Yahoo Finance Lumen (LUMN) Q4 Earnings Beat Estimates, Revenues Fall Y/Y
Lumen Technologies, Inc LUMN reported adjusted earnings (excluding special items) of 43 cents per share for fourth-quarter 2022 compared with 51 cents per share in the prior-year quarter. The bottom line beat the Zacks Consensus Estimate by 12 cents.
Quarterly total revenues were $3,800 million, down 21.6% year over year on a reported basis, and declining 6% on a modified basis. The Zacks Consensus Estimate was pegged at $3,746 million.
After the completion of the sale of its Latin America business in August, the company completed the sale of its 20-state ILEC business to Apollo in October, 2022. The company also announced the sale of its Europe, Middle East and Asia (EMEA) business to Colt Technology Services for $1.8 billion.
Following the announcement, shares are down 13% in premarket trading on Feb 8.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. Quote
Segment Performance
The company has adopted a new reporting structure under which it has collapsed International and Global Accounts or IGAM and large enterprise into the large enterprise channel and have moved public sector to its own separate channel.
By segment, on a modified basis, Business’ revenues fell 5% to $3.005 million affected by the sale of the correctional facilities business. Revenues from Large Enterprise fell 4% to $1,217 million.
Mid-Market Enterprise’s revenues, on a modified basis, fell 7% to $522 million. Public Sector’s revenues were down 14% to $431 million. Total Enterprise Channels’ revenues were down 7% to $2,170 million.
Revenues in Wholesale, on a modified basis, were almost flat at $835 million. Revenues from Mass Markets, on modified basis, declined 8% year over year to $795 million.
Lumen anticipates witnessing healthy momentum in Quantum business in the upcoming quarters. The company added 19,000 Quantum fiber subscribers, taking the count to 832,000 Quantum fiber subscribers in the reported quarter. The company expects overall Quantum enablement opportunity to be around 8 million to 10 million locations. In the fourth quarter, total enablements were approximately 97,000. As of Dec 31, 2022, the total enabled locations in the retained states stood at 3.1 million.
Other Quarterly Details
Total operating expenses increased 92% year over year to $7,084 billion.
Operating loss was $3,284 million, compared with operating income of $1,161 million reported in prior-year quarter. Adjusted EBITDA (excluding special items) slipped to $1.393 billion from $2.088 billion for respective margins of 36.7% and 43.1%, owing to the closure of cost pressures.
Cash Flow & Liquidity
In the fourth quarter, Lumen generated $841 million of net cash from operations compared with $1.607 billion a year ago.
Free cash flow (excluding cash special items) for the year was $126 million compared with $776 million in the year-ago quarter.
As of Dec 31, 2022, the company had $1,251 million in cash and cash equivalents with $20,418 million of long-term debt compared with the respective figures of $252 million and $21,764 million as of Sep 30, 2022.
In the fourth quarter, Lumen repurchased 33 million shares worth $200 million. In the third quarter of 2022, the company had announced the cancellation of dividend payments and a $1.5 billion share repurchase plan to be executed over a two-year period.
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 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).
Investors interested in the broader technology space may also consider stocks like Arista Networks ANET , Jabil JBL and Super Micro Computer SMCI . While Jabil sports a Zacks Rank #1 (Strong Buy), Arista Networks and Super Micro Computer carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Arista Networks’ 2022 earnings is pegged at $4.38 per share, up 1 cent in the past 60 days. The long-term earnings growth rate is anticipated to be 17.5%.
Arista Networks’ earnings beat the Zacks Consensus Estimate in the last four quarters, the average being 12.7%. Shares of ANET have gained 4.3% in the past year.
The Zacks Consensus Estimate for Jabil’s 2023 earnings is pegged at $8.37 per share, rising 2.3% in the past 60 days. The long-term earnings growth rate is anticipated to be 12%.
Jabil’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 8.8%. Shares of JBL have increased 32.3% in the past year.
The Zacks Consensus Estimate for Super Micro Computer’s fiscal 2023 earnings is pegged at $10.68 per share, up 11.5% in the past 60 days.
Super Micro Computer’s earnings beat the Zacks Consensus Estimate in all the last four quarters, the average being 7.8%. Shares of SMCI have gained 112.2% in the past year
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