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Earnings Results: Lumen posts mixed earnings and stock pulls back after Tuesday rally

Lumen Technologies Inc.’s stock pulled back in after-hours trading Tuesday after rising sharply in the regular session, as the telecommunications company posted a mixed set of results for its latest quarter.

The company generated a net loss of $8.736 billion, or $8.88 a share, whereas it logged net income of $344 million, or 34 cents a share, in the year-earlier period.

Lumen’s LUMN, +13.41% net loss for the second quarter included a $8.793 noncash goodwill impairment charge “driven by the difference between the company’s market capitalization and the carrying value, primarily in its North America business reporting unit,” Chief Executive Kate Johnson said in a release.

On an adjusted basis, Lumen earned 10 cents a share, down from 35 cents a share a year before, while the FactSet consensus was for 8 cents a share.

The company also reported adjusted earnings before interest, taxes, depreciation and amortization (Ebitda) of $1.229 billion, compared with $1.811 billion a year prior. Analysts were expecting $1.17 billion.

Revenue declined to $3.66 billion from $4.61 billion, while analysts were modeling $3.67 billion. The year-ago revenue total, however, includes $707 million in contributions from businesses that have since been divested.

“While it is early in our journey, we are driving solid revenue performance in our portfolio of next-generation growth products through intentional migration from legacy services, expanding our addressable market through network upgrades and product innovation, and improving operational excellence to better serve our customers,” Johnson said.

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Lumen generated negative free cash flow of $896 million in the latest quarter, whereas it recorded positive free cash flow of $635 million in the year-prior period and negative free cash flow of $45 million in the March quarter. The FactSet consensus was for $379 million in negative free cash flow.

Lumen’s stock was off about 3% in Tuesday’s after-hours action after it closed 13.4% higher during the day’s regular trading.

The company kept essentially all of its full-year outlook intact, only reducing the amount of stock-based compensation it expects to $65 million from $125 million. Lumen continues to expect $4.6 billion to $4.8 billion in adjusted Ebitda for 2023, along with free cash flow ranging from break-even to $200 million.

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