Greetings, and welcome to Lumen Technologies' Third Quarter 2024 Earnings Call. After the speakers' remarks, there will be a question-and-answer session. [Operator Instructions] And as a reminder, this conference is being recorded. I would now like to turn the conference over to Jim Breen, Senior Vice President, Investor Relations. Jim, please go ahead.

Good afternoon, everyone, and thank you for joining Lumen Technologies' third quarter 2024 earnings call. On the call today are Kate Johnson, President and Chief Executive Officer; and Chris Stansbury, Executive Vice President and Chief Financial Officer. Before we begin, I need to call your attention to our Safe Harbor Statement on slide one of our third quarter 2024 presentation, which notes that this conference call may include forward-looking statements subject to certain risks and uncertainties. All forward-looking statements should be considered in conjunction with the cautionary statements and the risk factors in our SEC filings. We will be referring to certain non-GAAP financial measures reconciled to the most comparable GAAP measures, which can be found in our earnings press release. In addition, certain metrics discussed today exclude costs for special items as detailed in our earnings materials, which can be found in our Investor Relations section of our Lumen website. With that, I'll turn the call over to Kate.

Good afternoon, everyone, and thanks for joining. Lumen's third quarter headline is this: the transformation is happening, we are making progress in our journey to turn Lumen into a digital network services company with simple and modern product offerings, infrastructure, and operations. We are pursuing two major growth factors: building the AI backbone and cloudifying telco, and has made material progress with each. With that said, and as expected, our financial performance still reflects the secular headwinds on our legacy revenues. We are also investing heavily in transformation programs, while running the core business, which weighs heavily on our EBITDA results. And we have fully recognized we have a long way to go on this journey, and we understand that our current financial results coupled with the fact that telcos and the industry are not talking about a turnaround, making it difficult to imagine long-term success for Lumen. But our team sees a clear path to turn this company around. We have a plan to take cost out, de-leverage our balance sheet, and drive growth by using our asset and intellectual property to give enterprise customers new value in a multi-cloud hybrid architecture environment. All of this will take time to execute, and it will take time to show up in our financials. But the path is real, and today I want to share more on the opportunity ahead, and what we have accomplished so far. I'll be covering three topics. One, how we are continuing to drive operational efficiency with sales growth and higher customer sat in our core business to ensure we maximize cash generation, customer life and value, and cost out. Number two, how Lumen is building the backbone to the AI economy, adding more than $3 billion in incremental private connectivity fabric sales in partnership with…

Thanks, Kate. Lumen continues to move forward along its path to transforming the business. And in the third quarter, we've taken additional steps towards achieving that goal. We signed over $3 billion in incremental PCF deals as we continue to be the partner of choice in building the trusted networks for AI. And we successfully executed a debt exchange, churning out over $800 million in 2026 through 2029 maturities to 2032. And we also, given our confidence in the free cash flow generation, contributed $170 million to our pensions in the quarter, bringing us to nearly 90% funded. As Kate discussed, we are now at over $8 billion in new PCF sales since June. Our customers have validated Lumen's unique position to build the backbone of the AI economy. While we will not be reporting on specific PCF sales every quarter, we chose to highlight the over $3 billion today for three reasons. First, we're incredibly proud of our team for how quickly they've been able to capture what we believe is a once-in-a-generation market opportunity. We have the right assets and the right people to build the trusted networks for AI. Second, given the incremental size of this over $3 billion, it will positively impact our 2024 guidance for free cash flow, which I will update you on shortly. And lastly, the PCF sales we're announcing today look similar in scope to the previous $5 billion largely sold on existing routes. Future PCF sales will also include new routes with a diverse set of enterprise customers. Given the complexity of these builds, these discussions are ongoing and will take place over several quarters. In the future, we will provide updates to the extent PCF sales have a material impact on our financial guidance. We introduced PCF sales last quarter…

Thanks, Chris. I know what we're saying is different than what everyone else in the industry is saying. It's going to take some time for the growth vectors I talked about to overcome the secular headwinds and show up in our financials, but we're confident that our plans will achieve exactly that. And we appreciate you taking the time to understand our story. With that, operator, we're ready for questions.

Thank you. [Operator Instructions] Your first question comes from the line of Michael Rollins with Citi. Your line is open.

Thanks, and good afternoon. I wanted to just ask on some of the PCF disclosures. There were three new customer announcements over the last few weeks. Did those specifically relate to these new sales in this quarter, or did that relate to the prior initial $5 billion? And then, Kate, you mentioned at the beginning of the call some details, where you're seeing improvements in the business sales. I'm just curious where that's coming from. Can you give us maybe an update on the marketing and the distribution? And are these PCF sales also providing you with a magnet to get additional wins from the hyperscale customers? Thanks.

Yes, for sure. So, thanks, Mike. Basically the four customer stories that we told come from the $8.5 billion in total, and we are not going to differentiate between buckets. But they are a magnet very much so. When you get all these clouds in the bag, you've got yourself in an ecosystem. You couple that with a digital platform to make it easy to consume the services that you're running on that infrastructure, and you got something pretty special. It's different than what everybody else is doing. We've got the cash to do it. So, we are super excited about that. Regarding the uptick in IP and waves, particularly at the higher capacity levels, it's purely an indication that our customers are recognizing a need for expanded networks, because of the [workloads] (ph) we are running. We don't have specific data to say it's all AI. That is a conversation and the signals we are getting from the conversations that we are having with our customers. And so, we think it fits perfectly in line with that trajectory we talked about. First, Big Tech builds the networks in the AI models and trains them. The second step is these customers are saying and using these models to transform our business, and I'm having a massive uptick in my own networking needs. I think we have realized that every AI strategy needs a network strategy, and customers are coming to Lumen, because we've become a thought leader.

Thanks. Next question, please.

Your next question comes from the line of Sebastiano Petti with J.P. Morgan. Your line is open.

Hi, thank you. Quick housekeeping on the incremental PCF announcements, should we think about that broadly as having a similar timeline to what was discussed last quarter as you're thinking about contribution in the IRU constructs that you laid out last time? I know you kind of said, they're similar to the last deal, but just trying to think about timing as they kind of come on. It does seem as though part of that cash was probably reflected in the free cash flow upgrade, just want to -- just housekeeping there --

Yes. I'm sorry. Go ahead.

Oh, no, go ahead, Chris, and then I can follow-up.

Yes. You are exactly right. If you just look at the shape of those deals, the incremental deals that we signed this quarter, in terms of the margins, the cash flows, how well that will work, the timing, it looks very similar to what we did on the $5 billion. So, I think that's a good way to model it.

Okay, that's helpful. And then, thinking about, I mean, just you did guide to the lower end of the 2024, your guidance range, does it imply a pretty decent acceleration sequentially even to get to that point? Anything specifically that we should be thinking about there as it pertains to just maybe costs that's coming online, or yes, anything that we should be thinking about from a timing perspective? Thank you.

Yes. It's really more, I would say, the seasonality, like that we see in the summer months. We obviously have more construction, maintenance, higher energy costs, and that abates somewhat in the fourth quarter. We also made some intentional investments in the quarter to help accelerate the work that we need to do to go capture the $1 billion. And so, when you look at the timing of those swings, that's what gives us confidence in delivering on the lower end of the guidance for the year.

Thank you.

The next question comes from Batya Levi with UBS. Your line is open.

Great, thank you. In terms of the incremental PCF sales that you signed, should we assume that they're mostly big tech, or are you starting to see a little bit of enterprise demand as well? And just to confirm, I think you mentioned that this new mix will be on the existing constructs that you're building for the original PCF deal. Does that mean the CapEx requirements would be pretty much included in the original deal? And how should we think about the prepaid revenue mix of the incremental sales? Thank you.

Well, I'll cover the first part. You cover the second part, Chris.

Yes.

So, the customer mix, we shared last quarter that it's more than 15 customers were in these tranches. We had some repeat business. We had some new business. So, it's a mix. Predominantly, those customers are building AI models. And if you look at some of the logos that we shared that are standing side by side with us going long in our strategy, it's all three clouds and a large social platform. And what those companies are reporting are massive infrastructure investments to build out the infrastructure for AI. And they're coming to Lumen. That's the story. The second piece of the next wave is really enterprises. And they're not buying at the same size because they're not planning on commercializing their AI models for the most part. They're using to transform their own business, and may be, some of their own products and services that they offer their customers. So, it's not the same size and build-out as the hyperscalers and the social platforms.

Yes. And on the second piece of the question, Batya, I would say, so of the total kind of $12 billion opportunity set, the $8.5 billion that we've talked about today that we secured to-date really does look the same. So, I would say that the same ratio of CapEx to sales value, the amount that's recurring versus the amount that's upfront, I would use those same parameters that we shared last quarter. What you see in terms of the impact for this year is just timing of cash flows, where given the time of year those were signed, we do have some inflows coming this year. But we'll incorporate a lot of that CapEx, obviously, in the next year's guidance when we give 2025 guidance. I think the important thing is that as we move forward from here, as we've said at a number of investor conferences, the second-half of that $7 billion opportunity are new networks, just like we built the difference is they're on new routes rather than existing routes. Those economics will look different. We're in the middle of multiple conversations with customers around that. And as we get better cost estimation around that, we'll update guidance and give you guys more clarity. But that'll probably be something that takes a few quarters until we have that locked down.

Got it. Thank you.

Next question, please.

The next question is from Jim Schneider with Goldman Sachs. Your line is open.

Good afternoon. Thanks for taking my question. I was wondering if you could maybe just clarify on the incremental $3 billion of the $7 billion you talked about. Does that mean that there's $4 billion of pipeline left to go, as you mentioned, or is there an incremental pipeline above and beyond the first $7 billion that you had seen before to sort of extend that beyond the $12 billion total pipeline? And then, maybe as a second question, can you maybe just kind of comment on your mass market business? And given the amount of deal activity there, maybe clarify whether you're seeing any kind of firm indications of interest and potential interest in acquiring that asset? Thank you.

Sure, Jim. So, really, just so we're all on the same page, in the $7 billion of opportunity, we said today that we had secured over $3 billion of that. So, let's just call that roughly half. Of the remainder, that's really new routes, as I just mentioned in my previous answer, that's going to take multiple quarters. Now, there continues to be customer interest in not just new routes, but existing routes. We're not going to continue to update pipeline, because it really is now normal course of business. And we want to be in that motion. The entire point of talking about the $5 billion and the $7 billion was to alert the market with points of validation that what we'd been saying earlier this year was, in fact, true. This is a significant opportunity. It remains a significant opportunity. And we'll report against it. So, you're going to see us get into a cadence of communicating updates really as it impacts guidance because of where we are in the process. Now on the consumer side, I guess it's just a few thoughts. First, I want to emphasize the great work by the team. And we're not the only ones that notice that. The rest of the world is starting to notice what this team is doing on execution as it relates to enablements and penetration. And we couldn't be happier with the work they're doing. Now, we've also said a couple of things, right? We have said for years now that this was a space that should and would eventually consolidate. And I think we're starting to see that happen today. And we've also said that we've got two great businesses in our enterprise business and our consumer business that we have a responsibility to invest in both. But that ultimately they don't strategically belong together. They've got two different return profiles. And at the right time, we would make the decision to separate them. Now, we don't have any news to report today. What I will say is, at your conference and other conferences, we've been pretty clear about what the economics of the consumer business are when you look at it between copper and fiber. So, I would leave it up to all of you to do the modeling and determine how significant an impact you think that would be on our ability to deliver to the company and focus as an enterprise company.

Thank you.

The next question comes from Jonathan Chaplin with New Street. Your line is open.

Thanks, guys. A quick follow-up on that, Chris, and then I've got just a network question as well. So, on the sort of thought process around the sale of mass markets, one thing I think you had been considering was separating out the fiber business from the rest of mass markets. And I'm wondering if you could give us just a little bit of context for how you would sort of accomplish that, the physical separation of those networks and how that would work? And then, maybe a little bit more of a difficult question, but it would be great to get some context for the network overall and how much of it has been consumed by these PCF contracts. So, from memory, I think level three initially had 12 conduits put fiber into. And we've heard that some of the conduits have been sold or had been sort of given the rights to them that have been given away in these new PCF contracts. I'm wondering how many have gone, how many you've got left. That would be -- yes, thank you.

Yes. So, I'll take the second question first. So, as we were so clear on the last earnings call, we have not sold any of these assets. These are long-term leases of conduit; sometimes just fibers, sometimes both. It's new networks on existing routes. It's building net new routes, putting new conduit in the ground, et cetera. And we strategically plan with our customers and with our own business modeling when we should, in fact, put more conduit in the ground or less conduit in the ground. And I want to call your attention to a very, very strategic partnership that we did with Corning to utilize their new fiber solutions, which as much as quadruples the capacity of our existing network. We have all the right network in all the right places. And we've got access to the best fiber in the world to continue to grow with and for our customers. Additionally, any of these long-term leases on those routes, these customers of ours, these are deep partnerships. They do not, by contract, have the right to compete with us in those spaces. So, just to demystify, because I saw a few reports that had it very, very wrong. Okay? So, these are great deals, huge cash infusion. We're super excited. They're giving us the jet fuel for this rocket. Now, Chris, do you want to talk about consumer?

Yes. And on consumer, look, I don't want to get into a lot of details here, because we don't know what we don't know. We'll, obviously, tell you what we can when we can. But I will reiterate what we have said publicly. And you need to think about the consumer business as two businesses. You have a copper business that generates most of the EBITDA and you have a fiber business that consumes most of the CapEx. So, therein, you can do the modeling. The reality is it's definitely possible to separate. Nothing is easy, obviously, but I would say we've done harder things. And I think we've proven to the market that we're not afraid of doing hard things. So, we'll see where that takes us, but that's all I can really comment on at this point.

Chris, does the [Zipty] (ph) transaction changed what you think that asset is worth?

I think the transactions that are taking place in the market more broadly are validation of our thesis that consolidation needs to happen and there's tremendous value in these assets. And we have an asset that is sizable in this consolidation play. And so, I'll let you do the math on that.

Great. Thanks, guys.

Next question, please.

The next question, thank you, comes from David Barden with Bank of America. Your line is open.

Hey guys, thank you so much for taking my questions. I appreciate it. So, two, if I could. The first is on the $3 billion. Chris, you kind of elaborated that this is going to look a lot like the $5 billion deal that you did before. And you gave us a lot of math that we could do around that $5 billion. And the net of it was that about 15% of that or $800 million of the $5 billion came in over a three to four year construction period. And then, another 5% came in over a further 20 years in terms of IRU maintenance and stuff. So, this $3 billion that's just like that would be about a $500 million cash contribution over the build period, which would be 26, 78 or so. And then, another amount that would come out over the next 20 years, and you suggested that there's a lot of wiggle room that's been created with that new deal to address balance sheet issues. And it doesn't sound like it from the numbers if they're related to the $5 billion. But what is clear is that you did get a lot of upfront money before you have to spend it from your partners. And I'm wondering if that's what you're talking about. Are you using some of this upfront payment money to do things with the balance sheet before you then come back and then spend it to go do the build on projects? So, that'd be my first question if I could.

Yes, no, and I'm glad you asked it, David. And look, I've been here two-and-a-half years. Kate's been here a couple of years. And I put it in my prepared remarks for a reason because there's a lot of stuff being written that I think is calling into question our credibility and our intentions with all of this. And I want to be exceedingly clear. We are not going to message anything to the market that is off base from what we can deliver. And so, the way I would characterize it rather than getting into specific pieces of math, number one, no, we are not spending other people's money to deliver the balance sheet and then come back and have to re-raise debt to go build these networks. We're not doing that. I want to be exceedingly clear. But the $5 billion, when we model out our transformation objectives and the investments required, which includes the investments to turn around the business and invest in our future, investments in things like pension and the payment of debt as it matures, the $5 billion close that funding gap, as we said. The $3 billion, with that box checked, the deals that constitute the $3 billion give us now more flexibility to go and reduce debt. And remember, we started all of this with cash on the balance sheet. So, you have to take all three pieces, cash on the balance sheet before the $5 billion, the $5 billion, the $3 billion. And when you look at all of those sources, we have ample cash to start to deliver the company. And you'll hear more from us on that when we can tell you, but you will see us start to deliver the company from these deals.

Got it, thank you. And then, I guess my second question is maybe a little bit of a housekeeping question. As we think about your comments about the obvious need to step up the EBITDA in the fourth quarter, at a minimum, it's got to be about a $1 billion as a jumping off point for 2025. And you've talked to us about how 2025 is going to be down. I guess, I'm trying to figure out how far it's down and I'm looking at the 4Q 2023 EBITDA. I know that there's a lot that was in there that was extracted, right? That came out because of all the deals. Could you give us a starting point for thinking about from a kind of apples and apples 4Q '23 to 4Q '24, what that might look like? And would that be an appropriate kind of trajectory to think about how the 2025 down year plays out? Thank you.

Yes, so I don't want to get too much into '25 guidance right now for obvious reasons, because we are still quantifying what we see as the need to invest in both the deals. Because by the way, we haven't said this yet, so I'll say it here. The customers that have signed these contracts, particularly in that first set, are calling us and asking us if we can go faster. And so, there's discussions around that. So, we're trying to finalize that, trying to finalize the investments required on the billion dollar takeout and what we need to do there. I would say that at this point, if I look at kind of street averages, probably a little high versus expectations for next year. But at the same time, as I've said, we want to give you '26 when we give you '25, because I think '26 will be a fairly significant inflection point, given our ability to take costs out. So, those are the things we said, and I think until we get a little further along, I don't want to go further than that, because we've got work to do.

Yes, I understand. I appreciate that. Thank you, guys.

Next question.

Your next question comes from Nick Del Deo with MoffettNathanson. Your line is open.

Hi, thanks for taking my questions. First, you shared metrics that suggest much better sales in North American Enterprise over the last several quarters. When should we start to see that flow through into the P&L in a more noticeable way? And then, Kate, you had also mentioned that you had over 400 NaaS customers signed up, which was good to hear. I mean, obviously it's early, but I guess to what degree is NaaS contributing incremental revenue? Either because those are new customers that came to you because of NaaS or they're existing customers that are spending more because of the product? Thank you.

Yes, I'll take the second one, Chris. I'll pass the first one to you. So, starting with the NaaS customers, so we're building a new digital platform and the focus is about driving adoption. That's about customer obsession. It's about what capabilities do they need? We're super lucky to have the network that we do because everything we build on that digital platform is integrated into it natively. And so, we can achieve the right economics and massive delta of capabilities compared to other offerings in the marketplace from those companies that simply don't have a network. And they frankly come to us to fill the circuits underneath their portal. And so, it's very exciting, but we're going to stay focused on getting as many customers on there as possible. I think what we're seeing is customers testing it. I'll try one port; I'll try two ports. They have a good experience. They start to add ports and that's where we start to innovate and drive additional service innovation like Lumen Defender, for example, is an opportunity for us on the horizon to sell into every NaaS customer, et cetera. That's the storyboard. How it impacts revenue? We're not going to give transparency to that for a while. We're simply not ready to. We have models that suggest that this is going to be very accretive over time, but it'll take time to get to scale. That's true for every cloud business, right? And we're using the cloud methodology to figure this thing out and plan it. So, Chris, you want to take the first question?

Yes, and so typically, Nick, we would expect to see sales convert to revenue in about a three month time window. Now, obviously, as we go forward and we're selling more digital services, that narrows, which is one of the benefits, but we're a ways from that. I would say this, in the grow bucket, as we said last quarter, we only grew 1.5% year-over-year. This quarter, it's four. So, I think that's encouraging. We have to watch that closely. So, there's not enough of a trend line there yet, but that's what we're watching. But I also want to be really realistic here. And it's a good problem to have. We have a legacy business that's enormous. It generates an enormous amount of cash, which is part of how we're able to invest in our future. That legacy business, given its size, will continue to offset the growth that we see in those grow buckets. So, I don't expect in the near term given what's going on in the industry, I've commented on what I think is some bad re-rate behavior in some cases that's driving customer disconnects. I think those things will continue and that'll continue to weigh on total revenue. But I think if we look at things like the TMPS scores, the sales, the fact that disconnects, at least in the near term, appear to be stabilizing, I hope that, that starts to show a slight improvement in the rate of decline. as we move forward over the coming quarters.

Next question, please.

The next question is from Greg Williams with TD Cowen. Your line is open.

Great, thanks for taking my questions. Back on the potential Mass Market sale, where you're splitting the fiber off from the copper, just wondering if you can provide an update on potential dis-synergies. I remember when you guys sold off the assets to Brightspeed, you mentioned that there were some dis-synergies there, but there wasn't a lot of enterprise overlap. In this situation, you'll have six or seven markets where you're heavily overlapped with enterprise and just wondering if there's going to be a greater level of dis-synergies as a result. Second question is on, just -- yes, go ahead, I'll have a follow-up.

Yes.

Yes, go ahead. I have a follow-up.

No, no. Go ahead, go ahead. Sorry.

Oh, so the second question's actually separate. It's on the North American enterprise. I noticed that the nurture bucket was actually declining faster than the harvest bucket. You mentioned that VPN and ethernet had some impact, but I found that kind of interesting and just wondering if you can help us understand that dynamic.

Yes, so a few things. So, on the first one, one of the benefits of CenturyLink and Level 3 being put together is there are routes that came from CenturyLink that, frankly, Lumen would never sell. They're going to be critical for our enterprise delivery going forward. So, I think there's -- without getting too specific, I think there's ways for us to make sure that we continue the synergies that existed before. The other thing is, is look, just like on the enterprise business where we talk about the simplification and better customer experience we can bring by unifying four networks, there's work we can do on legacy copper on the consumer side as well. So, I would say that's less of a concern at this point, but again, more to follow as we have more to share. As it relates to what happened in Q3, the reality is, is that that nurture bucket really is VPN and ethernet, nothing specific really to point to. We do have migration plays in place -- new migration plays to help move many of those VPN and ethernet customers to newer services. That has not yet hit. So, that's an area of focus we have as well. But I would say there was nothing significant that you could point to that moved the needle. I would say it's just more of a quarterly blip.

Got it, thank you.

Thanks. Next question, please.

The next question comes from Frank Louthan with Raymond James. Your line is open.

Great, thank you. Can you give us an idea of the annual revenue on wavelengths and what the margins are on those relative to your other products? And then contracts of this nature tend to see some expansion over time. They're already telling you to go faster. What do you think is the potential for some upside to this 8 billion and over what timeframe do you think you'll start to see some of that creep? Thanks.

Yes. So, on the $8 billion, nothing really to share at this point because we're still in those conversations about how much faster we can go and what that means for us. I would simply say that, again, the reasons why customers are here is because of their confidence in our ability to build these networks for them. And they are calling us to do that. They're calling us because they know of our capabilities and they know it's possible that we could go faster. So, that's something that they're willing to participate in with us. And as we know more, we'll share it. And I'm sorry, what was the first question again? It's been a long day, Frank.

Yes, the annual. Yes.

Yes, we're not at the point yet where we're disclosing individual product details. As we go forward, it's something we're looking at. I think it's a little bit early, but in time, I think we'll probably come to a different way of looking at it that we'll ultimately share with you guys. But it's too early yet. And we don't -- we don't go below, grow, nurture, harvest at this point. And that's what we're going to stick with for now.

All right. On the back of the building -- thanks.

Operator, we have time for one more question.

Thank you. Your final question will come from Eric Luebchow with Wells Fargo. Your line is open.

Great. I appreciate you squeezing me in. So, just to follow up on the mass markets business, as this -- you've alluded to on the call, a lot of recent announcements and deal activity from a lot of private overbuilders. So, as you look at your footprint today, I think you have roughly 18 million homes -- copper homes, how does some of this recent competitive activity or announcements play into how attractive you think that future growth opportunity is either by you or a partner? And how do you think about what could be built out with fiber at attractive economics?

Yes, we've -- so what we've said publicly that of those 18 million, again there's a fairly sizable piece that's rural, but there is -- 8 million home potential, I think, is reasonable. Maybe it's a little more. Maybe it's a little less. We're at 4 right now. So, the reality is that the markets where fiber is being built are really attractive markets. And if you look at the size of our fiber footprint today, and you look at the potential fiber footprint, we are the largest asset out there that has yet to be consolidated. So, those are the -- those are the facts. And we'll see where we go from here.

Appreciate that. And just a follow-up, you touched on the funding gap has closed. And now, you have more flexibility. Is that then another way of saying, you think Lumen will be kind of consistently free cash flow positive from here? I'm just trying to think about -- obviously a lot of puts and takes in the next year. You talked about EBITDA-low, or presumably CapEx a bit higher from some of these PCF sales ramping. And then, obviously kind of a wild card on PCF contributions next year, but just any kind of directional help you can provide on what free cash flow could look like?

Yes. No, it's a great question. Thank you for asking it. The answer is yes. I mean when we said that we were funding the gap and we talked about the additional things we could do with the cash that comes from the 3 billion, we will be generating positive free cash flow. Now, I want to be really clear on one thing; that's cumulative. Because of the impact of tax payments and the timing of CapEx, there could be -- and I just don't have enough information yet to be able to share it. There could be a year where maybe we're free cash flow negative. But we will have received the cash in advance of that. And we'll plan accordingly. It's just that the size of the tax payments and the quantum of the CapEx that'll get spent. It's going to be really lumpy. And it's going to be lumpy quarter to quarter. It's going to be lumpy year-to-year. But cumulatively, yes, free cash flow positive. And especially with the billion dollar cost takeout, even with the pressures on revenue, we're confident in making that statement.

Thank you.

Thanks, Eric.

This concludes the question-and-answer session. I'll turn the call to Kate for closing remarks.

Thanks everybody for digging in and taking the time to understand our unique story. I look forward to meeting you at the upcoming conferences and updating you on the significant progress we're making. See you soon.

This concludes today's conference call. We thank you for joining. You may now disconnect.