Lumen (LUMN) Q4 Earnings Beat Estimates, Revenues Down Y/Y
Lumen Technologies, Inc LUMN reported adjusted earnings (excluding special items) of 8 cents per share for fourth-quarter 2023 compared with 43 cents in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate of a loss of 3 cents.
Quarterly total revenues were $3.571 million, down 7% year over year on a reported basis. Quarterly revenues were significantly affected due to the completion of the sale of its Latin America business and its 20-state ILEC business to Apollo. However, it beat the Zacks Consensus Estimate by 2.4%.
The company also announced that it concluded the sale of its EMEA business and select CDN contracts.
Lumen also highlighted that the amended and restated transaction support agreement inked on Jan 25, 2024, which, when completed (based on current participation levels), will address maturities of nearly $9 billion of outstanding debt (including more than 77% of debt maturing through 2027).
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 7% to $2.788 billion while revenues from Large Enterprise plunged 13% to $1.061 billion.
Mid-Market Enterprise revenues declined 6% to $491 million.
Public Sector revenues were up 15% to $495 million driven by continued strength in Grow segment revenues and higher other revenues.
Total Enterprise Channels’ revenues were down 6% to $2.047 billion.
Revenues in Wholesale decreased 11% to $741 million. Revenues from Mass Markets were down 8% year over year to $729 million.
Lumen anticipates witnessing healthy momentum in the Quantum business in the upcoming quarters. The company added 20,000 Quantum fiber subscribers, taking the count to 916,000 in the reported quarter.
In the fourth quarter, total enablements were approximately 126,000. As of Dec 31, 2023, total enabled locations in the retained states stood at 3.7 million. The company is targeting to exceed 500,000 enabled locations in 2024.
Other Quarterly Details
Total operating expenses decreased 25% year over year to $5,293 million.
Operating loss was $1.776 billion compared with $3.284 million in the year-ago quarter. Adjusted EBITDA (excluding special items) slipped to $1.099 billion from $1.393 billion for respective margins of 31.2% and 36.7%.
Cash Flow & Liquidity
In the fourth quarter, Lumen generated $784 million of net cash from operations compared with $841 million in the prior-year quarter.
Free cash flow (excluding cash special items) for the year was $50 million compared with $126 million in the prior-year quarter.
As of Dec 31, 2023, the company had $2.234 billion in cash and cash equivalents with $19,831 million of long-term debt compared with the respective figures of $311 million and $19,740 million as of Sep 30, 2023.
2024 View
For 2024, Lumen expects adjusted EBITDA in the range of $4.1-$4.3 billion. Free cash flow is projected to be between $100 million and $300 million.
Capital expenditures are estimated to be between $2.7 billion and $2.9 billion.
Zacks Rank
Lumen currently carries a Zacks Rank #3 (Hold).
Stocks to Consider
Some better-ranked stocks worth consideration in the broader technology space are Watts Water Technologies WTS, Manhattan Associates MANH and Microsoft MSFT. While Manhattan Associates currently sports a Zacks Rank #1 (Strong Buy), Watts Water and Microsoft carry a Zacks Rank of 2 (Buy) each. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Watts Water Technologies’ 2023 EPS has improved by 1.1% in the past 60 days to $8.09.
WTS’ earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 11.8%. Shares of WTS have jumped 19.9% in the past year.
The Zacks Consensus Estimate for MANH 2024 EPS has increased by 3.6% in the past 60 days to $3.76.
Manhattan Associates’ earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 27.6%. Shares of MANH have surged 71.4% in the past year.
The Zacks Consensus Estimate for Microsoft’s fiscal 2024 earnings is pegged at $11.60 per share, indicating growth of 18.3% from the year-ago levels. Microsoft’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 8.8%. The long-term growth rate is pegged at 16.2%. MSFT has gained 52% in the past year.
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