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Lumen's (LUMN) Q2 Loss Wider Than Expected, Revenues Down Y/Y
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Lumen Technologies, Inc (LUMN - Free Report) reported an adjusted loss (excluding special items) of 13 cents per share for the second quarter of 2024. In the prior-year quarter, the company reported adjusted earnings per share of 10 cents. The bottom line was wider than the Zacks Consensus Estimate of a loss of 9 cents per share.
Quarterly total revenues were $3.268 billion, down 10.7% year over year on a reported basis. The decline was due to the negative impact of divestitures, commercial agreements and the sale of the CDN business. However, the metric beat the Zacks Consensus Estimate by 0.4%.
Lumen’s stock price is up 25.2% in the pre-market hours on Aug 7. It has been on an upward trajectory as investors cheer a string of positive developments. In the past month, LUMN stock has skyrocketed 371.7% against sub-industry’s decline of 12%.
Image Source: Zacks Investment Research
The stock was up 93% on Aug 6 and closed the session at $5 after LUMN announced securing $5 billion in new business due to significant AI-fueled connectivity demand. Additionally, The company is actively negotiating with its customers to secure another $7 billion in sales opportunities to meet growing customer needs.
As AI needs surge, large companies across various industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. Recently, Microsoft chose Lumen to enhance its network capacity and support the development of next-generation applications for the company’s global platform customers. In response to this substantial demand, Lumen plans to more than double its intercity network miles in the next five years and offer access to a substantial amount of installed dark fiber.
To further support this expansion, Lumen secured its largest cable purchase agreement with Corning Incorporated, which will ensure 10% of Corning’s global fiber capacity for Lumen in the next two years, advancing AI capabilities for cloud data centers, enterprises and public agencies.
Enabled by improved liquidity profile, Lumen added that it was looking to pull forward certain expenses from 2026 and 2027 to 2025. It expects 2025 EBITDA to come in below 2024 levels owing to the investments in transformation and costs associated with recent PCF sales and legacy revenue declines. LUMN expects EBITDA to significantly rebound in 2026 and register growth thereafter.
For 2024, free cash flow is now projected to be between $1 billion and $1.2 billion. Earlier, the company expected free cash flow in the range of $100-$300 million. Lumen now expects adjusted EBITDA in the band of $3.9-$4 billion compared with the earlier guided range of $$4.1-$4.3 billion.
Capital expenditures are now estimated to be between $3.1 billion and $3.3 billion (previous outlook: $2.7 to $2.9 billion).
Segment Performance
Lumen has adopted a new reporting structure that has collapsed International and Global Accounts and large enterprises into the large enterprise channel. The company has moved the public sector to its separate channel.
By segment, Business revenues fell 11.4% to $2.577 billion while revenues from Large Enterprise plunged 7% to $837 million.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Mid-Market Enterprise revenues declined 7% to $478 million.
Public Sector revenues were improved 8% to $448 million. LUMN expects the public sector to be the first segment to witness sustainable growth later this year, followed by mid-market and then large enterprise segments.
North American Enterprise Channels’ revenues were down 4% to $1.763 billion. Revenues in Wholesale decreased 10% to $723 million.
Revenues from Mass Markets were down 8% year over year to $691 million.
Lumen anticipates witnessing healthy momentum in the Quantum business in the upcoming quarters. The company added 40,000 Quantum fiber subscribers, taking the count to 992,000 in the reported quarter.
In the second quarter, LUMN added 136,000 of Fiber broadband-enabled locations. As of Jun 30, 2024, the total enabled locations in the retained states stood at 3.9 million. The company is targeting to achieve 500,000 enabled locations in 2024.
Other Quarterly Details
Total operating expenses decreased 74% year over year to $3,133 million.
Operating income was $135 million compared with an operating loss of $8.421 billion in the year-ago quarter. Adjusted EBITDA (excluding special items) slipped to $1.011 billion from $1.229 billion for respective margins of 30.9% and 33.6%.
Cash Flow & Liquidity
In the second quarter, Lumen generated $511 million of net cash from operations compared with $100 million used in the prior-year quarter.
Free cash outflow (excluding cash special items) for the second quarter was $156 million compared with free cash outflow of $896 million in the prior-year quarter.
As of Jun 30, 2024, the company had $1.495 billion in cash and cash equivalents with $18.411 billion of long-term debt compared with the respective figures of $1.58 billion and $18.591 billion as of Mar 31, 2024.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, up 3% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%.
BMI reported earnings of $1.12 per share for the second quarter of 2024, beating the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 76 cents. Quarterly net sales were $216.7 million, up 23% from $175.9 million in the year-ago quarter and surpassed the consensus mark by 7.9%.
The Zacks Consensus Estimate for GNRC’s 2024 earnings is pegged at $6.44, up 4.5% in the seven days. GNRC recently reported second-quarter 2024 results wherein adjusted EPS of $1.35 beat the Zacks Consensus Estimate of $1.24. GNRC reported adjusted EPS of $1.08 in the prior-year period. Net sales came in at $998 million compared with $1 billion in the prior-year quarter. The figure also missed the consensus estimate by 0.5%.
GNRC’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing once, with the average surprise being 9.75%. The long-term earnings growth rate is 12%.
The Zacks Consensus Estimate for SAP’s 2024 EPS is pegged at $4.75. SAP recently reported second-quarter 2024 results wherein non-IFRS earnings of €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. Total revenues on a non-IFRS basis of €8.288 billion ($8,921.3 million), which rose 10% year over year both at nominal and constant-currencies (cc) basis.
SAP’s earnings beat the Zacks Consensus Estimate in two of the last four quarters while missing twice, with the average surprise being 4%. The long-term earnings growth rate is 10.7%.
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Lumen's (LUMN) Q2 Loss Wider Than Expected, Revenues Down Y/Y
Lumen Technologies, Inc (LUMN - Free Report) reported an adjusted loss (excluding special items) of 13 cents per share for the second quarter of 2024. In the prior-year quarter, the company reported adjusted earnings per share of 10 cents. The bottom line was wider than the Zacks Consensus Estimate of a loss of 9 cents per share.
Quarterly total revenues were $3.268 billion, down 10.7% year over year on a reported basis. The decline was due to the negative impact of divestitures, commercial agreements and the sale of the CDN business. However, the metric beat the Zacks Consensus Estimate by 0.4%.
Lumen’s stock price is up 25.2% in the pre-market hours on Aug 7. It has been on an upward trajectory as investors cheer a string of positive developments. In the past month, LUMN stock has skyrocketed 371.7% against sub-industry’s decline of 12%.
Image Source: Zacks Investment Research
The stock was up 93% on Aug 6 and closed the session at $5 after LUMN announced securing $5 billion in new business due to significant AI-fueled connectivity demand. Additionally, The company is actively negotiating with its customers to secure another $7 billion in sales opportunities to meet growing customer needs.
As AI needs surge, large companies across various industries are urgently seeking fiber capacity, which is becoming highly valuable and potentially scarce. Recently, Microsoft chose Lumen to enhance its network capacity and support the development of next-generation applications for the company’s global platform customers. In response to this substantial demand, Lumen plans to more than double its intercity network miles in the next five years and offer access to a substantial amount of installed dark fiber.
To further support this expansion, Lumen secured its largest cable purchase agreement with Corning Incorporated, which will ensure 10% of Corning’s global fiber capacity for Lumen in the next two years, advancing AI capabilities for cloud data centers, enterprises and public agencies.
Enabled by improved liquidity profile, Lumen added that it was looking to pull forward certain expenses from 2026 and 2027 to 2025. It expects 2025 EBITDA to come in below 2024 levels owing to the investments in transformation and costs associated with recent PCF sales and legacy revenue declines. LUMN expects EBITDA to significantly rebound in 2026 and register growth thereafter.
For 2024, free cash flow is now projected to be between $1 billion and $1.2 billion. Earlier, the company expected free cash flow in the range of $100-$300 million. Lumen now expects adjusted EBITDA in the band of $3.9-$4 billion compared with the earlier guided range of $$4.1-$4.3 billion.
Capital expenditures are now estimated to be between $3.1 billion and $3.3 billion (previous outlook: $2.7 to $2.9 billion).
Segment Performance
Lumen has adopted a new reporting structure that has collapsed International and Global Accounts and large enterprises into the large enterprise channel. The company has moved the public sector to its separate channel.
By segment, Business revenues fell 11.4% to $2.577 billion while revenues from Large Enterprise plunged 7% to $837 million.
Lumen Technologies, Inc. Price, Consensus and EPS Surprise
Lumen Technologies, Inc. price-consensus-eps-surprise-chart | Lumen Technologies, Inc. Quote
Mid-Market Enterprise revenues declined 7% to $478 million.
Public Sector revenues were improved 8% to $448 million. LUMN expects the public sector to be the first segment to witness sustainable growth later this year, followed by mid-market and then large enterprise segments.
North American Enterprise Channels’ revenues were down 4% to $1.763 billion. Revenues in Wholesale decreased 10% to $723 million.
Revenues from Mass Markets were down 8% year over year to $691 million.
Lumen anticipates witnessing healthy momentum in the Quantum business in the upcoming quarters. The company added 40,000 Quantum fiber subscribers, taking the count to 992,000 in the reported quarter.
In the second quarter, LUMN added 136,000 of Fiber broadband-enabled locations. As of Jun 30, 2024, the total enabled locations in the retained states stood at 3.9 million. The company is targeting to achieve 500,000 enabled locations in 2024.
Other Quarterly Details
Total operating expenses decreased 74% year over year to $3,133 million.
Operating income was $135 million compared with an operating loss of $8.421 billion in the year-ago quarter. Adjusted EBITDA (excluding special items) slipped to $1.011 billion from $1.229 billion for respective margins of 30.9% and 33.6%.
Cash Flow & Liquidity
In the second quarter, Lumen generated $511 million of net cash from operations compared with $100 million used in the prior-year quarter.
Free cash outflow (excluding cash special items) for the second quarter was $156 million compared with free cash outflow of $896 million in the prior-year quarter.
As of Jun 30, 2024, the company had $1.495 billion in cash and cash equivalents with $18.411 billion of long-term debt compared with the respective figures of $1.58 billion and $18.591 billion as of Mar 31, 2024.
Zacks Rank and Stocks to Consider
Lumen currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks worth consideration in the broader technology space are Badger Meter (BMI - Free Report) , SAP SE (SAP - Free Report) and Generac Holdings (GNRC - Free Report) . Badger Meter sports a Zacks Rank #1 (Strong Buy), while SAP and GNRC carry a Zacks Rank #2 each at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Badger Meter’s 2024 EPS is pegged at $4.06, up 3% in the past 30 days. BMI’s earnings beat the Zacks Consensus Estimate in each of the last four quarters, the average surprise being 12.9%. The long-term earnings growth rate is 17.9%.
BMI reported earnings of $1.12 per share for the second quarter of 2024, beating the Zacks Consensus Estimate by 14.3%. Also, the bottom line compared favorably with the year-ago quarter’s EPS of 76 cents. Quarterly net sales were $216.7 million, up 23% from $175.9 million in the year-ago quarter and surpassed the consensus mark by 7.9%.
The Zacks Consensus Estimate for GNRC’s 2024 earnings is pegged at $6.44, up 4.5% in the seven days. GNRC recently reported second-quarter 2024 results wherein adjusted EPS of $1.35 beat the Zacks Consensus Estimate of $1.24. GNRC reported adjusted EPS of $1.08 in the prior-year period. Net sales came in at $998 million compared with $1 billion in the prior-year quarter. The figure also missed the consensus estimate by 0.5%.
GNRC’s earnings beat the Zacks Consensus Estimate in three of the last four quarters while missing once, with the average surprise being 9.75%. The long-term earnings growth rate is 12%.
The Zacks Consensus Estimate for SAP’s 2024 EPS is pegged at $4.75. SAP recently reported second-quarter 2024 results wherein non-IFRS earnings of €1.10 ($1.18) per share, climbing 59% from the year-ago quarter’s levels. Total revenues on a non-IFRS basis of €8.288 billion ($8,921.3 million), which rose 10% year over year both at nominal and constant-currencies (cc) basis.
SAP’s earnings beat the Zacks Consensus Estimate in two of the last four quarters while missing twice, with the average surprise being 4%. The long-term earnings growth rate is 10.7%.