FRONTIER Second QUARTER 2025 RESULTS © Frontier Communications. July 29, 2025 Safe Harbor Statement or any other performance measures derived in accordance with U.S. GAAP as measures of operating performance or cash flows as measures of liquidity. Non-GAAP financial measures have important limitations as analytical tools, and you should not consider them in isolation or as substitutes for results as reported under U.S. GAAP. This presentation includes a reconciliation of certain non-GAAP financial measures ...

Financial Performance - Frontier's fiber revenue reached $913 million, showing a year-over-year increase of 13.4%[13] - Total revenue increased by 3.4% year-over-year, reaching $1.51 billion[13] - Adjusted EBITDA increased by 6.6% year-over-year, reaching $583 million[13] - The Adjusted EBITDA margin was 38.6%[30] Fiber Expansion and Customer Growth - Frontier reached 8.1 million total fiber passings after passing 321,000 fiber locations in Q1 2025[13] - Frontier added 107,000 fiber broadband customers, resulting in a 19.3% year-over-year growth in fiber broadband customers[13] - Consumer fiber broadband ARPU grew by 4.7% year-over-year[12] Strategy and Outlook - Frontier's fiber-first strategy continues to deliver accelerating financial growth[9, 24] - The company is on track to achieve its goal of 10 million fiber passings[16] - Consumer fiber broadband revenue growth accelerated to 25.6% year-over-year[12]

Core Viewpoint - Verizon Communications is terminating its diversity, equity, and inclusion (DEI) programs amid scrutiny from the Trump administration as it seeks federal approval for its $20 billion acquisition of Frontier Communications [1][6]. Group 1: Changes to DEI Programs - Verizon is removing its "Diversity and Inclusion" website and eliminating references to DEI in employee training programs [3]. - The company plans to end workforce diversity goals and will drop a management compensation component aimed at increasing the representation of women and minorities in its U.S. workforce [4]. - Verizon's Chief Legal Officer stated that some DEI policies could be linked to discrimination, and the changes will take effect immediately [6]. Group 2: Acquisition Details - Verizon's acquisition of Frontier Communications is valued at $20 billion, including debt, and aims to increase its scale by adding 2.2 million fiber subscribers, expanding its reach to 25 million premises across 31 states and Washington, D.C. [7]. - The acquisition is described as a "strategic fit" that will enhance Verizon's competitiveness in the U.S. market [7]. - Frontier's CEO noted that the deal provides a substantial cash premium to its shareholders and creates new opportunities for employees while expanding access to reliable connectivity for more Americans [9].

Core Insights - Frontier Communications reported revenue of $1.51 billion for the quarter ended March 2025, reflecting a year-over-year increase of 3.4% and matching the Zacks Consensus Estimate, with an EPS of -$0.26 compared to $0.00 in the previous year [1] - The company achieved an EPS surprise of +21.21%, exceeding the consensus estimate of -$0.33 [1] Financial Performance - Revenue from contracts with customers was $1.50 billion, surpassing the average estimate of $1.49 billion, marking a 3.4% increase year-over-year [4] - Revenue from Fiber-Consumer services reached $589 million, exceeding the estimate of $581.81 million, with a year-over-year growth of 16.6% [4] - Revenue from Fiber-Business and Wholesale was $324 million, above the estimate of $321.75 million, representing an 8% increase year-over-year [4] Customer Metrics - Broadband customers totaled 3.15 million, slightly above the estimated 3.14 million [4] - Total Fiber Penetration stood at 30.7%, marginally higher than the estimated 30.6% [4] - Fiber-Consumer broadband customers numbered 2.35 million, exceeding the estimate of 2.34 million [4] Stock Performance - Shares of Frontier Communications have returned +1.1% over the past month, contrasting with the Zacks S&P 500 composite's -0.8% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Performance - Frontier Communications reported a quarterly loss of $0.26 per share, better than the Zacks Consensus Estimate of a loss of $0.33, compared to break-even earnings per share a year ago, representing an earnings surprise of 21.21% [1] - The company posted revenues of $1.51 billion for the quarter ended March 2025, surpassing the Zacks Consensus Estimate by 0.34%, and showing an increase from $1.46 billion year-over-year [2] Stock Performance - Frontier Communications shares have increased approximately 4.5% since the beginning of the year, contrasting with the S&P 500's decline of 6% [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is -$0.34 on revenues of $1.52 billion, and for the current fiscal year, it is -$1.34 on revenues of $6.06 billion [7] - The estimate revisions trend for Frontier Communications is currently unfavorable, resulting in a Zacks Rank 4 (Sell) for the stock, indicating expected underperformance in the near future [6] Industry Context - The Communication - Network Software industry, to which Frontier Communications belongs, is currently ranked in the bottom 13% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Financial Performance - The company reported operating income of $76 million for the three months ended March 31, 2025, a decrease of 16% from $90 million in the same period in 2024 [191]. - Total revenue for the three months ended March 31, 2025, was $1.511 billion, a 3% increase from $1.462 billion in the same period in 2024 [212]. - Consumer revenue increased by 3% to $813 million, driven by a 26% increase in fiber broadband revenue, which was attributed to higher average revenue per user (ARPU) and net customer additions [218]. - Business and wholesale revenue also rose by 3% to $682 million, primarily due to increases in data and internet services, despite declines in voice services revenue [220]. - Total operating expenses for the three months ended March 31, 2025, were $1,435 million, an increase of $63 million or 5% compared to $1,372 million in 2024 [234]. - Operating cash flows increased by $184 million to $519 million for the three months ended March 31, 2025, compared to the same period in 2024 [258]. Fiber Expansion - Frontier Communications has passed over 8 million total locations with fiber as of March 31, 2025, with a goal to reach 10 million [184]. - Fiber revenue increased by 13% to $913 million for the three months ended March 31, 2025, compared to $805 million in the prior year [214]. - The average monthly consumer fiber broadband revenue per customer (ARPU) rose by $3.03, or 5%, to $68.21 for the three months ended March 31, 2025 [209]. - Frontier added approximately 321,000 fiber passings and 107,000 fiber broadband customer net additions in the first quarter of 2025 [188]. - The company experienced a consumer customer churn rate of 1.20% for fiber broadband, an improvement from 1.24% in the prior year [205]. Capital Expenditures and Investments - Capital expenditures increased to $757 million for the three months ended March 31, 2025, compared to $666 million in the prior year [262]. - The company has negotiated payment terms with vendors, resulting in capital investment of $773 million for the three months ended March 31, 2025, including vendor financing [266]. - Cash flows used by investing activities were $756 million for the three months ended March 31, 2025, a decrease driven by $91 million in higher capital expenditures and the non-recurrence of $850 million in sales of short-term investments [261]. Debt and Liquidity - As of March 31, 2025, the company had liquidity of approximately $2,529 million, consisting of $506 million in cash and cash equivalents and available credit facilities [250]. - The working capital deficit increased to $1,516 million as of March 31, 2025, compared to $1,029 million at December 31, 2024, driven by various increases in current liabilities [256]. - As of March 31, 2025, there was $1,267 million of undrawn capacity under the $1,500 million DDTL Facility [265]. - The company assessed that operating cash flows and existing cash balances will be adequate to finance working capital requirements and other payments over the next twelve months [269]. - The financial maintenance covenant leverage ratio is set to not exceed 5.25:1.00, stepping down to 4.75:1.00 starting March 31, 2027 [281]. Pension and Employee Benefits - The company's pension plan assets increased by $42 million from $2,328 million at December 31, 2024, to $2,370 million at March 31, 2025, primarily due to market value changes and contributions [317]. - The discount rate for the company's pension benefit obligation was 5.50% as of March 31, 2025, down from 5.60% at the end of 2024 [314]. Regulatory and Compliance - The company is required to complete the CAF Phase II deployment by December 31, 2021, and could face penalties if it fails to meet certain requirements [295]. - The company was awarded approximately $371 million over ten years under the RDOF program to build gigabit-capable broadband to approximately 127,000 locations in eight states, with milestones to be met from December 31, 2025, to December 31, 2028 [297]. - The company is actively pursuing awards from the IIJA, which provides $65 billion for broadband connectivity programs, with approximately $25.5 billion allocated to states in its footprint [298]. - The company is in compliance with all covenants under its existing indentures and credit agreements as of March 31, 2025 [290]. Market and Shareholder Information - The merger agreement with Verizon is set at $38.50 per share, representing a premium of 43.7% to Frontier's 90-day volume-weighted average share price prior to market speculation [185]. - The company issued $750 million in secured fiber network revenue term notes on July 1, 2024, with a weighted average yield of approximately 7.4% [276]. - As of March 31, 2025, 90% of the company's total debt had fixed interest rates, with only $1.1 billion subject to floating rates [310]. - The annual impact of a 100 basis points increase in the SOFR would result in approximately $11 million of additional interest expense, provided that the SOFR rate exceeds the SOFR floor [311]. - The company does not maintain any off-balance sheet arrangements that would materially affect its financial statements [292].

[Executive Summary & Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Highlights) Frontier achieved record Q1 2025 revenue and Adjusted EBITDA, driven by significant fiber business growth and surpassing 8 million fiber passings, despite a net loss of $64 million - CEO Nick Jeffery highlighted the strongest start to a year yet, attributing success to continued strength in the fiber business and increasing reliance on fiber networks[3](index=3&type=chunk) - The company reached a significant milestone, expanding its fiber network to over **8 million passings**, progressing towards its goal of **10 million**[3](index=3&type=chunk)[6](index=6&type=chunk) Q1 2025 Key Financial and Operational Highlights (YoY) | Metric | Q1 2025 Value | YoY Change | | :--- | :--- | :--- | | Total Revenue | $1.51 billion | +3.4% | | Fiber Broadband Revenue | - | +24% | | Fiber Broadband Customers | - | +19.3% | | Adjusted EBITDA | $583 million | +6.6% | | Net Loss | $64 million | N/A (vs $1M income) | | Fiber Passings Added | 321,000 | - | | Total Fiber Passings | 8.1 million | - | | Consumer Fiber Broadband ARPU | $68.21 | +4.7% | [Segment Performance](index=2&type=section&id=Segment%20Performance) Both Consumer and Business/Wholesale segments grew revenue year-over-year, driven by fiber expansion, partially offset by legacy copper declines [Consumer Results](index=2&type=section&id=Consumer%20Results) Consumer revenue increased 3.3% to $813 million, fueled by a 25.6% surge in fiber broadband revenue from customer growth and higher ARPU, with improved churn Q1 2025 Consumer Segment Performance (YoY) | Metric | Q1 2025 Value | YoY Change | | :--- | :--- | :--- | | Total Consumer Revenue | $813 million | +3.3% | | Consumer Fiber Revenue | $589 million | +16.6% | | Consumer Fiber Broadband Revenue | $471 million | +25.6% | | Fiber Broadband Net Additions | 103,000 | - | | Fiber Broadband Customer Growth | - | +19.8% | | Fiber Broadband Customer Churn | 1.20% | -0.04 p.p. | [Business and Wholesale Results](index=2&type=section&id=Business%20and%20Wholesale%20Results) Business and Wholesale revenue grew 3.5% to $682 million, led by fiber revenue growth and 4,000 fiber broadband customer additions, despite increased churn Q1 2025 Business & Wholesale Segment Performance (YoY) | Metric | Q1 2025 Value | YoY Change | | :--- | :--- | :--- | | Total B&W Revenue | $682 million | +3.5% | | B&W Fiber Revenue | $324 million | +8.0% | | Fiber Broadband Net Additions | 4,000 | - | | Fiber Broadband Customer Growth | - | +11.4% | | Fiber Broadband ARPU | $99.98 | +1.6% | | Fiber Broadband Customer Churn | 1.53% | +0.21 p.p. | [Financial Position and Outlook](index=2&type=section&id=Financial%20Position%20and%20Outlook) Frontier maintained strong liquidity of ~$2.6 billion and a 4.9x net leverage ratio as of March 31, 2025, with no significant debt maturities before 2027, as its Verizon acquisition progresses [Capital Structure](index=2&type=section&id=Capital%20Structure) Frontier reported total liquidity of ~$2.6 billion and a 4.9x net leverage ratio as of March 31, 2025, with no long-term debt maturities prior to 2027 - Total liquidity of **~$2.6 billion** consists of **$0.5 billion** in cash, **$1.3 billion** in a delayed draw term loan facility, and **$0.8 billion** in a revolving credit facility[10](index=10&type=chunk) - The net leverage ratio was approximately **4.9x** as of March 31, 2025[10](index=10&type=chunk) [Pending Acquisition by Verizon](index=2&type=section&id=Pending%20Acquisition%20by%20Verizon) Frontier's definitive merger agreement with Verizon, signed September 4, 2024, is expected to close by Q1 2026 pending approvals, resulting in no financial outlook or earnings call - A definitive merger agreement was signed with Verizon on September 4, 2024[13](index=13&type=chunk) - The transaction is expected to close by the **first quarter of 2026**, subject to regulatory approvals[14](index=14&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) Unaudited Q1 2025 financials show 3.4% revenue growth to $1.51 billion, but higher expenses led to a $64 million net loss, with operating cash flow offset by capital expenditures [Statements of Operations](index=7&type=section&id=Statements%20of%20Operations) Frontier's Q1 2025 revenue increased to $1.511 billion, but operating income declined to $76 million, resulting in a $64 million net loss compared to prior year Q1 Statement of Operations Data (YoY Comparison) | Metric ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Revenue | $1,511 | $1,462 | | Total operating expenses | $1,435 | $1,372 | | Operating income | $76 | $90 | | Net income (loss) | $(64) | $1 | | Diluted EPS | $(0.26) | $0.00 | [Revenue Breakdown](index=8&type=section&id=Revenue%20Breakdown) Revenue analysis shows a clear strategic shift to fiber, with fiber revenue growing to $913 million in Q1 2025, offsetting copper declines, and Data and Internet services revenue increasing Revenue by Technology (YoY Comparison) | ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Fiber | $913 | $805 | | Copper | $582 | $641 | Revenue by Service (YoY Comparison) | ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Data and Internet services | $1,049 | $947 | | Voice services | $290 | $321 | | Video services | $74 | $94 | [Balance Sheet](index=10&type=section&id=Balance%20Sheet) As of March 31, 2025, Frontier's balance sheet showed total assets of $20.9 billion, driven by increased property, plant, and equipment, with total debt at $11.64 billion Condensed Balance Sheet Data | ($ in millions) | March 31, 2025 | Dec 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $506 | $750 | | Property, plant and equipment, net | $16,221 | $15,678 | | Total assets | $20,898 | $20,614 | | Total debt | $11,643 | $11,561 | | Equity | $4,877 | $4,941 | [Cash Flow Statement](index=11&type=section&id=Cash%20Flow%20Statement) In Q1 2025, Frontier generated $519 million in net cash from operating activities, but investing activities used $756 million, driven by capital expenditures for the fiber buildout Consolidated Cash Flow Data (YoY Comparison) | ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided from operating activities | $519 | $335 | | Net cash provided from (used by) investing activities | $(756) | $186 | | Net cash provided from (used by) financing activities | $45 | $(423) | [Key Operating Metrics](index=9&type=section&id=Key%20Operating%20Metrics) Q1 2025 operating metrics reflect a successful fiber-first strategy, with total fiber passings reaching 8.1 million and 107,000 fiber broadband customer additions, contrasting with continued copper declines [Customer Metrics](index=9&type=section&id=Customer%20Metrics) Total broadband customers grew to 3.153 million, with 59,000 net additions in Q1 2025, an acceleration from prior year, and consumer ARPU rising to $84.40 Broadband and Consumer Customer Metrics | Metric | Q1 2025 | Q4 2024 | Q1 2024 | | :--- | :--- | :--- | :--- | | Broadband customers (thousands) | 3,153 | 3,094 | 2,974 | | Broadband net additions (thousands) | 59 | 37 | 31 | | Consumer customers (thousands) | 3,232 | 3,193 | 3,140 | | Avg. monthly consumer revenue per customer | $84.40 | $83.58 | $83.65 | [Broadband Metrics](index=14&type=section&id=Broadband%20Metrics) The company's fiber buildout reached 8.1 million total passings, with strong consumer fiber net additions of 103,000 and healthy ARPU growth, contrasting with copper customer declines - Total fiber passings increased to **8.1 million** as of Q1 2025, up from **6.8 million** in Q1 2024[43](index=43&type=chunk) Broadband Net Additions (in thousands) | Segment | Technology | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | :--- | | Consumer | Fiber | 103 | 85 | | Consumer | Copper | (41) | (51) | | Business + Wholesale | Fiber | 4 | 3 | | Business + Wholesale | Copper | (7) | (6) | Broadband ARPU | Segment | Technology | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | :--- | | Consumer | Fiber | $68.21 | $65.18 | | Consumer | Copper | $62.39 | $56.16 | | Business + Wholesale | Fiber | $99.98 | $98.40 | [Non-GAAP Financial Measures & Reconciliations](index=3&type=section&id=Non-GAAP%20Financial%20Measures%20%26%20Reconciliations) Frontier uses non-GAAP measures like Adjusted EBITDA, operating free cash flow, and net leverage ratio to evaluate performance, with Q1 2025 Adjusted EBITDA at $583 million, and provides detailed reconciliations - Management uses non-GAAP measures like EBITDA, Adjusted EBITDA, operating free cash flow, and net leverage ratio to analyze underlying financial performance, make strategic decisions, and assess cash flow generation ability[17](index=17&type=chunk) [Reconciliation of Net Income to Adjusted EBITDA](index=12&type=section&id=Reconciliation%20of%20Net%20Income%20to%20Adjusted%20EBITDA) The company reconciled its Q1 2025 GAAP net loss of $64 million to a non-GAAP Adjusted EBITDA of $583 million, with key adjustments including depreciation, interest expense, and restructuring costs Adjusted EBITDA Reconciliation (YoY Comparison) | ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net income (loss) | $(64) | $1 | | Depreciation and amortization | 445 | 388 | | Interest expense | 200 | 199 | | Restructuring costs and other charges | 36 | 34 | | Stock-based compensation | 15 | 26 | | **Adjusted EBITDA** | **$583** | **$547** | [Reconciliation of Operating Free Cash Flow](index=12&type=section&id=Reconciliation%20of%20Operating%20Free%20Cash%20Flow) Operating free cash flow for Q1 2025 was a negative $254 million, derived from net cash from operations less capital expenditures and vendor financing, an improvement from prior year Operating Free Cash Flow Reconciliation (YoY Comparison) | ($ in millions) | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash provided from operating activities | $519 | $335 | | Capital expenditures | $(757) | $(666) | | Payment of vendor financing | $(16) | $(363) | | **Operating free cash flow** | **$(254)** | **$(694)** | [Forward-Looking Statements](index=5&type=section&id=Forward-Looking%20Statements) This press release contains forward-looking statements concerning future events, including the pending merger with Verizon, financial performance, and strategic initiatives, subject to numerous risks and uncertainties - The report includes forward-looking statements regarding future performance, strategic plans, and the proposed merger with Verizon[26](index=26&type=chunk) - A wide range of factors could affect future results, including risks related to the merger's completion, regulatory approvals, economic conditions, competition, and the company's ability to execute its fiber buildout plan[26](index=26&type=chunk)

Core Insights - Frontier Communications reported revenue of $1.51 billion for the quarter ended December 2024, reflecting a year-over-year increase of 5.6% [1] - The company's EPS was -$0.47, a decline from $0.07 in the same quarter last year, indicating a significant EPS surprise of -147.37% compared to the consensus estimate of -$0.19 [1] Financial Performance - Revenue exceeded the Zacks Consensus Estimate of $1.47 billion by 2.52% [1] - Revenue from contracts with customers was $1.49 billion, surpassing the average estimate of $1.46 billion, with a year-over-year change of +5.8% [4] - Revenue from video services was $79 million, down 18.6% compared to the previous year [4] Customer Metrics - Broadband customers totaled 3.09 million, slightly below the estimated 3.11 million [4] - Fiber revenue from consumer services was $557 million, aligning closely with the estimate of $557.64 million, representing a year-over-year increase of 15.1% [4] - Broadband net adds for business and wholesale fiber were 5 thousand, exceeding the average estimate of 4.6 thousand [4] Market Performance - Shares of Frontier Communications returned -0.1% over the past month, while the Zacks S&P 500 composite increased by 2.6% [3] - The stock currently holds a Zacks Rank 2 (Buy), suggesting potential outperformance in the near term [3]

Financial Performance - Frontier Communications reported a quarterly loss of $0.47 per share, which was worse than the Zacks Consensus Estimate of a loss of $0.19, marking an earnings surprise of -147.37% [1] - The company posted revenues of $1.51 billion for the quarter ended December 2024, exceeding the Zacks Consensus Estimate by 2.52% and showing an increase from $1.43 billion year-over-year [2] - Over the last four quarters, Frontier Communications has surpassed consensus revenue estimates four times, but has only exceeded EPS estimates once [2] Stock Performance and Outlook - Frontier Communications shares have increased by approximately 2.9% since the beginning of the year, compared to the S&P 500's gain of 4.5% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the upcoming quarter is -$0.27 on revenues of $1.49 billion, and for the current fiscal year, it is -$1.11 on revenues of $5.98 billion [7] Industry Context - The Communication - Network Software industry, to which Frontier Communications belongs, is currently ranked in the top 16% of over 250 Zacks industries, indicating a favorable outlook for the sector [8] - Empirical research suggests a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5] - The favorable estimate revisions trend ahead of the earnings release has resulted in a Zacks Rank 2 (Buy) for Frontier Communications, suggesting that the shares are expected to outperform the market in the near future [6]

Revenue Growth and Customer Metrics - Frontier Communications reported a revenue growth of 3% year-over-year, with fiber revenue increasing by 14% to $3.402 billion, while copper revenue declined by 8% to $2.471 billion[220]. - The company achieved fiber broadband customer growth of 19%, adding 385,000 net fiber broadband customers, resulting in a total of approximately 2.249 million consumer fiber broadband customers[204]. - The total number of broadband customers increased by 2% to 3.193 million, driven by net additions of fiber broadband customers[215]. - Consumer revenue increased by 2% to $3,163 million, driven by growth in fiber data and value-added services, despite declines in voice and video services[227]. - Business and wholesale revenue rose by 5% to $2,710 million, primarily due to increases in fiber broadband and network access services[225]. Financial Performance - Total revenue for the year ended December 31, 2024, was $5,937 million, a 3% increase from $5,751 million in 2023[223]. - Operating income decreased to $353 million for the year ended December 31, 2024, down from $492 million in 2023, primarily due to declines in voice and video services revenue[205]. - Total operating expenses increased by 6% to $5,584 million, with significant increases in depreciation and amortization expenses by 15%[240]. - Interest expense rose by $151 million, or 23%, to $804 million, driven by a higher debt balance[253]. - Cash flows from operating activities increased by $277 million to $1,621 million for the year ended December 31, 2024, primarily due to changes in working capital[262]. Merger and Acquisition - The company entered into a Merger Agreement with Verizon, with Verizon set to acquire Frontier for $38.50 per share, representing a 43.7% premium[202]. - The company expects to close the merger with Verizon by the first quarter of 2026, pending regulatory approvals[202]. Cost Savings and Efficiency - Frontier achieved $597 million in gross annualized cost savings since 2021, exceeding its initial target of $250 million[204]. - The company anticipates that its operating cash flows and existing cash balances will be sufficient to meet its working capital and capital expenditure needs over the next twelve months[271]. Capital Expenditures and Investments - Cash flows used by investing activities decreased to $1,681 million in 2024 from $2,556 million in 2023, attributed to a $428 million reduction in capital expenditures[265]. - Capital expenditures for 2024 were $2,783 million, down from $3,211 million in 2023, with a shift in capital payments classified as financing activities[266]. Debt and Liquidity - As of December 31, 2024, the company had liquidity of approximately $2,910 million, including cash and cash equivalents of $750 million[255]. - The company has total long-term debt obligations of $11,569 million, with interest obligations of $3,748 million, and total future contractual obligations amounting to $15,987 million[291]. - The company has $1,500 million in DDTL Facility and $925 million in Revolving Facility available for liquidity, with $265 million reserved for letters of credit[269]. Pension and Benefit Obligations - The unfunded benefit obligation for the company's pension and other postretirement benefit plans was $630 million as of December 31, 2024, with cash contributions of $171 million made during the year[309]. - The company’s expected long-term rate of return on pension plan assets was adjusted to 6.65% for the period from October 1, 2024, to December 31, 2024, down from 7.50%[312]. - The company’s actual return on pension plan assets for the year ended December 31, 2024, was a gain of 5%[312]. Regulatory and Compliance - As of December 31, 2024, the company was in compliance with all covenants under existing indentures and the Amended and Restated Credit Agreement[287]. - The financial maintenance covenant leverage ratio is set to not exceed 5.25:1.00 starting June 30, 2024, with a step-down to 4.75:1.00 beginning March 31, 2027[280]. Market and Risk Management - The company does not hold or issue derivative instruments for trading purposes, indicating a conservative approach to market risk management[318]. - The company has no significant equity security investments outside of its pension plan assets, limiting its exposure to equity price risk[324]. - The company aims to limit the impact of interest rate changes on earnings and cash flows while lowering overall borrowing costs[320].