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Lumen (LUMN) Q2 Earnings Beat Estimates, Revenues Down Y/Y
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Lumen Technologies, Inc (LUMN - Free Report) reported adjusted earnings per share (EPS) (excluding special items) of 10 cents for second-quarter 2023 compared with 35 cents per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 9 cents.
Quarterly total revenues were $3,661 million, down 20.6% year over year on a reported basis and declining 2.1% on a sequential basis. The Zacks Consensus Estimate is pegged at $3,578 million. Revenues in the second quarter were significantly impacted due to the completion of the sale of its Latin America business and its 20-state ILEC business to Apollo.
For the second quarter of 2023, the company's post-closing revenue impact from the actual amount received under the post-closing agreements with the buyers of the divested businesses was $27 million. In the second quarter, the company also recorded a non-cash goodwill impairment charge of $8.8 billion.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Lumen has adopted a new reporting structure that has collapsed International and Global Accounts or IGAM and large enterprises into the large enterprise channel. The company has moved the public sector to its separate channel.
By segment, Business revenues fell 15.2% to $2,897 million, affected by the sale of the correctional facilities business. Revenues from Large Enterprise fell 17.7% to $1,179 million.
Mid-Market Enterprise revenues fell 9.8% to $507 million. Public Sector revenues were down 16.2% to $414 million. Total Enterprise Channels’ revenues were down 15.6% to $2,100 million.
Revenues in Wholesale fell 14.2% to $797 million. Revenues from Mass Markets declined 36.1% year over year to $764 million.
Lumen anticipates witnessing healthy momentum in the Quantum business in the upcoming quarters. The company added 21,000 Quantum fiber subscribers, taking the count to 877,000 in the reported quarter.
In the second quarter, total enablements were approximately 130,000. As of Jun 30, 2023, the total enabled locations in the retained states stood at 3.4 million. The company is targeting to exceed 500,000 enabled locations in 2023.
Other Quarterly Details
Total operating expenses increased from $3,700 million year over year to $12,082 million.
Operating loss was $8,421 million compared with $912 million reported in the prior-year quarter. Adjusted EBITDA (excluding special items) slipped to $1.229 billion from $1.811 billion for respective margins of 33.6% and 39.3%, owing to the negative impact of divestiture-related commercial agreements.
Cash Flow & Liquidity
In the second quarter, Lumen used $100 million of net cash from operations compared with $1,396 million a year ago.
Free cash outflow (excluding cash special items) for the year was $896 million compared with free cash flow of $635 million in the year-ago quarter.
As of Jun 30, 2023, the company had $411 million in cash and cash equivalents with $19,899 million of long-term debt compared with the respective figures of $1,148 million and $19,743 million as of Mar 31, 2023. 2023 View
For 2023, Lumen expects adjusted EBITDA in the range of $4.6-$4.8 billion. Free cash flow is projected to be between breakeven and $200 million.
Capital expenditures are estimated to be between $2.9 billion and $3.1 billion. The effective income tax rate for the full year is estimated to be nearly 26%.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.
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Lumen (LUMN) Q2 Earnings Beat Estimates, Revenues Down Y/Y
Lumen Technologies, Inc (LUMN - Free Report) reported adjusted earnings per share (EPS) (excluding special items) of 10 cents for second-quarter 2023 compared with 35 cents per share in the prior-year quarter. The bottom line surpassed the Zacks Consensus Estimate of 9 cents.
Quarterly total revenues were $3,661 million, down 20.6% year over year on a reported basis and declining 2.1% on a sequential basis. The Zacks Consensus Estimate is pegged at $3,578 million. Revenues in the second quarter were significantly impacted due to the completion of the sale of its Latin America business and its 20-state ILEC business to Apollo.
For the second quarter of 2023, the company's post-closing revenue impact from the actual amount received under the post-closing agreements with the buyers of the divested businesses was $27 million. In the second quarter, the company also recorded a non-cash goodwill impairment charge of $8.8 billion.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. Quote
Segment Performance
Lumen has adopted a new reporting structure that has collapsed International and Global Accounts or IGAM and large enterprises into the large enterprise channel. The company has moved the public sector to its separate channel.
By segment, Business revenues fell 15.2% to $2,897 million, affected by the sale of the correctional facilities business. Revenues from Large Enterprise fell 17.7% to $1,179 million.
Mid-Market Enterprise revenues fell 9.8% to $507 million. Public Sector revenues were down 16.2% to $414 million. Total Enterprise Channels’ revenues were down 15.6% to $2,100 million.
Revenues in Wholesale fell 14.2% to $797 million. Revenues from Mass Markets declined 36.1% year over year to $764 million.
Lumen anticipates witnessing healthy momentum in the Quantum business in the upcoming quarters. The company added 21,000 Quantum fiber subscribers, taking the count to 877,000 in the reported quarter.
In the second quarter, total enablements were approximately 130,000. As of Jun 30, 2023, the total enabled locations in the retained states stood at 3.4 million. The company is targeting to exceed 500,000 enabled locations in 2023.
Other Quarterly Details
Total operating expenses increased from $3,700 million year over year to $12,082 million.
Operating loss was $8,421 million compared with $912 million reported in the prior-year quarter. Adjusted EBITDA (excluding special items) slipped to $1.229 billion from $1.811 billion for respective margins of 33.6% and 39.3%, owing to the negative impact of divestiture-related commercial agreements.
Cash Flow & Liquidity
In the second quarter, Lumen used $100 million of net cash from operations compared with $1,396 million a year ago.
Free cash outflow (excluding cash special items) for the year was $896 million compared with free cash flow of $635 million in the year-ago quarter.
As of Jun 30, 2023, the company had $411 million in cash and cash equivalents with $19,899 million of long-term debt compared with the respective figures of $1,148 million and $19,743 million as of Mar 31, 2023.
2023 View
For 2023, Lumen expects adjusted EBITDA in the range of $4.6-$4.8 billion. Free cash flow is projected to be between breakeven and $200 million.
Capital expenditures are estimated to be between $2.9 billion and $3.1 billion. The effective income tax rate for the full year is estimated to be nearly 26%.
Zacks Rank & Stocks to Consider
Lumen currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader technology space are InterDigital (IDCC - Free Report) , Badger Meter (BMI - Free Report) and Woodward (WWD - Free Report) . InterDigital and Badger Meter presently sport a Zacks Rank #1 (Strong Buy), while Woodward currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for InterDigital’s 2023 EPS has increased 0.1% in the past 60 days to $8.08. The company’s long-term earnings growth rate is 13.9%.
InterDigital’s earnings beat estimates in all the trailing four quarters, delivering an average surprise of 170.9%. Shares of IDCC have rallied 53.9% in the past year.
The Zacks Consensus Estimate for Badger Meter’s 2023 EPS has increased 4.8% in the past 60 days to $2.82.
Badger Meter’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 6.7%. Shares of BMI have surged 80.5% in the past year.
The Zacks Consensus Estimate for Woodward’s fiscal 2023 EPS has increased 0.8% in the past 60 days to $3.61.
WWD’s long-term earnings growth rate is 13.5%. Shares of WWD have gained 20.2% in the past year.