Lumen(US:LUMN)2025-10-30 20:20Financial Performance - For the three months ended September 30, 2025, consolidated operating revenue decreased by $134 million (4%) to $3,087 million compared to $3,221 million for the same period in 2024[200]. - Operating expenses for the three months ended September 30, 2025, increased by $108 million (3%) to $3,203 million compared to $3,095 million for the same period in 2024[201]. - The net loss for the three months ended September 30, 2025, was $621 million, compared to a net loss of $148 million for the same period in 2024, resulting in a basic loss per share of $0.62[199]. - The Business segment revenue for the three months ended September 30, 2025, was $2,456 million, a decrease of $81 million (3%) from $2,537 million in the same period in 2024[200]. - The Mass Markets segment revenue for the three months ended September 30, 2025, was $631 million, down $53 million (8%) from $684 million in the same period in 2024[200]. - Total operating revenue decreased to $3,087 million for the three months ended September 30, 2025, down from $3,221 million in 2024, with the Business segment revenue decreasing by $81 million[220]. - Business segment adjusted EBITDA was $1,108 million for the three months ended September 30, 2025, representing a 1% increase compared to the same period in 2024[221]. - Total segment adjusted EBITDA was $347 million for the three months ended September 30, 2025, representing 55% of segment revenue, compared to 52% for the same period in 2024[227]. Expenses and Costs - The company reported a total other expense of $697 million for the three months ended September 30, 2025, compared to $298 million for the same period in 2024[199]. - Cost of services and products increased by $8 million and $14 million for the three and nine months ended September 30, 2025, compared to the same periods in 2024, primarily due to a $41 million increase in employee-related expenses[203]. - Selling, general and administrative expenses increased by $133 million for the three months ended September 30, 2025, mainly due to a $120 million increase in professional fees and legal expenses[204]. - Total other expense, net increased to $697 million for the three months ended September 30, 2025, compared to $298 million in 2024, primarily due to a net loss on early retirement of debt[213]. - Depreciation expense decreased by $31 million for the three months ended September 30, 2025, mainly due to the discontinuation of depreciation for certain assets[207]. Cash Flow and Liquidity - The company held cash and cash equivalents of $2.4 billion as of September 30, 2025, with approximately $722 million of borrowing capacity available under its Revolving Credit Facilities[230]. - The company anticipates that its cash and cash equivalents will provide sufficient liquidity to meet cash requirements for at least the next 12 months[234]. - Net cash provided by operating activities increased by $531 million for the nine months ended September 30, 2025, compared to the same period in 2024[267]. - Net cash used in investing activities increased by $670 million for the nine months ended September 30, 2025, primarily due to increased capital expenditures[269]. - Net cash used in financing activities decreased by $246 million for the nine months ended September 30, 2025, due to higher net proceeds from long-term debt issuance[270]. Debt and Financing - The company had $13.9 billion of outstanding consolidated secured indebtedness and $4.1 billion of outstanding consolidated unsecured indebtedness as of September 30, 2025[244]. - Future debt transactions are planned to refinance a substantial portion of maturing debt, subject to market conditions[249]. - The company has engaged in various debt refinancing transactions to improve its financial flexibility and reduce consolidated indebtedness[252]. - On May 21, 2025, the company entered into an agreement to sell its Mass Markets fiber-to-the-home business for $5.75 billion in cash, expected to reduce interest expense by approximately $300 million annually[233]. - Interest expense decreased by $32 million for the three months ended September 30, 2025, attributed to a decrease in the average interest rate from 7.85% to 6.80%[215]. Market Risks and Strategies - The company highlighted significant market risks related to liquidity and capital resources[282]. - The discussion included quantitative and qualitative disclosures about market risk factors affecting performance[282]. - The company emphasized the importance of monitoring market conditions to mitigate potential risks[282]. - Future strategies will focus on enhancing capital management to address market volatility[282]. - The company plans to implement new risk assessment models to better predict market fluctuations[282]. - There was a mention of ongoing evaluations of market trends to inform investment decisions[282]. - The company aims to strengthen its financial position by optimizing resource allocation in response to market risks[282]. - The management reiterated the commitment to transparency in disclosing market risk factors[282]. - The company is exploring partnerships to enhance its market risk management capabilities[282]. - Future earnings guidance will incorporate potential impacts of identified market risks[282]. Employee and Operational Insights - The company had approximately 24,000 employees as of September 30, 2025[186]. - The company is experiencing operational challenges due to inflation and supply shortages, but these have not materially impacted financial performance to date[189]. - The company aims to expand its network capacity through its AI backbone initiative and execute on its Quantum Fiber buildout plan[199]. Tax and Benefits - The effective income tax rate was 23.6% for the three months ended September 30, 2025, compared to 14.0% in 2024, influenced by a $42 million impact from goodwill impairment[219]. - The company anticipates a significant reduction in its 2025 federal income tax liability due to the OBBBA, filing a refund claim for $400 million[255]. - The company expects to pay approximately $186 million of post-retirement benefits for the full year 2025[259]. Goodwill and Impairment - Goodwill impairment charges of $628 million were recorded in the second quarter of 2025 due to the estimated fair value of the Mass Markets reporting unit being less than its carrying value[211]. - The unfunded status of the defined benefit pension plans was $645 million as of December 31, 2024[257].