Lumen Technologies, Inc. LUMN reported decent results for the fourth quarter of 2020, with the bottom line beating the Zacks Consensus Estimate.
Bottom Line
Net loss in the December quarter was $ 2,289 million or a loss of $ 2.12 per share versus net profit of $ 223 million or 21 cents per share in the same quarter last year. The deterioration was mainly due to an operating loss.
In 2020, the net loss was $ 1,232 million or a loss of $ 1.14 per share, compared to a net loss of $ 5,269 million or a loss of $ 4.92 per share in 2019.
However, quarterly adjusted net income (excluding integration and transformation costs and special items) was $ 522 million or 48 cents per share, compared to $ 352 million or 33 cents per share in the last year quarter. The bottom line beat Zacks’ consensus estimate by 16 cents.
Lumen Technologies, Inc. Price, consensus and EPS surprise
Lumen Technologies, Inc. price-consensus-eps-surprise chart | Quote from Lumen Technologies, Inc.
Top line
Total revenue on a quarterly basis declined 3.4% year over year to $ 5,125 million. This was due to lower sales in the International and Global Accounts (IGAM), Small and Medium Business (SMB), Wholesale and Consumer business segments. The top line narrowly missed the consensus estimate of $ 5,126 million.
SMB revenue decreased 7.1% year-over-year to $ 618 million due to a decline in existing voice services. Wholesale sales decreased 6.2% to $ 922 million. Consumer revenues fell from $ 1,354 million in the same quarter a year ago to $ 1,299 million. IGAM’s revenues fell 1.6% to $ 856 million. Corporate revenues were virtually flat year over year at $ 1,430 million.
In 2020, revenues fell 3.5% year over year to $ 20,712 million.
Other quarterly data
Total operating expenses increased 55.5% year over year to $ 6,934 million, due to a goodwill impairment charge of $ 2,642 million. Operating loss was $ 1,809 million compared to operating income of $ 847 million in the same quarter last year.
Adjusted EBITDA decreased from $ 2,105 million to $ 2,083 million. Adjusted EBITDA margin was 40.6% compared to 39.7% in the same quarter a year ago. Capital expenditures were $ 758 million, compared to $ 940 million in the same quarter last year.
Cash flow and liquidity
In 2020, Lumen generated $ 6,524 million in net cash from operating activities, compared to $ 6,680 million in 2019. Free cash flow (excluding integration and transformation costs and special items) was $ 3,131 million, compared to $ 3,276 million.
As of December 31, 2020, the company had $ 406 million in cash and cash equivalents with $ 29,410 million in long-term debt. This compares to the respective amounts of $ 1,690 million and $ 32,394 million a year ago.
Outlook for 2021
For 2021, Lumen expects adjusted EBITDA in the range of $ 8.4- $ 8.6 billion. Adjusted Free Cash Flow is estimated to be between $ 2.8 billion and $ 3 billion. Capital expenditures are estimated to be between $ 3.5 billion and $ 3.8 billion. Depreciation and amortization are expected to be in the range of $ 4.2 – $ 4.4 billion. The effective tax rate is likely to be 27%.
Zacks Rank & Stocks to Consider
Lumen currently has a Zacks Rank # 3 (Hold).
Some of the better placed stocks in the industry are Harsco HSC; Luna Innovations LUNA and Riot Blockchain RIOT, each with a Zacks Rank # 2 (buy). You can see the full list of current Zacks # 1 Rank (Strong Buy) stocks here.
Harsco delivered a positive earnings surprise over four quarters of 463.1% on average.
Luna Innovations delivered a positive four-quarter earnings surprise averaging 47.5%.
Riot Blockchain delivered a positive four-quarter earnings surprise averaging 3.4%.
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