Lumen Technologies, Inc. · NYSE:LUMN
Lumen Technologies — CenturyLink — Q2 2018 Earnings Presentation
18 slides from Lumen Technologies's earnings presentation, Aug 8, 2018
Slide 1: 2nd Quarter 2018 Results
2nd Quarter 2018 Results August 8, 2018
Slide 2: Forward-Looking Statements
Forward-Looking Statements Except for historical and factual information, the matters set forth in this presentation and other of our oral or written statements identified by words such as “estimates,” “expects,” “anticipates,” “believes,” “plans,” “intends,” and similar expressions are forward-look
Slide 3: Non-GAAP Measures
Non-GAAP Measures This presentation includes certain non-GAAP historical and forward-looking financial measures, including but not limited to adjusted EBITDA, free cash flow, unlevered cash flow and adjustments to GAAP measures to exclude the effect of special items. In addition to providing key met
Slide 4: 2Q18 Financial Highlights
2Q18 Financial Highlights • Captured approximately $675 million of annualized run-rate Adjusted EBITDA synergies since the close of the Level 3 transaction • Generated Adjusted EBITDA(1) of $2.27 billion • Adjusted EBITDA(1) margin expanded to 38.5% from 35.7% • Generated Free Cash Flow(2) of $919 m
Slide 5: 2Q18 Revenue by Business Unit
2Q18 Revenue by Business Unit Revenues 2Q18 YoY % Revenue ($ in millions) Change(1) Mix By Business Unit Medium & Small Business $884 (1.0%) 15% Excluding the 2Q18 impact of the Enterprise $1,295 (0.1%) 22% Revenue Recognition Standard ASC 606 International & Global Accounts $903 (0.9%) 15% YoY: Who
Slide 6: 2Q18 Revenue Mix by Service Type
2Q18 Revenue Mix by Service Type Transport & Infrastructure Voice & Revenues YoY % ($ in millions) 2Q18 Change(1) 35% Collaboration IP & Data Services $1,833 2.1% Transport & Infrastructure $2,064 (1.9%) Voice & Collaboration $1,658 (8.0%) 28% IT & Managed Services $162 5.2% Regulatory $185 --% Tota
Slide 7: 2Q18 Adjusted EBITDA & Free Cash Flow
2Q18 Adjusted EBITDA & Free Cash Flow Adjusted EBITDA(1) Free Cash Flow(2) ($ in millions) ($ in millions) $2,271 $919 38.5% $2,155 35.7% $102 2Q17 PF 2Q18 2Q17 PF 2Q18 Adjusted EBITDA Adjusted EBITDA Margin Net Debt to LTM Adjusted EBITDA Ratio(3) 4.2x (1) 2Q18 Adjusted EBITDA results exclude $160
Slide 8: Integration Synergies and Expenses
Integration Synergies and Expenses Metric 2Q18 1Q18 4Q17 ($ in millions) Annualized run-rate Adjusted EBITDA $675 $215 $75 synergies Integration-related expenses $162 $71 $62 $850 million of expected annualized run-rate Adjusted EBITDA savings 8
Slide 9: 2018 Business Outlook
2018 Business Outlook Metric(1)(2) Updated Outlook Previous Outlook Adjusted EBITDA $9.00 to $9.15 billion $8.75 to $8.95 billion Free Cash Flow $3.60 to $3.80 billion $3.15 to $3.35 billion Dividends(3) $2.30 billion $2.30 billion Free Cash Flow after $1.30 billion to $1.50 billion $850 million to
Slide 10: Non-GAAP Reconciliation
We . a CenturyLink: Non-GAAP Reconciliation _ ——: —“ = ww“
Slide 11: Schedule to Reconcile to Non-GAAP Financial Metrics
Schedule to Reconcile to Non-GAAP Financial Metrics Pursuant to Regulation G, the company is hereby providing definitions of non-GAAP financial metrics and reconciliations to the most directly comparable GAAP measures. The following describes and reconciles those financial measures as reported under
Slide 12: Schedule to Reconcile to Non-GAAP Financial Metrics
Schedule to Reconcile to Non-GAAP Financial Metrics Adjusted EBITDA ($) is defined as net income (loss) from the Statements of Income before income tax (expense) benefit, total other income (expense), depreciation and amortization and non-cash stock compensation expense. Adjusted EBITDA Margin (%) i
Slide 13: Schedule to Reconcile to Non-GAAP Financial Metrics
Schedule to Reconcile to Non-GAAP Financial Metrics 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
Slide 14: Adjusted EBITDA Non-GAAP Reconciliation
Schedule to Reconcile to Non-GAAP Financial Metrics CenturyLink, Inc. Adjusted EBITDA Non-GAAP Reconciliation (UNAUDITED) ($ in millions) Actual Pro Forma 2Q18 2Q17 Net income $ 292 69 Income tax (benefit) expense (55) 29 Total other expense 530 535 Depreciation and amortization expense 1,290 1,313
Slide 15: Non-GAAP Cash Flow Reconciliation
Schedule to Reconcile to Non-GAAP Financial Metrics CenturyLink, Inc. Non-GAAP Cash Flow Reconciliation (UNAUDITED) ($ in millions) Actual Pro Forma 2Q18 2Q17 Net cash provided by operating activities $ 1,582 1,246 Capital expenditures (771) (1,158) Free cash flow 811 88 Cash interest paid 570 498 I
Slide 16: LTM Adjusted EBITDA
Schedule to Reconcile to Non-GAAP Financial Metrics CenturyLink, Inc. LTM Adjusted EBITDA (UNAUDITED) ($ in millions) Total LTM Actual Pro Forma Pro Forma Adjusted 2Q18 1Q18 4Q17 3Q17 EBITDA Total revenues $ 5,902 5,945 6,005 6,033 23,885 Cost of services and products 2,730 2,803 2,840 2,914 11,287
Slide 17: Net Debt to LTM Adjusted EBITDA Ratio
Schedule to Reconcile to Non-GAAP Financial Metrics CenturyLink, Inc. Net Debt to LTM Adjusted EBITDA ratio as of June 30, 2018 (UNAUDITED) ($ in millions) Gross debt $ 37,638 Cash and cash equivalents (700) Net debt $ 36,938 Adjusted EBITDA excluding integration-related expenses and special items (
Slide 18: 2018 Outlook Reconciliation
Schedule to Reconcile to Non-GAAP Financial Metrics CenturyLink, Inc. 2018 OUTLOOK (UNAUDITED) ($ in millions) Adjusted EBITDA Outlook Twelve Months Ended December 31, 2018 Range Low High Net income $ 690 1,150 Income tax expense 150 260 Total other expense 2,200 2,100 Depreciation and amortization