stand-alone Mass Markets
broadband subscribers. We count lines when we install the service.
Other companies may use different methodologies.
|
|
(3)
Represents the total number of units capable of receiving our
broadband services at period end. Other companies may use different
methodologies to count their broadband enabled units.
|
Description of Non-GAAP Metrics
Pursuant to Regulation G, the Company is hereby providing
definitions of non-GAAP financial metrics and reconciliations to
the most directly comparable GAAP measures.
The following describes and reconciles those financial measures
as reported under accounting principles generally accepted in
the United States (GAAP) with
those financial measures as adjusted by the items detailed below
and presented in the accompanying news release. These calculations
are not prepared in accordance with GAAP and should not be viewed
as alternatives to GAAP. In keeping with its historical financial
reporting practices, the Company believes that the supplemental
presentation of these calculations provides meaningful non-GAAP
financial measures to help investors understand and compare
business trends among different reporting periods on a consistent
basis.
We use the term Special Items as a non-GAAP measure to
describe items that impacted a period's statement of operations for
which investors may want to give special consideration due to their
magnitude, nature or both. We do not call these items
non-recurring because, while some are infrequent, others may
recur in future periods.
Adjusted EBITDA ($) is defined as net income (loss) from
the Statements of Operations before income tax (expense) benefit,
total other income (expense), depreciation and amortization,
stock-based compensation expense and impairments.
Adjusted EBITDA Margin (%) is defined as Adjusted EBITDA
divided by total revenue.
Management believes that Adjusted EBITDA and Adjusted EBITDA
Margin are relevant and useful metrics to provide to investors, as
they are an important part of our internal reporting and are key
measures used by management to evaluate profitability and operating
performance of Lumen and to make resource allocation decisions.
Management believes such measures are especially important in a
capital-intensive industry such as telecommunications. Management
also uses Adjusted EBITDA and Adjusted EBITDA Margin (and similarly
uses these terms excluding Special Items) to compare our
performance to that of our competitors and to eliminate certain
non-cash and non-operating items in order to consistently measure
from period to period our ability to fund capital expenditures,
fund growth, service debt and determine bonuses. Adjusted EBITDA
excludes non-cash stock compensation expense and impairments
because of the non-cash nature of these items. Adjusted EBITDA also
excludes interest income, interest expense and income taxes, and in
our view constitutes an accrual-based measure that has the effect
of excluding period-to-period changes in working capital and shows
profitability without regard to the effects of capital or tax
structure. Adjusted EBITDA also excludes depreciation and
amortization expense because these non-cash expenses primarily
reflect the impact of historical capital investments, as opposed to
the cash impacts of capital expenditures made in recent periods,
which may be evaluated through cash flow measures. Adjusted EBITDA
further excludes the gain (or loss) on extinguishment and
modification of debt and other income (expense), net, because these
items are not related to the primary business operations of
Lumen.
There are material limitations to using Adjusted EBITDA as a
financial measure, including the difficulty associated with
comparing companies that use similar performance measures whose
calculations may differ from our calculations. Additionally, by
excluding the above-listed items, Adjusted EBITDA may exclude items
that investors believe are important components of our performance.
Adjusted EBITDA and Adjusted EBITDA Margin (either with or without
Special Items) should not be considered a substitute for other
measures of financial performance reported in accordance with
GAAP.
Unlevered Cash Flow is defined as net cash provided
by (used in) operating activities less capital expenditures, plus
cash interest paid and less interest income, all as disclosed in
the Statements of Cash Flows or the Statements of Operations.
Management believes that Unlevered Cash Flow is a relevant metric
to provide to investors, because it reflects the operational
performance of Lumen and, measured over time, enables management
and investors to monitor the underlying business' growth pattern
and ability to generate cash. Unlevered Cash Flow (either with or
without Special Items) excludes cash used for acquisitions and debt
service and the impact of exchange rate changes on cash and cash
equivalents balances.
There are material limitations to using Unlevered Cash Flow to
measure our cash performance as it excludes certain material items
that investors may believe are important components of our cash
flows. Comparisons of our Unlevered Cash Flow to that of some of
our competitors may be of limited usefulness. Additionally, this
financial measure is subject to variability quarter over quarter as
a result of the timing of payments related to accounts receivable,
accounts payable, payroll and capital expenditures. Unlevered Cash
Flow should not be used as a substitute for net change in cash,
cash equivalents and restricted cash in the Consolidated Statements
of Cash Flows.
Free Cash Flow is defined as net cash provided by
(used in) operating activities less capital expenditures as
disclosed in the Statements of Cash Flows. Management believes that
Free Cash Flow is a relevant metric to provide to investors, as it
is an indicator of our ability to generate cash to service our
debt. Free Cash Flow excludes cash used for acquisitions, principal
repayments and the impact of exchange rate changes on cash and cash
equivalents balances.
There are material limitations to using Free Cash Flow to
measure our performance as it excludes certain material items that
investors may believe are important components of our cash flows.
Comparisons of our Free Cash Flow to that of some of our
competitors may be of limited usefulness since until recently we
did not pay a significant amount of income taxes due to net
operating loss carryforwards, and therefore generated higher cash
flow than a comparable business that does pay income taxes.
Additionally, this financial measure is subject to variability
quarter over quarter as a result of the timing of payments related
to interest expense, accounts receivable, accounts payable, payroll
and capital expenditures. Free Cash Flow (either with or without
Special Items) should not be used as a substitute for net change in
cash, cash equivalents and restricted cash on the Consolidated
Statements of Cash Flows.
|
Lumen Technologies,
Inc.
|
|
Non-GAAP Special
Items
|
|
(UNAUDITED)
|
|
($ in
millions)
|
|
Actual
QTD
|
|
Actual
YTD
|
|
Special Items
Impacting Adjusted EBITDA
|
4Q24
|
4Q23
|
|
4Q24
|
4Q23
|
|
Severance
|
$
11
|
53
|
|
130
|
74
|
|
Consumer and other
litigation
|
3
|
1
|
|
2
|
(3)
|
|
Net loss on sale of
business(1)
|
—
|
9
|
|
17
|
121
|
|
Transaction and
separation costs(2)
|
50
|
41
|
|
282
|
108
|
|
Net loss (gain) on sale
of select CDN contracts and other(3)
|
3
|
73
|
|
(6)
|
73
|
|
Real estate
transactions(4)
|
65
|
34
|
|
69
|
109
|
|
Total Special Items
impacting Adjusted EBITDA
|
$
132
|
211
|
|
494
|
482
|
|
Actual
QTD
|
|
Actual
YTD
|
|
Special Items
Impacting Net Income (Loss)
|
4Q24
|
4Q23
|
|
4Q24
|
4Q23
|
|
Severance
|
$
11
|
53
|
|
130
|
74
|
|
Consumer and other
litigation
|
3
|
1
|
|
2
|
(3)
|
|
Net loss on sale of
business(1)
|
—
|
9
|
|
17
|
121
|
|
Transaction and
separation costs(2)
|
50
|
41
|
|
282
|
108
|
|
Net loss (gain) on sale
of select CDN contracts and other(3)
|
3
|
73
|
|
(6)
|
73
|
|
Real estate
transactions(4)
|
65
|
34
|
|
69
|
109
|
|
Goodwill
impairment
|
—
|
1,900
|
|
—
|
10,693
|
|
Net gain on early
retirement of debt(5)
|
(71)
|
—
|
|
(348)
|
(618)
|
|
(Income) expense from
transition and separation services(6)
|
(50)
|
22
|
|
(157)
|
(128)
|
|
Gain on sale of
investment
|
—
|
—
|
|
(205)
|
—
|
|
Total Special Items
impacting Net Income (Loss)
|
11
|
2,133
|
|
(216)
|
10,429
|
|
Income tax effect of
Special Items(7)
|
(3)
|
(55)
|
|
66
|
62
|
|
Total Special Items
impacting Net Income (Loss), net of tax
|
$
8
|
2,078
|
|
(150)
|
10,491
|
|
Actual
QTD
|
|
Actual
YTD
|
|
Special Items
Impacting Cash Flows
|
4Q24
|
4Q23
|
|
4Q24
|
4Q23
|
|
Severance
|
$
18
|
48
|
|
133
|
67
|
|
Consumer and other
litigation
|
1
|
—
|
|
1
|
(3)
|
|
Transaction and
separation costs(2)
|
56
|
70
|
|
254
|
147
|
|
Income from transition
and separation services(6)
|
(22)
|
(31)
|
|
(104)
|
(149)
|
|
Total Special Items
impacting Cash Flows
|
$
53
|
87
|
|
284
|
62
|
|
|
(1) Reflects primarily (i) the
pre-tax gain of $597 million recorded in operating income as a
result of our Latin American business divestiture completed on Aug.
1, 2022, (ii) the pre-tax gain of $176 million recorded in
operating income as a result of our 20-state ILEC business
divestiture on Oct. 3, 2022 and (iii) the net loss of $102 million
recorded for the year ended 2023 operating income and $660 million
recorded for the year ended 2022 operating income as a result of
our EMEA business divestiture on Nov. 1, 2023.
|
|
(2)
Transaction and separation costs associated with (i) the sale of
our Latin American business on Aug. 1, 2022, (ii) the sale of our
20-state ILEC business on Oct. 3, 2022, (iii) the sale of our EMEA
business on Nov. 1, 2023, (iv) our Mar. 22, 2024 debt transaction
support agreement and our Sept. 24, 2024 exchange offer and (v) our
evaluation of other potential transactions.
|
|
(3) Includes
primarily the recognition of (i) Q1 2024 previously deferred gain
on sale of select CDN contracts in Oct. 2023, based on the transfer
of remaining customer contracts as of Mar. 31, 2024 and (ii) Q4
2023 write-off of an allocated portion of customer relationship
intangible assets in the amount of $121 million triggered by the
sale of the underlying CDN contracts, partially offset by
recognition of a $48 million gain on the transaction for based on
the percentage of contracts that had transferred control as of Dec.
31, 2023.
|
|
(4)Real
estate transactions include primarily the Q4 2024 impairment loss
for real estate held for sale, net of a gain associated our real
estate rationalization program, and the Q2 2023 and Q4 2023 loss on
donation of real estate and acceleration of costs associated with
our real estate rationalization program.
|
|
(5) Reflects
primarily net gains as a result of (i) cash tender offers and open
market repurchases resulting in a reduction of consolidated
indebtedness of approximately $656 million in Q4 2024, (ii)
repurchase of $75 million aggregate principal in Q2 2024, (iii)
debt transaction support agreement and resulting debt
extinguishment in Q1 2024, (iv) $19 million of debt exchanges in Q2
2023 and (v) $1.5 billion of debt exchanges in Q1 2023. There were
no comparable gains or losses during Q4 2023 or Q3 2023.
|
|
(6) Income
from transition and separation services includes charges we billed
for transition services and IT professional services provided to
the purchasers in connection with our 2022 and 2023
divestitures.
|
|
(7) Tax
effect calculated using the annualized effective statutory tax
rate, excluding any non-recurring discrete items, which was 26.0%
for Q4 2024 and Q3 2024, 30.0% for Q2 2024 and Q1 2024 and 23.5%
for all quarters of 2023.
|
|
|
|
Lumen Technologies,
Inc.
|
|
Non-GAAP Cash Flow
Reconciliation
|
|
(UNAUDITED)
|
|
($ in
millions)
|
|
Actual
QTD
|
|
Actual
YTD
|
|
4Q24
|
4Q23
|
|
4Q24
|
4Q23
|
|
Net cash provided by
operating activities(1)
|
$
688
|
784
|
|
4,333
|
2,160
|
|
Capital
expenditures
|
(915)
|
(821)
|
|
(3,231)
|
(3,100)
|
|
Free Cash
Flow(1)
|
(227)
|
(37)
|
|
1,102
|
(940)
|
|
Cash interest
paid
|
368
|
252
|
|
1,245
|
1,138
|
|
Interest
income
|
(29)
|
(19)
|
|
(119)
|
(40)
|
|
Unlevered Cash
Flow(1)
|
$
112
|
196
|
|
2,228
|
158
|
|
|
|
|
|
|
|
Free Cash
Flow(1)
|
$
(227)
|
(37)
|
|
1,102
|
(940)
|
|
Add back:
Severance(2)
|
18
|
48
|
|
133
|
67
|
|
Remove: Consumer and
other litigation(2)
|
1
|
—
|
|
1
|
(3)
|
|
Add back: Transaction
and separation costs(2)
|
56
|
70
|
|
254
|
147
|
|
Remove: Income from
transition and separation services(2)
|
(22)
|
(31)
|
|
(104)
|
(149)
|
|
Free Cash Flow
excluding cash Special Items(1)
|
$
(174)
|
50
|
|
1,386
|
(878)
|
|
|
|
|
|
|
|
Unlevered Cash
Flow(1)
|
$
112
|
196
|
|
2,228
|
158
|
|
Add back:
Severance(2)
|
18
|
48
|
|
133
|
67
|
|
Remove: Consumer and
other litigation(2)
|
1
|
—
|
|
1
|
(3)
|
|
Add back: Transaction
and separation costs(2)
|
56
|
70
|
|
254
|
147
|
|
Remove: Income from
transition and separation services(2)
|
(22)
|
(31)
|
|
(104)
|
(149)
|
|
Unlevered Cash Flow
excluding cash Special Items(1)
|
$
165
|
283
|
|
2,512
|
220
|
|
|
|
|
|
|
|
(1) Includes
the impact of (i) $170 million voluntary pension contribution in Q3
2024, (ii) $700 million in cash tax refund received in Q1 2024,
(iii) $938 million and $90 million in cash tax payments in Q2 2023
and Q1 2023, respectively, related to our 2022
divestitures.
|
|
(2) Refer to
Non-GAAP Special Items table for details of the Special
Items impacting cash included above.
|
|
|
|
Lumen Technologies,
Inc.
|
|
Adjusted EBITDA
Non-GAAP Reconciliation
|
|
(UNAUDITED)
|
|
($ in
millions)
|
|
Actual
QTD
|
|
Actual
YTD
|
|
4Q24
|
4Q23
|
|
4Q24
|
4Q23
|
|
Net income
(loss)
|
$
85
|
(1,995)
|
|
(55)
|
(10,298)
|
|
Income tax (benefit)
expense
|
(204)
|
(147)
|
|
(175)
|
61
|
|
Total other expense,
net
|
273
|
366
|
|
690
|
653
|
|
Depreciation and
amortization expense
|
758
|
751
|
|
2,956
|
2,985
|
|
Stock-based
compensation expense
|
8
|
13
|
|
29
|
52
|
|
Goodwill
impairment
|
—
|
1,900
|
|
—
|
10,693
|
|
Adjusted
EBITDA(1)
|
$
920
|
888
|
|
3,445
|
4,146
|
|
|
|
|
|
|
|
Add back:
Severance(2)
|
11
|
53
|
|
130
|
74
|
|
Add back: Consumer and
other litigation(2)
|
3
|
1
|
|
2
|
(3)
|
|
Add back: Net loss on
sale of business(2)
|
—
|
9
|
|
17
|
121
|
|
Add back: Transaction
and separation costs(2)
|
50
|
41
|
|
282
|
108
|
|
Add back: Net loss
(gain) on sale of select CDN contracts and
other(2)
|
3
|
73
|
|
(6)
|
73
|
|
Add back: Real estate
transaction costs(2)
|
65
|
34
|
|
69
|
109
|
|
Adjusted EBITDA
excluding Special Items(1)
|
$
1,052
|
1,099
|
|
3,939
|
4,628
|
|
|
|
|
|
|
|
Net income (loss)
excluding Special Items(2)
|
$
93
|
83
|
|
(205)
|
193
|
|
|
|
|
|
|
|
Total
revenue
|
$
3,329
|
3,517
|
|
13,108
|
14,557
|
|
|
|
|
|
|
|
Net Income (Loss)
Margin
|
2.6 %
|
(56.7) %
|
|
(0.4) %
|
(70.7) %
|
|
Net Income (Loss)
Margin, excluding Special Items
|
2.8 %
|
2.4 %
|
|
(1.6) %
|
1.3 %
|
|
Adjusted EBITDA
Margin
|
27.6 %
|
25.2 %
|
|
26.3 %
|
28.5 %
|
|
Adjusted EBITDA
Margin excluding Special Items
|
31.6 %
|
31.2 %
|
|
30.1 %
|
31.8 %
|
|
|
|
|
|
|
|
(1) Adjusted
EBITDA and Adjusted EBITDA excluding Special Items for 2023
includes the financial impacts of (i) the EMEA business divested on
Nov. 1, 2023 and (ii) the Company's select CDN contracts sold Oct.
10, 2023 and both 2023 and 2024 include the financial impact of the
post-closing commercial agreements with the purchasers of our
recently divested businesses. Refer to footnote 1 on the first page
of this release for details.
|
|
(2) Refer to
Non-GAAP Special Items table for details of the Special
Items included above.
|
Outlook
To enhance the information in our outlook with respect to
non-GAAP metrics, we are providing a range for certain GAAP
measures that are components of the reconciliation of the non-GAAP
metrics. The provision of these ranges is in no way meant to
indicate that Lumen is explicitly or implicitly providing an
outlook on those GAAP components of the reconciliation. In order to
reconcile the non-GAAP financial metric to GAAP, Lumen has to use
ranges for the GAAP components that arithmetically add up to the
non-GAAP financial metric. While Lumen believes that it has used
reasonable assumptions in connection with developing the outlook
for its non-GAAP financial metrics, it fully expects that the
ranges used for the GAAP components will vary from actual results.
We will consider our outlook of non-GAAP financial metrics to be
accurate if the specific non-GAAP metric is met or exceeded, even
if the GAAP components of the reconciliation are different from
those provided in an earlier reconciliation.
|
Lumen Technologies,
Inc.
|
|
2025 OUTLOOK (1)
(2)
|
|
(UNAUDITED)
|
|
($ in
millions)
|
|
|
|
|
|
Adjusted EBITDA
Outlook
|
|
|
|
|
Twelve Months Ended
December 31, 2025
|
|
|
|
|
Range
|
|
Low
|
|
High
|
|
Net
loss
|
$
(1,655)
|
|
(850)
|
|
Income tax
expense
|
215
|
|
30
|
|
Total other expense,
net
|
1,500
|
|
1,300
|
|
Depreciation and
amortization expense
|
3,100
|
|
2,900
|
|
Stock-based
compensation expense
|
40
|
|
20
|
|
Adjusted
EBITDA
|
$
3,200
|
|
3,400
|
|
|
|
|
|
Free Cash Flow
Outlook
|
|
|
|
|
Twelve Months Ended
December 31, 2025
|
|
|
|
|
Range
|
|
Low
|
|
High
|
|
Net cash provided by
operating activities
|
$
4,800
|
|
5,200
|
|
Capital
expenditures
|
(4,100)
|
|
(4,300)
|
|
Free Cash
Flow
|
$
700
|
|
900
|
|
|
(1) For
definitions of non-GAAP metrics and reconciliation to GAAP figures,
see the above schedules and our Investor Relations
website.
|
|
(2) Outlook
measures in this chart (i) exclude the effects of Special Items,
future changes in our operating or capital allocation plans,
unforeseen changes in regulation, laws or litigation, and other
unforeseen events or circumstances impacting our financial
performance and (ii) speak only as of Feb. 4, 2025. See
"Forward-Looking Statements."
|
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SOURCE Lumen Technologies
