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  "documentTitle": "Lumen Technologies (LUMN)",
  "authorId": "53_Kerrisdale_Capital",
  "authorName": "Kerrisdale Capital",
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  "presentationDate": "2024-08-15 00:00:00",
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  "notes": "The slide argues that the long-term recurring cash benefit is negligible relative to Lumen's current EBITDA.",
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      "kind": "callout",
      "text": "meaning the long-term recurring cash benefit of $5bn in PCF contracts is less than 1% of Lumen's current annual EBITDA or $0.42/shr.",
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      "text": "net cash profit per share: $1.18",
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      "kind": "paragraph",
      "text": "provided scant detail about the timing or size of cash flows other than that they will be front-loaded. Given the large pre-payment in 2H24E without a similarly sized increase in capex or any change in cash taxes, in 2025 we expect there will be a “catch-up” in these cost items which will drive more muted free cash flow next year. We expect this will drive negative free cash flow in 2026E as costs continue while prepayments begin tailing off (see financial summary and capitalization on p. 4 of this report). The net result of this multi-billion dollar construction project is ~$800m in cash value ($0.76/shr).",
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      "text": "In summary, based on our calculations, $5bn in complex, execution risk-laden, multi-year construction projects nets only $1.18 per share in value, most of which is non-recurring in nature. Given the decrepit state of its balance sheet and the funding gap Lumen’s CFO",
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      "kind": "source-note",
      "text": "Source: Kerrisdale analysis, Lumen Form 8-K Ex 99.3 – Modeling Constructs for Indefeasible Rights of Use, 2Q24 earnings call.",
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      "kind": "table",
      "text": "Total contract value $5,000; Construction Project 4,500; O&M 500; Less: pre-tax cash costs (3,400); Total pre-tax cash contribution margin $1,600; Less: taxes (400); Total after-tax cash profit $1,200; $ per share $1.18",
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      "kind": "title",
      "text": "What Does $5bn in PCF Deals Really Mean for Lumen?",
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