Louisiana | 001-7784 | 72-0651161 | ||||||||||||||||||
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(IRS Employer Identification No.) |
100 CenturyLink Drive | |||||||||||
Monroe, | Louisiana | 71203 | |||||||||
(Address of principal executive offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of Each Class | Trading Symbol | Name of Each Exchange on Which Registered | ||||||||||||
Common Stock, par value $1.00 per share | LUMN | New York Stock Exchange | ||||||||||||
Preferred Stock Purchase Rights | N/A | New York Stock Exchange |
Emerging growth company |
☐ |
Item 2.02. | Results of Operations and Financial Condition. |
Item 7.01. |
Regulation FD Disclosure. |
Item 9.01. | Financial Statements and Exhibits. |
Exhibit No. | Description | |||||||
Exhibit 99.1 | ||||||||
Exhibit 99.2 |
||||||||
Exhibit 104 | Cover page formatted as Inline XBRL and contained in Exhibit 101. |
LUMEN TECHNOLOGIES, INC. | ||||||||
Date: February 6, 2024 |
By: | /s/ Andrea Genschaw | ||||||
Andrea Genschaw | ||||||||
Senior Vice President, Controller | ||||||||
NEWS RELEASE | ![]() |
Metric, as reported | Fourth Quarter | Full Year | ||||||||||||
($ in millions, except per share data) | 2023 | 2022 | 2023 | 2022 | ||||||||||
Large Enterprise | $ | 1,061 | 1,217 | 4,616 | 5,377 | |||||||||
Mid-Market Enterprise | 491 | 522 | 2,011 | 2,212 | ||||||||||
Public Sector | 495 | 431 | 1,783 | 1,861 | ||||||||||
Enterprise Channels | 2,047 | 2,170 | 8,410 | 9,450 | ||||||||||
Wholesale | 741 | 835 | 3,125 | 3,591 | ||||||||||
Business Segment Revenue | 2,788 | 3,005 | 11,535 | 13,041 | ||||||||||
Mass Markets Segment Revenue | 729 | 795 | 3,022 | 4,437 | ||||||||||
Total Revenue(1)(2) |
$ | 3,517 | 3,800 | 14,557 | 17,478 | |||||||||
Cost of Services and Products | 1,737 | 1,826 | 7,144 | 7,868 | ||||||||||
Selling, General and Administrative Expenses | 896 | 671 | 3,198 | 3,078 | ||||||||||
Net Loss (Gain) on Sale of Businesses(3) |
9 | 480 | 121 | (113) | ||||||||||
Loss on Disposal Group Held for Sale |
— | 40 | — | 40 | ||||||||||
Stock-based Compensation Expense | 13 | 27 | 52 | 98 | ||||||||||
Net Loss |
(1,995) | (3,069) | (10,298) | (1,548) | ||||||||||
Net Income, Excluding Special Items(4)(5) |
83 | 425 | 193 | 1,564 | ||||||||||
Adjusted EBITDA(4)(6)(7) |
888 | 810 | 4,146 | 6,703 | ||||||||||
Adjusted EBITDA, Excluding Special Items(4)(6)(7)(8) |
1,099 | 1,393 | 4,628 | 6,858 | ||||||||||
Net Loss Margin |
(56.7) | % | (80.8) | % | (70.7) | % | (8.9) | % | ||||||
Net Income Margin, Excluding Special Items(4)(5) |
2.4 | % | 11.2 | % | 1.3 | % | 8.9 | % | ||||||
Adjusted EBITDA Margin(4) |
25.2 | % | 21.3 | % | 28.5 | % | 38.4 | % | ||||||
Adjusted EBITDA Margin, Excluding Special Items(4)(8) |
31.2 | % | 36.7 | % | 31.8 | % | 39.2 | % | ||||||
Net Cash Provided by Operating Activities |
784 | 841 | 2,160 | 4,735 | ||||||||||
Capital Expenditures(9) |
821 | 833 | 3,100 | 3,016 | ||||||||||
Unlevered Cash Flow(4) |
196 | 264 | 158 | 3,059 | ||||||||||
Unlevered Cash Flow, Excluding Cash Special Items(4)(10) |
283 | 382 | 220 | 3,600 | ||||||||||
Free Cash Flow(4) |
(37) | 8 | (940) | 1,719 | ||||||||||
Free Cash Flow, Excluding Cash Special Items(4)(10) |
50 | 126 | (878) | 2,260 | ||||||||||
Net Loss per Common Share - Diluted |
(2.03) | (3.08) | (10.48) | (1.54) | ||||||||||
Net Income per Common Share - Diluted, Excluding Special Items(4)(5) |
0.08 | 0.43 | 0.20 | 1.55 | ||||||||||
Weighted Average Shares Outstanding (in millions) - Diluted | 983.8 | 995.6 | 983.1 | 1,007.5 | ||||||||||
(1) Revenue for the fourth quarter and full year 2023 includes $39 million and $454 million, respectively, from the EMEA business divested on Nov. 1, 2023, which will not recur in periods following the completion of this divestiture. Revenue for the fourth quarter and full year 2022 includes $135 million and $2.6 billion of revenue, respectively, from (i) the Latin American business divested Aug. 1, 2022, (ii) the 20-state ILEC business divested Oct. 3, 2022 and (iii) the EMEA business (the "divestitures" or the "divested businesses"), which will not recur in periods following the completion of these divestitures. The full year 2022 also includes $59 million of previously deferred revenue recognized in Q1 2022 related to the CAF Phase II program, which lapsed on Dec. 31, 2021. 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. | ||||||||||||||
(2) The post-closing revenue impact of amounts received by the Company under its post-closing agreements with the purchasers of the divested businesses was (i) $39 million for the fourth quarter of 2023, (ii) $117 million for the year 2023 and (iii) $33 million for the fourth quarter of 2022 and the full year 2022. 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. | ||||||||||||||
(3) Reflects primarily (i) the pre-tax gain of $597 million recorded in operating income as a result of our Latin American business divestiture completed 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 completed 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 completed Nov. 1, 2023. | ||||||||||||||
(4) See the attached schedules for definitions of non-GAAP metrics and reconciliations to GAAP figures. | ||||||||||||||
(5) Excludes Special Items (net of the income tax effect thereof), which positively impacted this metric by (i) $2.1 billion for the fourth quarter of 2023, (ii) $10.5 billion for the year 2023, (iii) $3.5 billion for the fourth quarter of 2022 and (iv) $3.1 billion for the year 2022. |
(6) 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, which will not recur in periods following the completion of this divestiture. Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2022 includes $27 million and $1.3 billion of Adjusted EBITDA from our businesses divested in the second half of 2022 and 2023, which will not recur in periods following the completion of these divestitures. The full year 2022 also includes $59 million of previously deferred revenue recognized in Q1 2022 related to the CAF Phase II program, which lapsed on December 31, 2021. 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. | ||||||||||||||
(7) The post-closing net financial impacts of actual amounts received or paid by the Company under its post-closing agreements with the purchasers of the divested businesses was a net reduction of (i) $(40) million for the fourth quarter of 2023, (ii) $(179) million for the year 2023 and (iii) $(43) million for the fourth quarter and year 2022. 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 financial performance following the completion of these divestitures. | ||||||||||||||
(8) Excludes Special Items in the amounts of (i) $211 million for the fourth quarter of 2023, (ii) $482 million for the year 2023, (iii) $583 million for the fourth quarter of 2022 and (iv) $155 million for the year 2022. | ||||||||||||||
(9) Capital expenditures for the fourth quarter and full year 2023 includes $7 million and $98 million, respectively, of capital expenditures relating to the EMEA business, which will not recur in periods following the completion of this divestiture. Capital expenditures for the fourth quarter 2022 includes $38 million of capital expenditures relating to the divested businesses, which will not recur in periods following the completion of these divestitures. Capital expenditures for the full year 2022 includes (i) $424 million of capital expenditures relating to the divested businesses and (ii) $18 million of capital expenditures related to the CAF Phase II program, which lapsed on December 31, 2021. 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. | ||||||||||||||
(10) Excludes cash paid for Special Items of (i) $87 million for the fourth quarter of 2023, (ii) $62 million for the year 2023, (iii) $118 million for the fourth quarter of 2022 and (iv) $541 million for the year 2022. |
Metrics(1) |
Fourth Quarter | YoY Percent | Full Year | YoY Percent | ||||||||||||||||
($ in millions) | 2023 | 2022 | Change | 2023 | 2022 | Change | ||||||||||||||
Revenue By Sales Channel | ||||||||||||||||||||
Large Enterprise | $ | 1,061 | 1,217 | (13)% | 4,616 | 5,377 | (14)% | |||||||||||||
Mid-Market Enterprise | 491 | 522 | (6)% | 2,011 | 2,212 | (9)% | ||||||||||||||
Public Sector | 495 | 431 | 15% | 1,783 | 1,861 | (4)% | ||||||||||||||
Enterprise Channels | 2,047 | 2,170 | (6)% | 8,410 | 9,450 | (11)% | ||||||||||||||
Wholesale | 741 | 835 | (11)% | 3,125 | 3,591 | (13)% | ||||||||||||||
Business Segment Revenue | 2,788 | 3,005 | (7)% | 11,535 | 13,041 | (12)% | ||||||||||||||
Mass Markets Segment Revenue | 729 | 795 | (8)% | 3,022 | 4,437 | (32)% | ||||||||||||||
Total Revenue(2) |
$ | 3,517 | 3,800 | (7)% | 14,557 | 17,478 | (17)% | |||||||||||||
Business Segment Revenue by Product Category | ||||||||||||||||||||
Grow | $ | 1,078 | 1,091 | (1)% | 4,469 | 4,595 | (3)% | |||||||||||||
Nurture | 826 | 934 | (12)% | 3,465 | 4,094 | (15)% | ||||||||||||||
Harvest | 639 | 777 | (18)% | 2,785 | 3,557 | (22)% | ||||||||||||||
Subtotal | 2,543 | 2,802 | (9)% | 10,719 | 12,246 | (12)% | ||||||||||||||
Other | 245 | 203 | 21% | 816 | 795 | 3% | ||||||||||||||
Business Segment Revenue | $ | 2,788 | 3,005 | (7)% | 11,535 | 13,041 | (12)% | |||||||||||||
Net (Loss) Income | $ | (1,995) | (3,069) | (35)% | (10,298) | (1,548) | nm | |||||||||||||
Net (Loss) Income Margin | (56.7) | % | (80.8) | % | (30)% | (70.7) | % | (8.9) | % | nm | ||||||||||
Net Income, Excluding Special Items |
$ | 83 | 425 | (80)% | 193 | 1,564 | (88)% | |||||||||||||
Net Income Margin, Excluding Special Items |
2.4 | % | 11.2 | % | (79)% | 1.3 | % | 8.9 | % | (85)% | ||||||||||
Adjusted EBITDA, Excluding Special Items(3) |
$ | 1,099 | 1,393 | (21)% | 4,628 | 6,858 | (33)% | |||||||||||||
Adjusted EBITDA Margin, Excluding Special Items |
31.2 | % | 36.7 | % | (15)% | 31.8 | % | 39.2 | % | (19)% | ||||||||||
Capital Expenditures(4) |
$ | 821 | 833 | (1)% | 3,100 | 3,016 | 3% | |||||||||||||
(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 and year of 2023 and 2022 includes amounts from the 2022 and 2023 divestitures and the post-closing commercial agreements with the purchasers of the divested businesses. Refer to footnotes 1 and 2 on the preceding table for details. | ||||||||||||||||||||
(3) Adjusted EBITDA excluding Special Items for the fourth quarter and year of 2023 and 2022 includes the financial impacts from the 2022 and 2023 divestitures and the post-closing commercial agreements with the purchasers of the divested businesses. Refer to footnotes 6 and 7 on the preceding table for details. | ||||||||||||||||||||
(4) Capital expenditures for the fourth quarter and year of 2023 and 2022 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 9 on the preceding table for details. | ||||||||||||||||||||
nm - Percentages greater than 200% and comparisons between positive and negative values are considered not meaningful. |
Metric (1)(2) |
Outlook |
||||
Adjusted EBITDA | $4.1 to $4.3 billion |
||||
Free Cash Flow(3)(4) |
$100 to $300 million |
||||
Net Cash Interest | $1.25 to $1.35 billion |
||||
Capital Expenditures | $2.7 to $2.9 billion |
||||
Cash Income Taxes/(Refund)(4) |
($200) to ($300) 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, goodwill impairments, 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. 6, 2024. See “Forward-Looking Statements.” | |||||
(3) Assumes no discretionary pension plan contributions during 2024. | |||||
(4) Includes an approximately $700 million tax refund received during the first quarter 2024. |
Media Relations Contact: | Investor Relations Contact: | |||||||
Esmeralda Cameron |
Mike McCormack, CFA | |||||||
esmeralda.cameron@lumen.com |
mike.mccormack@lumen.com | |||||||
+1 201-839-0712 | +1 720-888-3514 |
Lumen Technologies, Inc. | |||||||||||||||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||||||||||||||
TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022 | |||||||||||||||||||||||||||||
(UNAUDITED) | |||||||||||||||||||||||||||||
($ in millions, except per share amounts; shares in thousands) | |||||||||||||||||||||||||||||
Three months ended December 31, | (Decrease) / Increase | Twelve months ended December 31, | (Decrease) / Increase | ||||||||||||||||||||||||||
2023 | 2022 | 2023 | 2022 | ||||||||||||||||||||||||||
OPERATING REVENUE | $ | 3,517 | 3,800 | (7) | % | 14,557 | 17,478 | (17) | % | ||||||||||||||||||||
OPERATING EXPENSES | |||||||||||||||||||||||||||||
Cost of services and products (exclusive of depreciation and amortization) | 1,737 | 1,826 | (5) | % | 7,144 | 7,868 | (9) | % | |||||||||||||||||||||
Selling, general and administrative | 896 | 671 | 34 | % | 3,198 | 3,078 | 4 | % | |||||||||||||||||||||
Net loss (gain) on sale of businesses |
9 | 480 | (98) | % | 121 | (113) | nm | ||||||||||||||||||||||
Loss on disposal group held for sale | — | 40 | nm | — | 40 | nm | |||||||||||||||||||||||
Depreciation and amortization | 751 | 796 | (6) | % | 2,985 | 3,239 | (8) | % | |||||||||||||||||||||
Goodwill impairment | 1,900 | 3,271 | (42) | % | 10,693 | 3,271 | nm | ||||||||||||||||||||||
Total operating expenses | 5,293 | 7,084 | (25) | % | 24,141 | 17,383 | 39 | % | |||||||||||||||||||||
OPERATING (LOSS) INCOME |
(1,776) | (3,284) | (46) | % | (9,584) | 95 | nm | ||||||||||||||||||||||
OTHER (EXPENSE) INCOME | |||||||||||||||||||||||||||||
Interest expense | (290) | (280) | 4 | % | (1,158) | (1,332) | (13) | % | |||||||||||||||||||||
Net gain on early debt retirement | — | 205 | nm | 618 | 214 | 189 | % | ||||||||||||||||||||||
Other (expense) income, net |
(76) | 177 | nm | (113) | 32 | nm | |||||||||||||||||||||||
Total other (expense) income, net |
(366) | 102 | nm | (653) | (1,086) | (40) | % | ||||||||||||||||||||||
Income tax benefit (expense) |
147 | 113 | 30 | % | (61) | (557) | (89) | % | |||||||||||||||||||||
NET LOSS |
$ | (1,995) | (3,069) | (35) | % | (10,298) | (1,548) | nm | |||||||||||||||||||||
BASIC LOSS PER SHARE |
$ | (2.03) | (3.08) | (34) | % | (10.48) | (1.54) | nm | |||||||||||||||||||||
DILUTED LOSS PER SHARE |
$ | (2.03) | (3.08) | (34) | % | (10.48) | (1.54) | nm | |||||||||||||||||||||
WEIGHTED AVERAGE SHARES OUTSTANDING | |||||||||||||||||||||||||||||
Basic | 983,762 | 995,573 | (1) | % | 983,081 | 1,007,517 | (2) | % | |||||||||||||||||||||
Diluted | 983,762 | 995,573 | (1) | % | 983,081 | 1,007,517 | (2) | % | |||||||||||||||||||||
DIVIDENDS PER COMMON SHARE | — | — | nm | — | 0.75 | nm | |||||||||||||||||||||||
Exclude: Special Items(1) |
$ | 2,078 | 3,494 | (41) | % | 10,491 | 3,112 | nm | |||||||||||||||||||||
NET INCOME EXCLUDING SPECIAL ITEMS |
$ | 83 | 425 | (80) | % | 193 | 1,564 | (88) | % | ||||||||||||||||||||
DILUTED EARNINGS PER SHARE EXCLUDING SPECIAL ITEMS |
$ | 0.08 | 0.43 | (81) | % | 0.20 | 1.55 | (87) | % | ||||||||||||||||||||
(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, 2023 AND DECEMBER 31, 2022 | |||||||||||
(UNAUDITED) | |||||||||||
($ in millions) | |||||||||||
December 31, 2023 | December 31, 2022 | ||||||||||
ASSETS | |||||||||||
CURRENT ASSETS | |||||||||||
Cash and cash equivalents | $ | 2,234 | 1,251 | ||||||||
Accounts receivable, less allowance of $67 and $85 |
1,318 | 1,508 | |||||||||
Assets held for sale | 104 | 1,889 | |||||||||
Other | 1,119 | 803 | |||||||||
Total current assets | 4,775 | 5,451 | |||||||||
Property, plant and equipment, net of accumulated depreciation of $21,318 and $19,886 |
19,758 | 19,166 | |||||||||
GOODWILL AND OTHER ASSETS | |||||||||||
Goodwill | 1,964 | 12,657 | |||||||||
Other intangible assets, net | 5,470 | 6,166 | |||||||||
Other, net | 2,051 | 2,172 | |||||||||
Total goodwill and other assets | 9,485 | 20,995 | |||||||||
TOTAL ASSETS | $ | 34,018 | 45,612 | ||||||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||||
CURRENT LIABILITIES | |||||||||||
Current maturities of long-term debt | $ | 157 | 154 | ||||||||
Accounts payable | 1,134 | 1,044 | |||||||||
Accrued expenses and other liabilities | |||||||||||
Salaries and benefits | 696 | 692 | |||||||||
Income and other taxes | 251 | 1,158 | |||||||||
Current operating lease liabilities | 268 | 344 | |||||||||
Interest | 168 | 181 | |||||||||
Other | 209 | 277 | |||||||||
Liabilities held for sale | 4 | 451 | |||||||||
Current portion of deferred revenue | 647 | 596 | |||||||||
Total current liabilities | 3,534 | 4,897 | |||||||||
LONG-TERM DEBT | 19,831 | 20,418 | |||||||||
DEFERRED CREDITS AND OTHER LIABILITIES | |||||||||||
Deferred income taxes, net | 3,127 | 3,163 | |||||||||
Benefit plan obligations, net | 2,490 | 2,391 | |||||||||
Deferred revenue | 1,969 | 1,758 | |||||||||
Other | 2,650 | 2,611 | |||||||||
Total deferred credits and other liabilities | 10,236 | 9,923 | |||||||||
STOCKHOLDERS' EQUITY | |||||||||||
Common stock | 1,008 | 1,002 | |||||||||
Additional paid-in capital | 18,126 | 18,080 | |||||||||
Accumulated other comprehensive loss | (810) | (1,099) | |||||||||
Accumulated deficit | (17,907) | (7,609) | |||||||||
Total stockholders' equity | 417 | 10,374 | |||||||||
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY | $ | 34,018 | 45,612 |
Lumen Technologies, Inc. | |||||||||||
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||
TWELVE MONTHS ENDED DECEMBER 31, 2023 AND 2022 | |||||||||||
(UNAUDITED) | |||||||||||
($ in millions) | |||||||||||
Twelve months ended December 31, | |||||||||||
2023 | 2022 | ||||||||||
OPERATING ACTIVITIES | |||||||||||
Net loss | $ | (10,298) | (1,548) | ||||||||
Adjustments to reconcile net loss to net cash provided by operating activities: | |||||||||||
Depreciation and amortization | 2,985 | 3,239 | |||||||||
Goodwill impairment | 10,693 | 3,271 | |||||||||
Net loss (gain) on sale of businesses |
121 | (113) | |||||||||
Loss on disposal group held for sale | — | 40 | |||||||||
Deferred income taxes | 8 | (1,230) | |||||||||
Provision for uncollectible accounts | 100 | 133 | |||||||||
Net gain on early retirement of debt | (618) | (214) | |||||||||
Unrealized loss on investments | 97 | 191 | |||||||||
Stock-based compensation | 52 | 98 | |||||||||
Changes in current assets and liabilities, net | (1,729) | 540 | |||||||||
Retirement benefits | (1) | 46 | |||||||||
Changes in other noncurrent assets and liabilities, net | 730 | 258 | |||||||||
Other, net | 20 | 24 | |||||||||
Net cash provided by operating activities | 2,160 | 4,735 | |||||||||
INVESTING ACTIVITIES | |||||||||||
Capital expenditures | (3,100) | (3,016) | |||||||||
Proceeds from sale of businesses | 1,746 | 8,369 | |||||||||
Proceeds from sale of property, plant and equipment and other assets | 165 | 120 | |||||||||
Other, net | (12) | 3 | |||||||||
Net cash (used in) provided by investing activities |
(1,201) | 5,476 | |||||||||
FINANCING ACTIVITIES | |||||||||||
Payments of long-term debt | (185) | (8,093) | |||||||||
Net proceeds from (payments on) revolving line of credit |
200 | (200) | |||||||||
Dividends paid | (11) | (780) | |||||||||
Repurchases of common stock | — | (200) | |||||||||
Other, net | (22) | (40) | |||||||||
Net cash used in financing activities | (18) | (9,313) | |||||||||
Net increase in cash, cash equivalents and restricted cash |
941 | 898 | |||||||||
Cash, cash equivalents and restricted cash at beginning of period | 1,307 | 409 | |||||||||
Cash, cash equivalents and restricted cash at end of period | $ | 2,248 | 1,307 | ||||||||
Cash, cash equivalents and restricted cash: | |||||||||||
Cash and cash equivalents | $ | 2,234 | 1,251 | ||||||||
Cash and cash equivalents and restricted cash included in assets held for sale | — | 44 | |||||||||
Restricted cash | 14 | 12 | |||||||||
Total | $ | 2,248 | 1,307 |
Lumen Technologies, Inc. | |||||||||||||||||
OPERATING METRICS | |||||||||||||||||
(UNAUDITED) | |||||||||||||||||
Operating Metrics | 4Q23 | 3Q23 | 4Q22 |
||||||||||||||
Mass Markets broadband subscribers | |||||||||||||||||
(in thousands) | |||||||||||||||||
Fiber broadband subscribers | 916 | 896 | 832 | ||||||||||||||
Other broadband subscribers(1) |
1,842 | 1,940 | 2,205 | ||||||||||||||
Mass Markets total broadband subscribers(2) |
2,758 | 2,836 | 3,037 | ||||||||||||||
Mass Markets broadband enabled units(3) |
|||||||||||||||||
(in millions) | |||||||||||||||||
Fiber broadband enabled units | 3.7 | 3.5 | 3.1 | ||||||||||||||
Other broadband enabled units | 18.1 | 18.2 | 18.7 | ||||||||||||||
Mass Markets total broadband enabled units | 21.8 | 21.7 | 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. |
Lumen Technologies, Inc. | |||||||||||||||||
Non-GAAP Special Items | |||||||||||||||||
(UNAUDITED) | |||||||||||||||||
($ in millions) | |||||||||||||||||
Actual QTD | Actual YTD | ||||||||||||||||
Special Items Impacting Adjusted EBITDA | 4Q23 | 4Q22 | 4Q23 | 4Q22 | |||||||||||||
Severance | $ | 53 | 10 | 74 | 12 | ||||||||||||
Consumer and other litigation | 1 | — | (3) | (3) | |||||||||||||
Net loss (gain) on sale of businesses(1) |
9 | 480 | 121 | (113) | |||||||||||||
Loss on disposal group held for sale | — | 40 | — | 40 | |||||||||||||
Transaction and separation costs(2) |
41 | 53 | 108 | 219 | |||||||||||||
Net loss on sale of select CDN contracts | 73 | — | 73 | — | |||||||||||||
Real estate transactions(3) |
34 | — | 109 | — | |||||||||||||
Total Special Items impacting Adjusted EBITDA | $ | 211 | 583 | 482 | 155 | ||||||||||||
Actual QTD | Actual YTD | ||||||||||||||||
Special Items Impacting Net (Loss) Income | 4Q23 | 4Q22 | 4Q23 | 4Q22 | |||||||||||||
Severance | $ | 53 | 10 | 74 | 12 | ||||||||||||
Consumer and other litigation | 1 | — | (3) | (3) | |||||||||||||
Goodwill impairment | 1,900 | 3,271 | 10,693 | 3,271 | |||||||||||||
Net loss (gain) on sale of businesses(1) |
9 | 480 | 121 | (113) | |||||||||||||
Loss on disposal group held for sale | — | 40 | — | 40 | |||||||||||||
Net gain on early retirement of debt(4) |
— | (205) | (618) | (214) | |||||||||||||
Transaction and separation costs(2) |
41 | 53 | 108 | 219 | |||||||||||||
Net loss on sale of select CDN contracts | 73 | — | 73 | — | |||||||||||||
Real estate transactions(3) |
34 | — | 109 | — | |||||||||||||
Expense (income) from transition and separation services(5) |
22 | (82) | (128) | (152) | |||||||||||||
Total Special Items impacting Net (Loss) Income | 2,133 | 3,567 | 10,429 | 3,060 | |||||||||||||
Income tax effect of Special Items(6) |
(55) | (73) | 62 | 52 | |||||||||||||
Total Special Items impacting Net (Loss) Income, net of tax | $ | 2,078 | 3,494 | 10,491 | 3,112 | ||||||||||||
Actual QTD | Actual YTD | ||||||||||||||||
Special Items Impacting Cash Flows | 4Q23 | 4Q22 | 4Q23 | 4Q22 | |||||||||||||
Severance | $ | 48 | 7 | 67 | 37 | ||||||||||||
Consumer and other litigation | — | — | (3) | — | |||||||||||||
Pension contribution(7) |
— | — | — | 319 | |||||||||||||
Transaction and separation costs(2) |
70 | 142 | 147 | 282 | |||||||||||||
Income from transition and separation services(5) |
(31) | (31) | (149) | (97) | |||||||||||||
Total Special Items impacting Cash Flows | $ | 87 | 118 | 62 | 541 | ||||||||||||
(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 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 completed 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 completed 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 and (iv) our evaluation of other potential transactions. | |||||||||||||||||
(3) Real estate transactions include the Q2 and Q4 2023 loss on donation of real estate and acceleration of costs associated with our real estate rationalization program. | |||||||||||||||||
(4) Reflects a gain as a result of (i) $19 million of debt exchanges in Q2 2023, (ii) $1.5 billion of debt exchanges in Q1 2023, (iii) $4.4 billion in early debt retirement in Q4 2022 and (iv) $2.3 billion in early debt retirement in Q3 2022. There were no comparable gains or losses during Q4 2023,Q3 2023, Q2 2022 or Q1 2022. | |||||||||||||||||
(5) Income from transition and separation services includes charges we billed for transition services and IT professional services provided to the purchasers in connection with our 2022 and 2023 divestitures. | |||||||||||||||||
(6) Tax effect calculated using the annualized effective statutory tax rate, excluding any non-recurring discrete items, which was 23.5% for all quarters of 2023 and 24.6% for all quarters of 2022. | |||||||||||||||||
(7) Cash pension contribution following a revaluation of the pension obligation and pension assets for the Lumen Pension Plan, in connection with the closing of the sale of the 20-state ILEC business on Oct. 3, 2022. |
Lumen Technologies, Inc. | |||||||||||||||||
Non-GAAP Cash Flow Reconciliation | |||||||||||||||||
(UNAUDITED) | |||||||||||||||||
($ in millions) | |||||||||||||||||
Actual QTD | Actual YTD | ||||||||||||||||
4Q23 | 4Q22 | 4Q23 | 4Q22 | ||||||||||||||
Net cash provided by operating activities(1) |
$ | 784 | 841 | 2,160 | 4,735 | ||||||||||||
Capital expenditures | (821) | (833) | (3,100) | (3,016) | |||||||||||||
Free Cash Flow(1) |
(37) | 8 | (940) | 1,719 | |||||||||||||
Cash interest paid | 252 | 273 | 1,138 | 1,365 | |||||||||||||
Interest income | (19) | (17) | (40) | (25) | |||||||||||||
Unlevered Cash Flow(1) |
$ | 196 | 264 | 158 | 3,059 | ||||||||||||
Free Cash Flow(1) |
$ | (37) | 8 | (940) | 1,719 | ||||||||||||
Add back: Severance(2) |
48 | 7 | 67 | 37 | |||||||||||||
Remove: Consumer and other litigation(2) |
— | — | (3) | — | |||||||||||||
Add back: Pension contribution(2) |
— | — | — | 319 | |||||||||||||
Add back: Transaction and separation costs(2) |
70 | 142 | 147 | 282 | |||||||||||||
Remove: Income from transition and separation services(2) |
(31) | (31) | (149) | (97) | |||||||||||||
Free Cash Flow excluding cash Special Items(1) |
$ | 50 | 126 | (878) | 2,260 | ||||||||||||
Unlevered Cash Flow(1) |
$ | 196 | 264 | 158 | 3,059 | ||||||||||||
Add back: Severance(2) |
48 | 7 | 67 | 37 | |||||||||||||
Remove: Consumer and other litigation(2) |
— | — | (3) | — | |||||||||||||
Add back: Pension contribution(2) |
— | — | — | 319 | |||||||||||||
Add back: Transaction and separation costs(2) |
70 | 142 | 147 | 282 | |||||||||||||
Remove: Income from transition and separation services(2) |
(31) | (31) | (149) | (97) | |||||||||||||
Unlevered Cash Flow excluding cash Special Items(1) |
$ | 283 | 382 | 220 | 3,600 | ||||||||||||
(1) Includes the impact of (i) $938 million in cash tax payments in Q2 2023 and (ii) $90 million in cash tax payments in Q1 2023 related to our divestitures completed on Aug. 1, 2022 and Oct. 3, 2022. | |||||||||||||||||
(2) Refer to Non-GAAP Special Items table for details of the Special Items impacting cash included above. |
Lumen Technologies, Inc. | |||||||||||||||||
Adjusted EBITDA Non-GAAP Reconciliation | |||||||||||||||||
(UNAUDITED) | |||||||||||||||||
($ in millions) | |||||||||||||||||
Actual QTD | Actual YTD | ||||||||||||||||
4Q23 | 4Q22 | 4Q23 | 4Q22 | ||||||||||||||
Net loss |
$ | (1,995) | (3,069) | (10,298) | (1,548) | ||||||||||||
Income tax (benefit) expense |
(147) | (113) | 61 | 557 | |||||||||||||
Total other expense (income), net | 366 | (102) | 653 | 1,086 | |||||||||||||
Depreciation and amortization expense | 751 | 796 | 2,985 | 3,239 | |||||||||||||
Stock-based compensation expense | 13 | 27 | 52 | 98 | |||||||||||||
Goodwill impairment | 1,900 | 3,271 | 10,693 | 3,271 | |||||||||||||
Adjusted EBITDA(1) |
$ | 888 | 810 | 4,146 | 6,703 | ||||||||||||
Add back: Severance(2) |
53 | 10 | 74 | 12 | |||||||||||||
Add back: Consumer and other litigation(2) |
1 | — | (3) | (3) | |||||||||||||
Add back: Net loss (gain) on sale of businesses(2) |
9 | 480 | 121 | (113) | |||||||||||||
Add back: Loss on disposal group held for sale(2) |
— | 40 | — | 40 | |||||||||||||
Add back: Transaction and separation costs(2) |
41 | 53 | 108 | 219 | |||||||||||||
Add back: Net loss on sale of select CDN contracts(2) |
73 | — | 73 | — | |||||||||||||
Add back: Real estate transaction costs(2) |
34 | — | 109 | — | |||||||||||||
Adjusted EBITDA excluding Special Items(1) |
$ | 1,099 | 1,393 | 4,628 | 6,858 | ||||||||||||
Net income excluding Special Items(2) |
$ | 83 | 425 | 193 | 1,564 | ||||||||||||
Total revenue | $ | 3,517 | 3,800 | 14,557 | 17,478 | ||||||||||||
Net Loss Margin |
(56.7) | % | (80.8) | % | (70.7) | % | (8.9) | % | |||||||||
Net Income Margin, excluding Special Items |
2.4 | % | 11.2 | % | 1.3 | % | 8.9 | % | |||||||||
Adjusted EBITDA Margin | 25.2 | % | 21.3 | % | 28.5 | % | 38.4 | % | |||||||||
Adjusted EBITDA Margin excluding Special Items | 31.2 | % | 36.7 | % | 31.8 | % | 39.2 | % | |||||||||
(1) Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2023 include the financial impacts of the EMEA business divested on Nov. 1, 2023. Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2022 include the financial impacts of (i) the Latin American business divested on Aug. 1, 2022, the 20-state ILEC business divested on Oct. 3, 2022 and the EMEA business divested on Nov. 1, 2023 and (ii) the CAF Phase II program, which lapsed on Dec. 31, 2021. Adjusted EBITDA excluding Special Items for the fourth quarter and full year 2023 and 2022 include the financial impacts from the post-closing commercial agreements with the purchasers of the 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. |
Lumen Technologies, Inc. | |||||||||||
2024 OUTLOOK (1) (2) (3) (4) | |||||||||||
(UNAUDITED) | |||||||||||
($ in millions) | |||||||||||
Adjusted EBITDA Outlook | |||||||||||
Twelve Months Ended December 31, 2024 |
|||||||||||
Range | |||||||||||
Low | High | ||||||||||
Net (loss) income |
$ | (100) | 400 | ||||||||
Income tax expense | 50 | 250 | |||||||||
Total other expense, net | 1,190 | 920 | |||||||||
Depreciation and amortization expense | 2,900 | 2,700 | |||||||||
Stock-based compensation expense | 60 | 30 | |||||||||
Adjusted EBITDA | $ | 4,100 | 4,300 | ||||||||
Free Cash Flow Outlook | |||||||||||
Twelve Months Ended December 31, 2024 |
|||||||||||
Range | |||||||||||
Low | High | ||||||||||
Net cash provided by operating activities | $ | 2,800 | 3,200 | ||||||||
Capital expenditures | (2,700) | (2,900) | |||||||||
Free Cash Flow | $ | 100 | 300 |