Lumen Technologies, Inc. · NYSE:LUMN
Lumen Technologies — Q3 2022 Earnings Presentation
17 slides from Lumen Technologies's earnings presentation, Nov 2, 2022
Slide 1: Third Quarter 2022 Results
Third Quarter 2022 Results November 2, 2022 Issued: November 2, 2022
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,” “will,” and similar expressions are forw
Slide 3: Non-GAAP Measures
Non-GAAP Measures This presentation includes certain historical and forward-looking non-GAAP financial measures, including but not limited to adjusted EBITDA, adjusted EBITDA margin, net-debt-to-adjusted- EBITDA and free cash flow, each excluding the effects of special items, and adjustments to GAAP
Slide 4: Key Milestones
Key Milestones Announced Announced exclusive Closed the agreements to arrangement for sale of our sell our LATAM the proposed sale LATAM and 20-state of our EMEA business ILEC businesses business for ~11x worth over $10 Estimated Adjusted billion EBITDA(1) Launched 8 Announced Gbps Quantum Quantum F
Slide 5: Proposed Transaction Overview
Proposed Transaction Overview Accretive transaction sharpens strategic focus Transaction Valuation Strategic Timing/Closing Partnership Colt would acquire Implied ~11x 2021 Lumen would continue As early as late 2023 Lumen’s EMEA Estimated Adjusted serving multinational business for $1.8 billion EBIT
Slide 6: Financial Highlights
Financial Highlights Updated full-year 2022 financial outlook measures ~$10 ~$11 ~18% Y/Y $620 3Q22 Fiber Broadband billion billion revenue million Gross proceeds from Reduction in Pro growth; continued 3Q22 Free Cash Flow business divestitures year- Forma(2) Net improvement in generated to-date(1)
Slide 7: 3Q22 Year-Over-Year Pro Forma Total Revenue Bridge
(1) 3Q22 Year-Over-Year Pro Forma Total Revenue Bridge -5.5% Y/Y Pro Forma(4) Adjusted Revenue Performance: -5.0% Y/Y Adjusted $4,582 • -$83 Total: -5.0% -$10 -$17 $4,328 • Business: -4.3% $1,256 -$144 $1,173 • Mass Markets: -6.6% (1) Pro Forma Total Revenue figures exclude the Latin America busines
Slide 8: Revenue – Sales Channels
3Q22 Revenue – Sales Channels Investing to Drive Growth in Enterprise Channels and Mass Markets Total 3Q Pro Forma Revenue Mix 3Q22 3Q22 Y/Y% Q/Q% Revenue ($ in millions) Reported Pro Forma Change(1) Change(1) Enterprise Channels(2) $2,315 $2,251 (7.4%) (2.7%) 53.1% 52.0% Wholesale $902 $904 1.0% (1
Slide 9: Revenue - Enterprise Channels
3Q22 Revenue - Enterprise Channels Improving Revenue Mix in Our Core Products Enterprise Channel 3Q Pro Forma Revenue Mix 3Q22 3Q22 Y/Y% Q/Q% Revenue ($ in millions) Reported Pro Forma Change(1) Change(1) International and GAM $853 $789 (6.2%) (1.9%) Large Enterprise $844 $844 (10.4%) (4.5%) 77.7% 7
Slide 10: Revenue - Business Product Group
3Q22 Revenue - Business Product Group Our Grow Product Group Now Represents Over 34% Business Product Group 3Q Pro Forma of Business Revenue Revenue Mix Direct Margin (4) Revenue ($ in 3Q22 3Q22 Y/Y% Q/Q% Adj. (1)(2) Y/Y% millions) Actual Pro Forma Change(1) Change(1) Change 32.2% 34.2% ~84% Grow $1
Slide 11: Mass Markets Pro Forma Revenue
3Q22 Mass Markets Pro Forma Revenue Total Mass Markets Product Categories Significant Revenue Mix Improvement Y/Y% Q/Q% RemainCo Mass Markets Revenue ($ in millions) 3Q22 % Total Change Change Fiber Contribution Fiber Broadband $160 18.5% 6.0% 14% 18% 16% 16% Other Broadband(1) $580 (6.3%) (2.7%) 49
Slide 12: Mass Markets Broadband Metrics
3Q22 Mass Markets Broadband Metrics ILEC Business Divestiture Reduces Legacy Technology Exposure 3Q22 Broadband Metrics RemainCo Fiber-Enabled Location Adds Fiber Total Lumen RemainCo Enabled Locations 3.3M 3.0M ~195K 3Q22 Enabled Location Adds ~210K ~195K Subscribers 889K 813K ~185K Penetration 27%
Slide 13: RemainCo Quantum Fiber Subscriber Growth and KPIs
3Q22 RemainCo Quantum Fiber Subscriber Growth and KPIs Quantum Fiber Subscriber Trends 813 788 ~$60 >+50 762 737 ARPU NPS ~27% 711 Penetration of the 2020 Enablement Vintage (at 18-month mark) 3Q21 4Q21 1Q22 2Q22 3Q22 (in thousands) 13 Issued: November 2, 2022
Slide 14: Pro Forma Adjusted EBITDA & Adjusted EBITDA Margin
Pro Forma Adjusted EBITDA & Adjusted EBITDA Margin Pro Forma (1)(2) Reported $4.582 $4.544 $4.436 $4.423 $4.328 $4.390 40.9% 41.3% 41.1% 39.0% 38.5% 38.3% $1.872 $1.878 $1.824 $1.725 $1.659 $1.688 3Q21 4Q21 1Q22 2Q22 3Q22 3Q22 Adj. EBITDA Total Revenue Adj. EBITDA Margin ($ in billions) (1) As Repor
Slide 15: Consolidated Cash Flow Summary
Consolidated Cash Flow Summary Continued Strong Free Cash Generation Key Metrics 3Q22 ($ in millions) Reported Cash Flow from Operations $1,123 Capital Expenditures $845 Free Cash Flow $620 Net Cash Interest $387 Net Debt to LTM Adj. EBITDA 3.5x 15 Issued: November 2, 2022
Slide 16: Updated 2022 Financial Outlook
Updated 2022 Financial Outlook Metric(1)(2) Current Outlook Previous Outlook(3) Adjusted EBITDA $6.9 to $7.1 billion $6.9 to $7.1 billion Free Cash Flow(4) $2.2 to $2.4 billion $2.0 to $2.2 billion Net Cash Interest $1.3 to $1.4 billion $1.3 to $1.4 billion GAAP Interest Expense $1.350 billion $1.35
Slide 17: Q&A
Q&A 17 Issued: November 2, 2022