Slide 1: First Quarter 2022 Results
First Quarter 2022 Results May 4, 2022 © 2022 Lumen Technologies. All Rights Reserved. Issued: May 4, 2022
Slide 2: Forward-Looking Statements
Forward-Looking Statements Except for historical and factual information, the matters set forth in this presentation and other of our oral or written statements identified by words such as “estimates,” “expects,” “anticipates,” “believes,” “plans,” “intends,” “will,” and similar expressions are forw
Slide 3: Non-GAAP Measures
Non-GAAP Measures This presentation includes certain historical and forward-looking non-GAAP financial measures, including but not limited to adjusted EBITDA, adjusted EBITDA margin, net-debt-to-adjusted-EBITDA and free cash flow, each excluding the effects of special items, and adjustments to GAAP
Slide 4: 2022 Priorities
2022 Priorities 1 Growth 3 Debt Management Invest in fiber deployments and product enhancements to Reduced net debt by approximately $1.5 billion since the first drive toward profitable revenue growth quarter 2021 2 Shareholder Returns 4 Portfolio Optimization Maintain our $1 per share dividend; eva
Slide 5: Financial Highlights for 1Q22
Financial Highlights for 1Q22 Maintained strong Adjusted EBITDA margins and Free Cash Flow Improved Mass Markets revenue performance excluding CAF II through fiber subscriber growth and ARPU expansion Returned $271 million to our shareholders during the quarter through our quarterly dividend Reduced
Slide 6: 1Q22 Year-Over-Year Total Revenue Bridge
1Q22 Year-Over-Year Total Revenue Bridge -7.0% YoY Reported -5.5% YoY Adjusted Adjusted Revenue $5,029 Performance In Line $4,676 with Recent Results (1) ($ in millions) 6 (1) Includes $10 million impact from the sale of our corrections facilities business in 4Q21 and $8 million impact from foreign
Slide 7: 1Q22 Revenue – Sales Channels
1Q22 Revenue – Sales Channels Total 1Q Total 1Q Revenue Revenue Mix Mix Total 1Q Revenue Mix Total 1Q Revenue Mix 28.6% 28.6% 28.5% 28.5% 27.3% 27.3% 28.6% 28.5% 27.3% 52.9% 53.0% 53.7% 52.9% 52.9% 53.0% 53.0% 53.7% 53.7% 52.9% 53.0% 53.7% 28.6% 28.5% 27.3% 18.5% 18.5% 18.5% 18.5% 19.0% 19.0% 18.5%
Slide 8: 1Q22 Enterprise Channel Revenue
1Q22 Enterprise Channel Revenue Enterprise Enterprise Channel Enterprise Channel 1Q Revenue Channel Mix1Q Revenue Mix1Q Revenue Mix 75.7% 75.7% 77.3% 75.7% 77.3% 79.1% 77.3% 79.1% 79.1% 24.3% 24.3% 22.7% 24.3% 22.7% 20.9% 22.7% 20.9% 20.9% Voice & Other 1Q20 1Q20 1Q21 1Q21 1Q20 1Q22 1Q22 1Q21 1Q22 E
Slide 9: 1Q22 Mass Markets Revenue
Significant Revenue Mix Improvement 1Q22 Mass Markets Revenue Expected Within RemainCo Total Mass Markets Product Categories RemainCo Mass Markets Fiber Contribution YoY% QoQ% 15% Revenue ($ in millions) 1Q22 % Total Change Change 14% 13% 13% Fiber Broadband $145 18.9% 5.8% 11% 12% 11% 10% 9% 9% Oth
Slide 10: 12M+ Addressable Fiber Opportunity in RemainCo Footprint
DRAFT 12M+ Addressable Fiber Opportunity in RemainCo Footprint RemainCo Fiber Enablement Opportunity WA 12+ VT MT ME ND OR NH MN ID NY MA SD WI WY MI RI PA CT NV NE IA OH NJ ~3.5+ UT IL IN DE CO WV MD CA VA KS MO KY DC 2.67 2.67 NC TN AZ OK NM AR SC 2022 Opportunity AL GA MS 16-State RemainCo LA Pro
Slide 11: 1Q22 RemainCo Quantum Fiber Subscriber Growth and KPIs
DRAFT 1Q22 RemainCo Quantum Fiber Subscriber Growth and KPIs RemainCo Quantum Fiber ~$59 Subscriber Trends 762 ARPU 737 711 685 > 22% (in thousands) 657 Penetration of the 2020 Enablement Vintage (at 12-month mark) 1Q21 2Q21 3Q21 4Q21 1Q22 (in thousands) > +50 Roughly 90% of Subscriber Additions New
Slide 12: 1Q22 Year-over-year Adjusted EBITDA Bridge
1Q22 Year-over-year Adjusted EBITDA Bridge $2,165 $1,966 CAF II Support and Revenue Release Impacting Comparability with Prior Periods (1) ($ in millions) (1) Includes impact of revenue declines, investments for growth and separation-related activities resulting in lower transformation savings. 12 I
Slide 13: Adjusted EBITDA | Adjusted EBITDA Margin
Adjusted EBITDA | Adjusted EBITDA Margin Excluding CAF II(1) Reported $4.906 $4.802 $4.764 $4.725 $4.617 $4.676 42.0% 41.6% 41.6% 41.4% 41.3% 41.0% $2.042 $1.987 $1.955 $1.966 $1.907 $1.966 1Q21 2Q21 3Q21 4Q21 1Q22 1Q22 Adj. EBITDA Total Revenue Adj. EBITDA Margin ($ in billions) (1) 1Q21, 2Q21, 3Q2
Slide 14: 1Q22 Free Cash Flow
1Q22 Free Cash Flow Free Cash Flow Positively Impacted $577M by the Timing of Capital Expenditures Capital Expenditures $846M $385M Free Cash Flow Net Cash Interest 14 Issued: May 4, 2022
Slide 15: YoY Adj. EBITDA Change: Previous and Current Outlook
YoY Adj. EBITDA Change: Previous and Current Outlook Updating our Outlook Based on Adjusted Timing of the 20-state ILEC Business Divestiture $8.4B ~ -$400M to -$600M $6.9B to $6.5B to $7.1B $6.7B (2) CAF II (1) (3) Support (1) The previous outlook assumed that the pending sales of Lumen’s LATAM busi
Slide 16: Updated 2022 Financial Outlook
Updated 2022 Financial Outlook Metric(1)(2) Current Outlook(3) Previous Outlook(4) Adjusted EBITDA $6.9 to $7.1 billion $6.5 to $6.7 billion Free Cash Flow(5) $2.0 to $2.2 billion $1.6 to $1.8 billion Net Cash Interest $1.3 to $1.4 billion $1.3 to $1.4 billion GAAP Interest Expense $1.350 billion $1
Slide 17: Q&A
Q&A Issued: May 4, 2022