Lumen Technologies Inc LUMN

¹ Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the second quarter of 2023 includes $37 million from the EMEA business (defined below), divested on Nov. 1, 2023 and $11 million from those of our CDN customer contracts sold Oct. 10, 2023, which will not recur in subsequent periods. The Company believes that these figures will allow analysts and investors to understand the amounts associated with these transactions to understand the impact they had on the Company's past, but not current or future, financial performance. Therefore, these amounts will impact the Company's ability to match its past performance in current and future periods. The post-closing financial impacts of actual amounts received or paid by the Company under the post-closing agreements with the purchasers of its businesses divested in 2022 and 2023 were a net reduction of $(48) million and $(51) million for the second quarter 2024 and 2023, respectively. The Company believes that this provides useful information to investors to understand the impact that the post-closing agreements have had on the Company's activities and its current financial performance.

² Includes the impact of $938 million in cash tax payments related to our divestitures completed on Aug. 1, 2022 and Oct. 3, 2022.

Metric, as reported

Second Quarter

($ in millions, except per share data)

2024

2023

Large Enterprise⁽¹⁾

$        837

899

Mid-Market Enterprise

478

514

Public Sector

448

415

North America Enterprise Channels

1,763

1,828

Wholesale

723

803

North America Business Revenue

2,486

2,631

International and Other⁽¹⁾⁽²⁾

91

277

Business Segment Revenue

2,577

2,908

Mass Markets Segment Revenue

691

753

Total Revenue⁽³⁾⁽⁴⁾

$      3,268

3,661

Cost of Services and Products

1,653

1,740

Selling, General and Administrative Expenses

742

790

(Gain) Loss on Sale of Business

(5)

13

Stock-based Compensation (Credit) Expense

(3)

9

Net Loss

(49)

(8,736)

Net (Loss) Income, Excluding Special Items⁽⁵⁾⁽⁶⁾

(124)

98

Adjusted EBITDA^(2)(5)(7)(8)

875

1,127

Adjusted EBITDA, Excluding Special Items^{(2)(5)(7)(8)(9)}

1,011

1,229

Net Loss Margin

(1.5) %

(238.6) %

Net (Loss) Income Margin, Excluding Special Items⁽⁵⁾⁽⁶⁾

(3.8) %

2.7 %

Adjusted EBITDA Margin⁽⁵⁾

26.8 %

30.8 %

Adjusted EBITDA Margin, Excluding Special Items⁽⁵⁾⁽⁹⁾

30.9 %

33.6 %

Net Cash Provided by (Used in) Operating Activities

511

(100)

Capital Expenditures⁽¹⁰⁾

753

796

Unlevered Cash Flow⁽⁵⁾

(24)

(701)

Unlevered Cash Flow, Excluding Cash Special Items^(5)(11)

62

(701)

Free Cash Flow⁽⁵⁾

(242)

(896)

Free Cash Flow, Excluding Cash Special Items^(5)(11)

(156)

(896)

Net Loss per Common Share - Diluted

(0.05)

(8.88)

Net (Loss) Income per Common Share - Diluted, Excluding Special Items⁽⁵⁾⁽⁶⁾

(0.13)

0.10

Weighted Average Shares Outstanding (in millions) - Diluted

987.2

983.5

⁽¹⁾ International revenue amounts previously reported in Large Enterprise represent revenue related to our non-domestic regions including (i) Europe, Middle East and Africa ("EMEA") through the sale of our EMEA business on Nov. 1, 2023 and (ii) Asia Pacific ("APAC") and any remaining international operations, which we do not expect to be significant or material in future periods. As such, prior period amounts related to our historical international operations have been reclassified within the Business Segment Revenue to the "International and Other" sales channel. These reporting changes had no impact on total operating revenue, total operating expenses or net income for any period.

⁽²⁾ Subsequent to the sale of select Content Delivery Network ("CDN") customer contracts announced on Oct. 10, 2023, certain prior period amounts related to our historical CDN revenue have been reclassified from "Harvest" to "International and Other" sales channel within the "Other" product in the Business Segment Revenue products to conform to our 2024 reporting presentation. These reporting changes had no impact on total operating revenue, total operating expenses or net income for any period. Revenue and Adjusted EBITDA excluding Special Items for the second quarter of 2023 includes $22 million and $11 million, respectively, from our divested CDN customer contracts. The Company believes that these figures will allow analysts and investors to understand the amounts associated with recent transactions and to understand the impacts they had on the Company's past, but not current or future, financial performance. Therefore, these amounts will impact the Company's ability to match its past performance in current and future periods.

⁽³⁾ Revenue for the second quarter of 2023 includes $142 million from the EMEA business divested Nov. 1, 2023, which will not recur in periods following the divestiture. The Company believes that these figures will allow analysts and investors to understand the amounts associated with these transactions and to understand the impact they had on the Company's past, but not current or future, financial performance. Therefore, these amounts will impact the Company's ability to match its past performance in current and future periods.

⁽⁴⁾ The post-closing revenue impact of amounts received by the Company under its post-closing agreements with purchasers of our businesses divested in 2022 and 2023 was (i) $51 million for the second quarter of 2024 and (ii) $27 million for the second quarter of 2023. The Company believes that this provides useful information to investors to understand the impact that the post-closing agreements have had on the Company's current financial performance.

⁽⁵⁾ See the attached schedules for definitions of non-GAAP metrics and reconciliations to GAAP figures.

⁽⁶⁾ Excludes Special Items (net of the income tax effect thereof) which (i) negatively impacted this metric by $75 million for the second quarter of 2024 and (ii) positively impacted this metric by $8.8 billion for the second quarter of 2023.

⁽⁷⁾ Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the second quarter of 2023 includes $37 million from the EMEA business, divested in Nov. 1, 2023, which will not recur in periods following the divestiture. The Company believes that these figures will allow analysts and investors to understand the amounts associated with these transactions to understand the impact they had on the Company's past, but not current or future, financial performance. Therefore, these amounts will impact the Company's ability to match its past performance in current and future periods.

⁽⁸⁾ The post-closing net financial impacts to adjusted EBITDA of actual amounts received or paid by the Company under its post-closing agreements with the purchasers of our businesses divested in 2022 and 2023 were (i) a net reduction of $(48) million for the second quarter of 2024 and (ii) a net reduction of $(51) million for the second quarter 2023. The Company believes that this provides useful information to investors to understand the impact that the post-closing agreements have had on the Company's financial performance following the completion of these divestitures.

⁽⁹⁾ Excludes Special Items in the amounts of (i) $136 million for the second quarter of 2024 and (ii) $102 million for the first quarter of 2023.

⁽¹⁰⁾ Capital expenditures for the second quarter of 2023 includes $34 million of capital expenditures relating to EMEA business divested on Nov. 1, 2023, which will not recur in periods following the divestiture. The Company believes that these figures will allow analysts and investors to understand the amounts associated with these transactions and programs to understand the impact they had on the Company's past, but not current or future, capital expenditures. Therefore, these amounts will impact the Company's ability to match its past capital expenditure activities in current and future periods.

⁽¹¹⁾ Excludes cash paid (received) for Special Items in the amounts of (i) $86 million for the second quarter of 2024 and (ii) net zero for the second quarter of 2023.

Metrics⁽¹⁾

Second
Quarter

First
Quarter

QoQ
Percent

Second
Quarter

YoY
Percent

($ in millions)

2024

2024

Change

2023

Change

Revenue By Sales Channel

Large Enterprise

$     837

858

(2) %

899

(7) %

Mid-Market Enterprise

478

486

(2) %

514

(7) %

Public Sector

448

420

7 %

415

8 %

North America Enterprise Channels

1,763

1,764

— %

1,828

(4) %

Wholesale

723

730

(1) %

803

(10) %

North America Business Revenue

2,486

2,494

— %

2,631

(6) %

International and Other

91

97

(6) %

277

(67) %

Business Segment Revenue

2,577

2,591

(1) %

2,908

(11) %

Mass Markets Segment Revenue

691

699

(1) %

753

(8) %

Total Revenue⁽²⁾

$  3,268

3,290

(1) %

3,661

(11) %

Business Segment Revenue by Product Category

Grow

$  1,063

1,059

— %

1,144

(7) %

Nurture

751

777

(3) %

874

(14) %

Harvest

566

582

(3) %

691

(18) %

Subtotal

2,380

2,418

(2) %

2,709

(12) %

Other

197

173

14 %

199

(1) %

Business Segment Revenue

$  2,577

2,591

(1) %

2,908

(11) %

Net (Loss) Income

$      (49)

57

nm

(8,736)

(99) %

Net (Loss) Income Margin

(1.5) %

1.7 %

nm

(238.6) %

(99) %

Net (Loss) Income, Excluding Special Items

$    (124)

(41)

nm

98

nm

Net (Loss) Income Margin, Excluding Special Items

(3.8) %

(1.2) %

nm

2.7 %

nm

Adjusted EBITDA, Excluding Special Items⁽³⁾

$  1,011

977

3 %

1,229

(18) %

Adjusted EBITDA Margin, Excluding Special Items

30.9 %

29.7 %

4 %

33.6 %

(8) %

Capital Expenditures⁽⁴⁾

$     753

713

6 %

796

(5) %

⁽¹⁾ See the notes to our immediately preceding chart for information about our use of non-GAAP metrics, Special Items, and reconciliations to GAAP.

⁽²⁾ Revenue for the second quarter of 2023 includes amounts from the 2023 divestiture and sale of CDN contracts. Revenue for the first and second quarter of 2024 and second quarter of 2023 includes amounts from the post-closing commercial agreements with the purchasers of our businesses divested in 2022 and 2023. Refer to footnotes 1 through 4 on the preceding table for details.

⁽³⁾ Adjusted EBITDA excluding Special Items for the fourth quarter of 2023 includes the financial impacts from the 2023 divestiture and sale of CDN contracts. Adjusted EBITDA excluding Special Items for the first and second quarter of 2024 and the first quarter of 2023 includes the financial impacts from the post-closing commercial agreements with the purchasers of our businesses divested in 2022 and 2023. Refer to footnotes 2, 7 and 8 on the preceding table for details.

⁽⁴⁾ Capital expenditures for the second quarter 2023 includes the impacts of capital expenditures related to our divested businesses, which will not recur in periods following the completion of these divestitures. Refer to footnote 10 on the preceding table for details.

nm - Percentages greater than 200% and comparisons between positive and negative values are considered not meaningful.

¹ See footnote 2 on page 1 of this release.

Metric ⁽¹⁾⁽²⁾

Current Outlook

Previous Outlook

Adjusted EBITDA

$3.9 to $4.0 billion

$4.1 to $4.3 billion

Free Cash Flow⁽³⁾⁽⁴⁾

$1.0 to $1.2 billion

$100 to $300 million

Net Cash Interest

$1.15 to $1.25 billion

$1.25 to $1.35 billion

Capital Expenditures

$3.1 to $3.3 billion

$2.7 to $2.9 billion

Cash Income Taxes/(Refund)⁽⁴⁾

($200) to ($300) million

($200) to ($300) million

⁽¹⁾  For definitions of non-GAAP metrics and reconciliations to GAAP figures, see the attached schedules and our Investor Relations website.

⁽²⁾  Outlook measures in this chart and the accompanying schedules (i) exclude the effects of Special Items, goodwill impairments, future changes in our operating or capital allocation plans, unforeseen changes in regulation, laws or litigation, and other unforeseen events or circumstances impacting our financial performance and (ii) speak only as of Aug. 6, 2024. See "Forward-Looking Statements."

⁽³⁾  Assumes no discretionary pension plan contributions during 2024.

⁽⁴⁾  Includes an approximately $700 million tax refund received during the first quarter 2024.

Lumen Technologies, Inc.

CONSOLIDATED STATEMENTS OF OPERATIONS

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)

($ in millions, except per share amounts; shares in thousands)

Three months ended June 30,

(Decrease) /
Increase

Six months ended June 30,

(Decrease) /
Increase

2024

2023

2024

2023

OPERATING REVENUE

$            3,268

3,661

(11) %

6,558

7,399

(11) %

OPERATING EXPENSES

Cost of services and products
(exclusive of depreciation and
amortization)

1,653

1,740

(5) %

3,305

3,557

(7) %

Selling, general and administrative

742

790

(6) %

1,565

1,511

4 %

(Gain) loss on sale of business

(5)

13

nm

17

90

(81) %

Depreciation and amortization

743

746

— %

1,491

1,479

1 %

Goodwill impairment

—

8,793

nm

—

8,793

nm

  Total operating expenses

3,133

12,082

(74) %

6,378

15,430

(59) %

OPERATING INCOME (LOSS)

135

(8,421)

nm

180

(8,031)

nm

OTHER (EXPENSE) INCOME

Interest expense

(373)

(294)

27 %

(664)

(573)

16 %

Net gain on early retirement of debt

3

9

(67) %

278

618

(55) %

Other income (expense), net

194

16

nm

267

(24)

nm

  Total other (expense) income, net

(176)

(269)

(35) %

(119)

21

nm

Income tax expense

(8)

(46)

(83) %

(53)

(215)

(75) %

NET (LOSS) INCOME

$               (49)

(8,736)

(99) %

8

(8,225)

nm

BASIC (LOSS) EARNINGS PER
SHARE

$            (0.05)

(8.88)

(99) %

0.01

(8.37)

nm

DILUTED (LOSS) EARNINGS PER
SHARE

$            (0.05)

(8.88)

(99) %

0.01

(8.37)

nm

WEIGHTED AVERAGE SHARES
OUTSTANDING

Basic

987,239

983,453

— %

986,047

982,505

— %

Diluted

987,239

983,453

— %

987,224

982,505

— %

Exclude: Special Items⁽¹⁾

$               (75)

8,834

nm

(173)

8,420

nm

NET (LOSS) INCOME EXCLUDING
SPECIAL ITEMS

$             (124)

98

nm

(165)

195

nm

DILUTED (LOSS) EARNINGS PER
SHARE EXCLUDING SPECIAL
ITEMS

$            (0.13)

0.10

nm

(0.17)

0.20

nm

⁽¹⁾ Excludes the Special Items described in the accompanying Non-GAAP Special Items table, net of the income tax effect thereof.

nm - Percentages greater than 200% and comparisons between positive and negative values are considered not meaningful.

Lumen Technologies, Inc.

CONSOLIDATED BALANCE SHEETS

AS OF JUNE 30, 2024 AND DECEMBER 31, 2023

(UNAUDITED)

($ in millions)

June 30, 2024

December 31, 2023

ASSETS

CURRENT ASSETS

Cash and cash equivalents

$                     1,495

2,234

Accounts receivable, less allowance of $62 and $67

1,294

1,318

Other

971

1,223

   Total current assets

3,760

4,775

Property, plant and equipment, net of accumulated depreciation of $22,073
and $21,318

20,089

19,758

GOODWILL AND OTHER ASSETS

Goodwill

1,964

1,964

Other intangible assets, net

5,127

5,470

Other, net

2,003

2,051

    Total goodwill and other assets

9,094

9,485

TOTAL ASSETS

$                   32,943

34,018

LIABILITIES AND STOCKHOLDERS' EQUITY

CURRENT LIABILITIES

Current maturities of long-term debt

$                        192

157

Accounts payable

995

1,134

Accrued expenses and other liabilities

Salaries and benefits

605

696

Income and other taxes

597

251

Current operating lease liabilities

281

268

Interest

219

168

Other

179

213

Current portion of deferred revenue

670

647

    Total current liabilities

3,738

3,534

LONG-TERM DEBT

18,411

19,831

DEFERRED CREDITS AND OTHER LIABILITIES

Deferred income taxes, net

3,142

3,127

Benefit plan obligations, net

2,437

2,490

Deferred revenue

2,112

1,969

Other

2,637

2,650

Total deferred credits and other liabilities

10,328

10,236

STOCKHOLDERS' EQUITY

Common stock

1,016

1,008

Additional paid-in capital

18,135

18,126

Accumulated other comprehensive loss

(786)

(810)

Accumulated deficit

(17,899)

(17,907)

Total stockholders' equity

466

417

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

$                   32,943

34,018

Lumen Technologies, Inc.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

SIX MONTHS ENDED JUNE 30, 2024 AND 2023

(UNAUDITED)

($ in millions)

Six months ended June 30,

OPERATING ACTIVITIES

Net income (loss)

$                                      8

(8,225)

Adjustments to reconcile net income (loss) to net cash provided by
operating activities:

Depreciation and amortization

1,491

1,479

Loss on sale of business

17

90

Goodwill impairment

—

8,793

Deferred income taxes

2

46

Provision for uncollectible accounts

39

47

Net gain on early retirement of debt

(278)

(618)

Debt modification costs and related fees

(75)

—

Gain on sale of investment

(205)

—

Unrealized loss on investments

2

81

Stock-based compensation

11

23

Changes in current assets and liabilities, net

341

(1,388)

Retirement benefits

(16)

(16)

Changes in other noncurrent assets and liabilities, net

301

132

Other, net

(25)

51

Net cash provided by operating activities

1,613

495

INVESTING ACTIVITIES

Capital expenditures

(1,466)

(1,436)

(Payments) proceeds from sale of business

(5)

3

Proceeds from sale of property, plant and equipment and other assets

264

26

Other, net

13

2

Net cash used in investing activities

(1,194)

(1,405)

FINANCING ACTIVITIES

Net proceeds from issuance of long-term debt

1,325

—

Payments of long-term debt

(1,997)

(100)

Net (payments) proceeds on revolving line of credit

(200)

200

Dividends paid

(3)

(9)

Debt issuance and extinguishment costs and related fees

(282)

(13)

Other, net

(3)

(6)

Net cash (used in) provided by financing activities

(1,160)

72

Net decrease in cash, cash equivalents and restricted cash

(741)

(838)

Cash, cash equivalents and restricted cash at beginning of period

2,248

1,307

Cash, cash equivalents and restricted cash at end of period

$                               1,507

469

Cash, cash equivalents and restricted cash:

Cash and cash equivalents

$                               1,495

411

Cash and cash equivalents and restricted cash included in assets held
for sale

—

47

Restricted cash

12

11

 Total

$                               1,507

469

Lumen Technologies, Inc.

OPERATING METRICS

(UNAUDITED)

Operating Metrics

2Q24

1Q24

2Q23

Mass Markets broadband subscribers

(in thousands)

Fiber broadband subscribers

992

952

877

Other broadband subscribers⁽¹⁾

1,666

1,758

2,032

Mass Markets total broadband subscribers⁽²⁾

2,658

2,710

2,909

Mass Markets broadband enabled units⁽³⁾

(in millions)

Fiber broadband enabled units

3.9

3.8

3.4

Other broadband enabled units

18.0

18.0

18.4

Mass Markets total broadband enabled units

21.9

21.8

21.8

⁽¹⁾ Other broadband subscribers are customers that primarily subscribe to lower speed copper-based broadband services marketed under the CenturyLink brand.

⁽²⁾ Mass Markets broadband subscribers are customers that purchase broadband connection service through their existing telephone lines, stand-alone telephone lines, or fiber-optic cables. Our methodology for counting our Mass Markets broadband subscribers includes only those lines that we use to provide services to external customers and excludes lines used solely by us and our affiliates. It also excludes unbundled loops and includes stand-alone Mass Markets broadband subscribers. We count lines when we install the service. Other companies may use different methodologies.

⁽³⁾ Represents the total number of units capable of receiving our broadband services at period end. Other companies may use different methodologies to count their broadband enabled units.

Lumen Technologies, Inc.

Non-GAAP Special Items

(UNAUDITED)

($ in millions)

Actual QTD

Actual YTD

Special Items Impacting Adjusted EBITDA

2Q24

2Q23

2Q24

2Q23

Severance

$                 103

5

107

13

Consumer and other litigation

1

(1)

(1)

(1)

Net (gain) loss on sale of business

(5)

13

17

90

Transaction and separation costs⁽¹⁾

23

10

191

39

Net loss (gain) on sale of select CDN contracts and other

14

—

(8)

—

Real estate transactions⁽²⁾

—

75

—

75

Total Special Items impacting Adjusted EBITDA

$                 136

102

306

216

Actual QTD

Actual YTD

Special Items Impacting Net Income

2Q24

2Q23

2Q24

2Q23

Severance

$                 103

5

107

13

Consumer and other litigation

1

(1)

(1)

(1)

Net (gain) loss on sale of business

(5)

13

17

90

Transaction and separation costs⁽¹⁾

23

10

191

39

Net loss (gain) on sale of select CDN contracts and other

14

—

(8)

—

Real estate transactions⁽²⁾

—

75

—

75

Goodwill impairment

—

8,793

—

8,793

Net gain on early retirement of debt⁽³⁾

(3)

(9)

(278)

(618)

Income from transition and separation services⁽⁴⁾

(35)

(40)

(70)

(86)

Gain on sale of investment

(205)

—

(205)

—

Total Special Items impacting Net Income

(107)

8,846

(247)

8,305

Income tax effect of Special Items⁽⁵⁾

32

(12)

74

115

Total Special Items impacting Net Income, net of tax

$                  (75)

8,834

(173)

8,420

Actual QTD

Actual YTD

Special Items Impacting Cash Flows

2Q24

2Q23

2Q24

2Q23

Severance

$                   83

7

101

12

Consumer and other litigation

1

—

(1)

—

Transaction and separation costs⁽¹⁾

29

25

167

49

Income from transition and separation services⁽⁴⁾

(27)

(32)

(52)

(91)

Total Special Items impacting Cash Flows

$                   86

—

215

(30)

⁽¹⁾ Transaction and separation costs associated with (i) the sale of our Latin American business on Aug. 1, 2022, (ii) the sale of our 20-state ILEC business on Oct. 3, 2022, (iii) the sale of our EMEA business on Nov. 1, 2023, (iv) our March 22, 2024 debt transaction support agreement and (v) our evaluation of other potential transactions.

⁽²⁾ Real estate transactions include the Q2 2023 loss on donation of real estate.                                                 

⁽³⁾ Reflects a gain as a result of (i) repurchase of $75 million aggregate principal in Q2 2024, (ii) debt transaction support agreement and resulting debt extinguishment in Q1 2024, (iii) $1.5 billion of debt exchanges in Q1 2023 and (iv) $19 million of debt exchanges in Q2 2023.                                                                                            

⁽⁴⁾ Income from transition and separation services includes charges we billed for transition services and IT professional services provided to the purchasers in connection with our 2022 and 2023 divestitures.

⁽⁵⁾ Tax effect calculated using the annualized effective statutory tax rate, excluding any non-recurring discrete items, which was 30.0% for Q1 and Q2 of 2024 and 23.5% for Q1 and Q2 of 2023.

Lumen Technologies, Inc.

Non-GAAP Cash Flow Reconciliation

(UNAUDITED)

($ in millions)

Actual QTD

Actual YTD

2Q24

2Q23

2Q24

2Q23

Net cash provided by operating activities⁽¹⁾

$                  511

(100)

1,613

495

Capital expenditures

(753)

(796)

(1,466)

(1,436)

Free Cash Flow⁽¹⁾

(242)

(896)

147

(941)

Cash interest paid

232

198

571

561

Interest income

(14)

(3)

(72)

(16)

Unlevered Cash Flow⁽¹⁾

$                  (24)

(701)

646

(396)

Free Cash Flow⁽¹⁾

$                (242)

(896)

147

(941)

Add back: Severance⁽²⁾

83

7

101

12

Remove: Consumer and other litigation⁽²⁾

1

—

(1)

—

Add back: Transaction and separation costs⁽²⁾

29

25

167

49

Remove: Income from transition and separation services⁽²⁾

(27)

(32)

(52)

(91)

Free Cash Flow excluding cash Special Items⁽¹⁾

$                (156)

(896)

362

(971)

Unlevered Cash Flow⁽¹⁾

$                  (24)

(701)

646

(396)

Add back: Severance⁽²⁾

83

7

101

12

Remove: Consumer and other litigation⁽²⁾

1

—

(1)

—

Add back: Transaction and separation costs⁽²⁾

29

25

167

49

Remove: Income from transition and separation services⁽²⁾

(27)

(32)

(52)

(91)

Unlevered Cash Flow excluding cash Special Items⁽¹⁾

$                   62

(701)

861

(426)

⁽¹⁾ Includes the impact of (i) $700 million in cash tax refund received in Q1 2024, (ii) $938 million in cash tax payments in Q2 2023 and (iii) $90 million in cash tax payments in Q1 2023 related to our 2022 divestitures.

⁽²⁾ Refer to Non-GAAP Special Items table for details of the Special Items impacting cash included above.

Lumen Technologies, Inc.

Adjusted EBITDA Non-GAAP Reconciliation

(UNAUDITED)

($ in millions)

Actual QTD

Actual YTD

2Q24

2Q23

2Q24

2Q23

Net (loss) income

$               (49)

(8,736)

8

(8,225)

Income tax expense

8

46

53

215

Total other expense (income), net

176

269

119

(21)

Depreciation and amortization expense

743

746

1,491

1,479

Stock-based compensation (credit) expense

(3)

9

11

23

Goodwill impairment

—

8,793

—

8,793

Adjusted EBITDA⁽¹⁾

$              875

1,127

1,682

2,264

Add back: Severance⁽²⁾

103

5

107

13

Add back: Consumer and other litigation⁽²⁾

1

(1)

(1)

(1)

Add back: Net (gain) loss on sale of business⁽²⁾

(5)

13

17

90

Add back: Transaction and separation costs⁽²⁾

23

10

191

39

Add back: Net loss (gain) on sale of select CDN
contracts and other⁽²⁾

14

—

(8)

—

Add back: Real estate transaction costs⁽²⁾

—

75

—

75

Adjusted EBITDA excluding Special Items⁽¹⁾

$           1,011

1,229

1,988

2,480

Net (loss) income excluding Special Items⁽²⁾

$             (124)

98

(165)

195

Total revenue

$           3,268

3,661

6,558

7,399

Net (Loss) Income Margin

(1.5) %

(238.6) %

0.1 %

(111.2) %

Net (Loss) Income Margin, excluding Special Items

(3.8) %

2.7 %

(2.5) %

2.6 %

Adjusted EBITDA Margin

26.8 %

30.8 %

25.6 %

30.6 %

Adjusted EBITDA Margin excluding Special Items

30.9 %

33.6 %

30.3 %

33.5 %

⁽¹⁾ Adjusted EBITDA and Adjusted EBITDA excluding Special Items for the first and second quarter of 2023 includes the financial impacts of (i) the EMEA business divested on Nov. 1, 2023 and (ii) the Company's select CDN contracts sold Oct. 10, 2023 and both the first and second quarter of 2023 and 2024 include the financial impact of the post-closing commercial agreements with the purchasers of the our recently divested businesses. Refer to footnote 1 on the first page of this release for details.

⁽²⁾ Refer to Non-GAAP Special Items table for details of the Special Items included above.

Lumen Technologies, Inc.

2024 OUTLOOK ^{(1) (2) (3) (4)}

(UNAUDITED)

($ in millions)

Adjusted EBITDA Outlook

Twelve Months Ended December 31, 2024

Range

Low

High

Net (loss) income

$                   (300)

100

Income tax expense

50

250

Total other expense, net

1,190

920

Depreciation and amortization expense

2,900

2,700

Stock-based compensation expense

60

30

Adjusted EBITDA

$                  3,900

4,000

Free Cash Flow Outlook

Twelve Months Ended December 31, 2024

Range

Low

High

Net cash provided by operating activities

$                  4,100

4,500

Capital expenditures

(3,100)

(3,300)

Free Cash Flow

$                  1,000

1,200

⁽¹⁾ For definitions of non-GAAP metrics and reconciliation to GAAP figures, see the above schedules and our Investor Relations website.

⁽²⁾ Outlook measures in this chart (i) exclude the effects of Special Items, goodwill impairments, future changes in our operating or capital allocation plans, unforeseen changes in regulation, laws or litigation, and other unforeseen events or circumstances impacting our financial performance and (ii) speak only as of Aug. 6, 2024. See "Forward-Looking Statements."

⁽³⁾ Assumes no discretionary pension plan contributions during 2024.

⁽⁴⁾ Includes an approximately $700 million tax refund received during the first quarter 2024.