Fourth Quarter 2022 Highlights

• Appointed Kate Johnson as president, chief executive officer, and a member of the company's Board of Directors

• Completed the $7.5 billion divestiture of its 20-state ILEC business to Apollo on Oct. 3

• Announced an exclusive arrangement for the proposed sale of its EMEA business to Colt Technology Services for $1.8 billion

• Repurchased 33 million shares of common stock for a total purchase price of $200 million

• Reported Net Loss of $(3.069) billion for the fourth quarter 2022, which included a non-cash goodwill impairment charge of $3.271 billion, compared to reported Net Income of $508 million for the fourth quarter 2021

• Reported diluted loss per share of ($3.08) for the fourth quarter 2022, compared to diluted earnings per share of $0.50 for the fourth quarter 2021. Excluding Special Items, Diluted EPS of $0.43 per share for the fourth quarter 2022, compared to $0.51 per share for the fourth quarter 2021

• Generated Adjusted EBITDA of $1.393 billion for the fourth quarter 2022, compared to $2.088 billion for the fourth quarter 2021, excluding the effects of Special Items of $583 million and $19 million, respectively

• Generated Modified¹ Adjusted EBITDA of $1.393 billion for the fourth quarter 2022, compared to $1.496 billion for the fourth quarter 2021, excluding the effects of Special Items of $583 million and $19 million, respectively

• Reported Net Cash Provided by Operating Activities of $841 million for the fourth quarter 2022

• Generated Free Cash Flow of $126 million for the fourth quarter 2022, compared to $776 million for the fourth quarter 2021, excluding cash paid for Special Items of $118 million and $17 million, respectively

Full Year 2022 Financial Highlights

• Generated $10.2 billion of gross proceeds from business divestitures²

• Reduced Estimated Net Debt³ by $9.9 billion

• Reported Net Loss of $(1.548) billion for the full year 2022, which included a non-cash goodwill impairment charge of $3.271 billion, compared to reported Net Income of $2.033 billion for the full year 2021

• Reported diluted loss per share of ($1.54) for the full year 2022, compared to diluted earnings per share of $1.91 for the full year 2021. Excluding Special Items, Diluted EPS of $1.55 per share for the full year 2022, compared to $1.91 per share for the full year 2021

• Generated Adjusted EBITDA of $6.858 billion for the full year 2022, compared to $8.440 billion for the full year 2021, excluding the effects of Special Items of $155 million and $16 million, respectively

• Generated Modified¹ Adjusted EBITDA of $5.540 billion for the full year 2022, compared to $6.092 billion for the full year 2021, excluding the effects of Special Items of $155 million and $16 million, respectively

• Reported Net Cash Provided by Operating Activities of $4.735 billion for the full year 2022

• Delivered Free Cash Flow of $2.260 billion for the full year 2022, compared to $3.742 billion for the full year 2021, excluding cash paid for Special Items of $541 million and $141 million, respectively

DENVER, Feb. 7, 2023 /PRNewswire/ -- Lumen Technologies, Inc. (NYSE: LUMN) reported results for the fourth quarter ended December 31, 2022.

"This year brings significant change for Lumen as we pivot to growth with a new leadership team and an energized group of highly skilled employees to execute on our plan," said Kate Johnson, president and CEO of Lumen. "In 2023 we will be investing in and optimizing Lumen as we drive our five core priorities: develop customer obsession, innovate and invest for growth, build a reliable execution engine, radically simplify Lumen, and further develop our culture."

Total Revenue was $3.800 billion for the fourth quarter 2022, compared to $4.847 billion for the fourth quarter 2021 and compared to Modified¹ Revenue of $4.022 billion for the fourth quarter 2021.

Financial Results

Cash Flow
Free Cash Flow, excluding Special Items, was $126 million in the fourth quarter 2022, compared to $776 million in the fourth quarter 2021.

As of Dec. 31, 2022, Lumen had cash and cash equivalents of $1.251 billion.

Goodwill Impairment
Each year, the company is required under GAAP to undertake a goodwill impairment analysis of all its reporting units. The analysis compares the fair value of the equity for each of the reporting units to the carrying value of equity for each reporting unit. The analysis takes into account weighted average cost of capital and market multiples, along with the company's forecasts. Based on this analysis, in the fourth quarter of 2022 the company recorded an aggregate $3.271 billion non-cash goodwill impairment, primarily in our North America business reporting unit.

Update on the Divestiture of EMEA Business to Colt
Since we announced this transaction on Nov. 2, 2022, Colt has exercised its option to acquire our EMEA business following the completion of a French consultative process. The parties expect to enter into a definitive purchase agreement in the next couple of days. We expect to close this transaction on the terms previously announced as early as late 2023, following receipt of all requisite regulatory approvals in the U.S. and certain other countries where the EMEA business operates, as well as the satisfaction of other customary conditions.

2023 Financial Outlook

The company announced its full-year 2023 financial outlook which is detailed below:

Investor Call

Lumen's management team will host a conference call at 5:00 p.m. ET today, Feb. 7, 2023. The conference call will be streamed live over the Lumen website at ir.lumen.com. Additional information regarding fourth quarter 2022 results, including the presentation materials management will review during the conference call, will be available on the Investor Relations website prior to the call. If you are unable to join the call via the web, the call can be accessed live at +1 877-283-5145 (U.S. Domestic) or +1 312-281-1201 (International).

A telephone replay of the call will be available beginning at 8:00 p.m. ET on Feb. 7, 2023, and ending May 8, 2023, at 8:00 p.m. ET. The replay can be accessed by dialing +1 800-633-8284 (U.S. Domestic) or +1 402-977-9140 (International), reservation code 22024860. A webcast replay of the call will also be available on our website beginning at 8:00 p.m. ET on Feb. 7, 2023, and ending May 8, 2023, at 8:00 p.m. ET.

About Lumen Technologies and the People of Lumen:

Lumen Technologies Inc. (NYSE: LUMN) is guided by our belief that humanity is at its best when technology advances the way we live and work. With approximately 400,000 route fiber miles and serving customers in more than 60 countries, we deliver the fastest, most secure platform for applications and data to help businesses, government and communities deliver amazing experiences.

Learn more about the Lumen network, edge cloud, security, communication and collaboration solutions and our purpose to further human progress through technology at news.lumen.com, LinkedIn: /lumentechnologies, Twitter: @lumentechco, Facebook: /lumentechnologies, Instagram: @lumentechnologies and YouTube: /lumentechnologies. Lumen and Lumen Technologies are registered trademarks of Lumen Technologies LLC in the United States. Lumen Technologies LLC is a wholly-owned affiliate of Lumen Technologies, Inc.

Forward-Looking Statements

Except for historical and factual information, the matters set forth in this release and other of our oral or written statements identified by words such as "estimates," "expects," "anticipates," "believes," "plans," "intends," "will," and similar expressions are forward-looking statements as defined by the federal securities laws, and are subject to the "safe harbor" protections thereunder. These forward-looking statements are not guarantees of future results and are based on current expectations only, are inherently speculative, and are subject to a number of assumptions, risks and uncertainties, many of which are beyond our control. Actual events and results may differ materially from those anticipated, estimated, projected or implied by us in those statements if one or more of these risks or uncertainties materialize, or if underlying assumptions prove incorrect. Factors that could affect actual results include but are not limited to: the effects of intense competition from a wide variety of competitive providers, including decreased demand for our more mature service offerings and increased pricing pressures; the effects of new, emerging or competing technologies, including those that could make our products less desirable or obsolete; our ability to successfully and timely attain our key operating imperatives, including simplifying and consolidating our network, simplifying and automating our service support systems, attaining our Quantum Fiber buildout plans, strengthening our relationships with customers and attaining projected cost savings; our ability to safeguard our network, and to avoid the adverse impact of possible cyber-attacks, security breaches, service outages, system failures, or similar events impacting our network or the availability and quality of our services; the effects of ongoing changes in the regulation of the communications industry, including the outcome of legislative, regulatory or judicial proceedings relating to content liability standards, intercarrier compensation, universal service, service standards, broadband deployment, data protection, privacy and net neutrality; our ability to generate cash flows sufficient to fund our financial commitments and objectives, including our capital expenditures, operating costs, debt repayments, pension contributions and other benefits payments; our ability to effectively retain and hire key personnel and to successfully negotiate collective bargaining agreements on reasonable terms without work stoppages; changes in customer demand for our products and services, including increased demand for high-speed data transmission services; our ability to successfully maintain the quality and profitability of our existing product and service offerings and to introduce profitable new offerings on a timely and cost-effective basis; our ability to successfully and timely implement our corporate strategies, including our deleveraging and buildout strategies; our ability to successfully and timely consummate the pending divestiture of our European, Middle Eastern and African business, to successfully and timely realize the anticipated benefits from that divestiture and our divestitures completed in 2022, and to successfully operate and transform our retained business after such divestitures; changes in our operating plans, corporate strategies, or capital allocation plans, whether based upon changes in our cash flows, cash requirements, financial performance, financial position, market or regulatory conditions, or otherwise; the impact of any future material acquisitions or divestitures that we may transact; the negative impact of increases in the costs of our pension, healthcare, post-employment or other benefits, including those caused by changes in markets, interest rates, mortality rates, demographics or regulations; the potential negative impact of customer complaints, government investigations, security breaches or service outages impacting us or our industry; adverse changes in our access to credit markets on favorable terms, whether caused by changes in our financial position, lower credit ratings, unstable markets or otherwise; our ability to meet the terms and conditions of our debt obligations and covenants, including our ability to make transfers of cash in compliance therewith; our ability to maintain favorable relations with our security holders, key business partners, suppliers, vendors, landlords and financial institutions; our ability to timely obtain necessary hardware, software, equipment, services, governmental permits and other items on favorable terms; our ability to meet evolving environmental, social and governance ("ESG") expectations and benchmarks, and effectively communicate and implement our ESG strategies; our ability to collect our receivables from, or continue to do business with, financially-troubled customers; our ability to continue to use or renew intellectual property used to conduct our operations; any adverse developments in legal or regulatory proceedings involving us; changes in tax, pension, healthcare or other laws or regulations, in governmental support programs, or in general government funding levels, including those arising from recently enacted legislation promoting broadband development; our ability to use our net operating loss carryforwards in the amounts projected; the effects of changes in accounting policies, practices or assumptions, including changes that could potentially require additional future impairment charges; continuing uncertainties regarding the impact that COVID-19 and its aftermath could have on our business, operations, cash flows and corporate initiatives; the effects of adverse weather, terrorism, epidemics, pandemics, rioting, vandalism, societal unrest, or other natural or man-made disasters or disturbances; the potential adverse effects if our internal controls over financial reporting have weaknesses or deficiencies, or otherwise fail to operate as intended; the effects of changes in interest rates and inflation; the effects of more general factors such as changes in exchange rates, in operating costs, in public policy, in the views of financial analysts, or in general market, labor, economic or geopolitical conditions; and other risks referenced from time to time in our filings with the U.S. Securities and Exchange Commission. You are cautioned not to unduly rely upon our forward-looking statements, which speak only as of the date made. We undertake no obligation to publicly update or revise any forward-looking statements for any reason, whether as a result of new information, future events or developments, changed circumstances, or otherwise. Furthermore, any information about our intentions contained in any of our forward-looking statements reflects our intentions as of the date of such forward-looking statement, and is based upon, among other things, regulatory, technological, industry, competitive, economic and market conditions, and our related assumptions, as of such date. We may change our intentions, strategies or plans without notice at any time and for any reason.

Reconciliation to GAAP

This release includes certain historical and forward-looking non-GAAP financial measures, including but not limited to Modified Revenue, Modified Adjusted Revenue, Adjusted EBITDA, Modified Adjusted EBITDA, Free Cash Flow, Unlevered Cash Flow, and adjustments to GAAP and non-GAAP measures to exclude the effect of Special Items. This release also includes certain modified historical information, none of which has been prepared in accordance with Regulation S-X promulgated by the U.S. Securities and Exchange Commission.

In addition to providing key metrics for management to evaluate the company's performance, we believe these above-described measurements assist investors in their understanding of period-to-period operating performance and in identifying historical and prospective trends.

Reconciliations of non-GAAP financial measures to the most comparable GAAP measures are included in the attached financial schedules. Reconciliation of modified historical information appearing herein and additional non-GAAP historical financial measures that may be discussed during the call described above, along with further descriptions of non-GAAP financial measures, will be available in the Investor Relations portion of the company's website at http://ir.lumen.com. Non-GAAP measures are not presented to be replacements or alternatives to the GAAP measures, and investors are urged to consider these non-GAAP measures in addition to, and not in substitution for, measures prepared in accordance with GAAP. Lumen may present or calculate its non-GAAP measures differently from other companies.