FULL YEAR HIGHLIGHTS
FOURTH QUARTER 2018 HIGHLIGHTS
CINCINNATI–(BUSINESS WIRE)–Cincinnati Bell Inc. (NYSE:CBB), today announced financial results for
the full year and fourth quarter of 2018.
Leigh Fox, President and Chief Executive Officer of Cincinnati Bell,
commented, “The success of our expanded high-quality metro fiber assets
and ability to capitalize on Cincinnati Bell’s 140+ year history as a
communications provider continues to differentiate us from our
traditional peer group.
“I am proud of our strong financial performance and our ability to
execute on our strategy of building two complementary lines of business.
Looking ahead to 2019, our strategy is consistent – we will continue to
invest where we are winning. We remain focused on efficiently expanding
our fiber network and growing our IT Solutions business while
maintaining a disciplined approach to capital allocation,” Mr. Fox
concluded.
CONSOLIDATED RESULTS
Entertainment and Communications Segment
Cincinnati Bell’s continued investment in dense metro fiber has allowed
the Company to lock in fiber density value for its shareholders as
demand for faster data speed and broadband usage continues to accelerate.
IT Services and Hardware Segment
The company’s transformation from a traditional hardware reseller to a
service oriented IT solutions provider continues to generate momentum
across its expanded North American footprint, resulting in client
diversification and the ability to capitalize on significant higher
margin service revenue opportunities.
Cash Flow and Financial Position
2019 Outlook
| 2019 | |||||||||||
| Category | Guidance Range | ||||||||||
| Revenue | $1,515M – $1,575M | ||||||||||
| Adjusted EBITDA | $400M – $410M | ||||||||||
Conference Call/Webcast
Cincinnati Bell will host a conference call on Thursday, February 14,
2019 at 9:00 a.m. (ET) to discuss its financial results for the fourth
quarter and full year of 2018. A live webcast of the call will be
available via the Investor Relations section of www.cincinnatibell.com.
Callers can dial toll-free (800) 263-0877 or toll (323) 794-2094. A
taped replay of the conference call will be available starting at 12:00
p.m. (ET) on Thursday, February 14, 2019 until Thursday, February 28,
2019 at midnight ET. To access the telephone replay, please dial
toll-free (888) 203-1112 or toll (719) 457-0820, and then enter the
conference ID number 9120332. An archived webcast will be available for
replay following the conclusion of the live event in the Investor
Relations section of www.cincinnatibell.com.
INVESTOR RELATIONS CONTACT:
Kei Lawson, 513-565-0510
E-mail: Takeitha.Lawson@cinbell.com
or
MEDIA CONTACT:
Josh Pichler, 513-565-0310
E-mail: Josh.Pichler@cinbell.com
Safe Harbor Note
This release may contain “forward-looking” statements, as defined in
federal securities laws including the Private Securities Litigation
Reform Act of 1995, which are based on our current expectations,
estimates, forecasts and projections. Statements that are not historical
facts, including statements about the beliefs, expectations and future
plans and strategies of the Company, are forward-looking statements.
Actual results may differ materially from those expressed in any
forward-looking statements. The following important factors, among other
things, could cause or contribute to actual results being materially and
adversely different from those described or implied by such
forward-looking statements including, but not limited to: those
discussed in this release; we operate in highly competitive industries,
and customers may not continue to purchase products or services, which
would result in reduced revenue and loss of market share; we may be
unable to grow our revenues and cash flows despite the initiatives we
have implemented; failure to anticipate the need for and introduce new
products and services or to compete with new technologies may compromise
our success in the telecommunications industry; our access lines, which
generate a significant portion of our cash flows and profits, are
decreasing in number and if we continue to experience access line losses
similar to the past several years, our revenues, earnings and cash flows
from operations may be adversely impacted; our failure to meet
performance standards under our agreements could result in customers
terminating their relationships with us or customers being entitled to
receive financial compensation, which would lead to reduced revenues
and/or increased costs; we generate a substantial portion of our revenue
by serving a limited geographic area; a large customer accounts for a
significant portion of our revenues and accounts receivable and the loss
or significant reduction in business from this customer would cause
operating revenues to decline and could negatively impact profitability
and cash flows; maintaining our telecommunications networks requires
significant capital expenditures, and our inability or failure to
maintain our telecommunications networks could have a material impact on
our market share and ability to generate revenue; increases in broadband
usage may cause network capacity limitations, resulting in service
disruptions or reduced capacity for customers; we may be liable for
material that content providers distribute on our networks; cyber
attacks or other breaches of network or other information technology
security could have an adverse effect on our business; natural
disasters, terrorists acts or acts of war could cause damage to our
infrastructure and result in significant disruptions to our operations;
the regulation of our businesses by federal and state authorities may,
among other things, place us at a competitive disadvantage, restrict our
ability to price our products and services and threaten our operating
licenses; we depend on a number of third party providers, and the loss
of, or problems with, one or more of these providers may impede our
growth or cause us to lose customers; a failure of back-office
information technology systems could adversely affect our results of
operations and financial condition; if we fail to extend or renegotiate
our collective bargaining agreements with our labor union when they
expire or if our unionized employees were to engage in a strike or other
work stoppage, our business and operating results could be materially
harmed; the loss of any of the senior management team or attrition among
key sales associates could adversely affect our business, financial
condition, results of operations and cash flows; our debt could limit
our ability to fund operations, raise additional capital, and fulfill
our obligations, which, in turn, would have a material adverse effect on
our businesses and prospects generally; our indebtedness imposes
significant restrictions on us; we depend on our loans and credit
facilities to provide for our short-term financing requirements in
excess of amounts generated by operations, and the availability of those
funds may be reduced or limited; the servicing of our indebtedness is
dependent on our ability to generate cash, which could be impacted by
many factors beyond our control; we depend on the receipt of dividends
or other intercompany transfers from our subsidiaries and investments;
the trading price of our common shares may be volatile, and the value of
an investment in our common shares may decline; the uncertain economic
environment, including uncertainty in the U.S. and world securities
markets, could impact our business and financial condition; our future
cash flows could be adversely affected if we are unable to fully realize
our deferred tax assets; adverse changes in the value of assets or
obligations associated with our employee benefit plans could negatively
impact shareowners’ deficit and liquidity; third parties may claim that
we are infringing upon their intellectual property, and we could suffer
significant litigation or licensing expenses or be prevented from
selling products; third parties may infringe upon our intellectual
property, and we may expend significant resources enforcing our rights
or suffer competitive injury; we could be subject to a significant
amount of litigation, which could require us to pay significant damages
or settlements; we could incur significant costs resulting from
complying with, or potential violations of, environmental, health and
human safety laws; the possibility that the expected synergies and value
creation from our acquisition of Hawaiian Telcom will not be realized or
will not be realized within the expected time period; the risk that the
businesses of the Company and Hawaiian Telcom and other acquired
companies will not be integrated successfully; the risk that unexpected
costs will be incurred; and the other risks and uncertainties detailed
in our filings with the SEC, including our Form 10-K report, Form 10-Q
reports and Form 8-K reports.
These forward-looking statements are based on information, plans and
estimates as of the date hereof and there may be other factors that may
cause our actual results to differ materially from these forward-looking
statements. We assume no obligation to update the information contained
in this release except as required by applicable law.
Use of Non-GAAP Financial Measures
This press release contains information about adjusted earnings before
interest, taxes, depreciation and amortization (Adjusted EBITDA),
Adjusted EBITDA margin, net debt, net income (loss) applicable to common
shareholders excluding special items and free cash flow. These are
non-GAAP financial measures used by Cincinnati Bell management when
evaluating results of operations and cash flow. Management believes
these measures also provide users of the financial statements with
additional and useful comparisons of current results of operations and
cash flows with past and future periods. Non-GAAP financial measures
should not be construed as being more important than comparable GAAP
measures. Detailed reconciliations of these non-GAAP financial measures
to comparable GAAP financial measures have been included in the tables
distributed with this release and are available in the Investor
Relations section of www.cincinnatibell.com.
1Adjusted EBITDA provides a useful measure of
operational performance. The company defines Adjusted EBITDA as GAAP
operating income plus depreciation, amortization, stock based
compensation, restructuring and severance related charges, (gain) loss
on sale or disposal of assets, transaction and integration costs, asset
impairments, and other special items. During the first quarter ended
March 31, 2018, the Company revised its methodology to calculate
Adjusted EBITDA to exclude stock-based compensation expense to align
more closely with its peer group. In addition, the presentation of
Adjusted EBITDA is adjusted for the amended accounting guidance adopted
by the Company on January 1, 2018 and implemented retrospectively, which
requires pension and postretirement benefit costs (excluding current
service cost component) to be reported below operating income. Adjusted
EBITDA should not be considered as an alternative to comparable GAAP
measures of profitability and may not be comparable with the measure as
defined by other companies.
Adjusted EBITDA margin provides a useful measure of operational
performance. The company defines Adjusted EBITDA margin as Adjusted
EBITDA divided by revenue. Adjusted EBITDA margin should not be
considered as an alternative to comparable GAAP measures of
profitability and may not be comparable with the measure as defined by
other companies.
2Free cash flow provides a useful measure of
operational performance, liquidity and financial health. The company
defines free cash flow as cash provided by (used in) operating
activities, adjusted for restructuring and severance related payments,
transaction and integration payments, less capital expenditures and
preferred stock dividends. Free cash flow should not be considered as an
alternative to net income (loss), operating income (loss), cash flow
from operating activities, or the change in cash on the balance sheet
and may not be comparable with free cash flow as defined by other
companies. Although the company feels there is no comparable GAAP
measure for free cash flow, the attached financial information
reconciles cash provided by operating activities to free cash flow.
Net debt provides a useful measure of liquidity and financial
health. The company defines net debt as the sum of the face amount of
short-term and long-term debt, unamortized premium and/or discount and
unamortized note issuance costs, offset by cash and cash equivalents.
Net income (loss) applicable to common shareholders excluding special
items in total and per share provides a useful measure of operating
performance. Net income (loss) applicable to common shareholders
excluding special items should not be considered as an alternative to
comparable GAAP measures of profitability and may not be comparable with
net income (loss) excluding special items as defined by other companies.
About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE: CBB)
delivers integrated communications solutions to residential and business
customers over its fiber-optic and copper networks including high-speed
internet, video, voice and data. Cincinnati Bell provides service in
areas of Ohio, Kentucky, Indiana and Hawaii. In addition, enterprise
customers across the United States and Canada rely on CBTS and OnX,
wholly-owned subsidiaries, for efficient, scalable office communications
systems and end-to-end IT solutions. For more information, please visit www.cincinnatibell.com.
The information on the Company’s website is not incorporated by
reference in this press release.
| Cincinnati Bell Inc. | |||||||||||||||||||||||||||||||||
| Consolidated Statements of Operations | |||||||||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||||||||
| (Dollars in millions, except per share amounts) | |||||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||||||||
| December 31, | Change | December 31, | Change | ||||||||||||||||||||||||||||||
| 2018 | 2017 | $ | % | 2018 | 2017 | $ | % | ||||||||||||||||||||||||||
| Revenue | $ | 399.0 | $ | 301.2 | $ | 97.8 | 32 | % | $ | 1,378.2 | $ | 1,065.7 | $ | 312.5 | 29 | % | |||||||||||||||||
| Costs and expenses | |||||||||||||||||||||||||||||||||
| Cost of services and products | 199.3 | 151.0 | 48.3 | 32 | % | 698.7 | 531.0 | 167.7 | 32 | % | |||||||||||||||||||||||
| Selling, general and administrative | 93.2 | 72.8 | 20.4 | 28 | % | 313.4 | 235.1 | 78.3 | 33 | % | |||||||||||||||||||||||
| Depreciation and amortization | 74.4 | 52.9 | 21.5 | 41 | % | 252.0 | 193.0 | 59.0 | 31 | % | |||||||||||||||||||||||
| Restructuring and severance related charges | 3.4 | 3.5 | (0.1 | ) | (3 | )% | 8.3 | 32.7 | (24.4 | ) | (75 | )% | |||||||||||||||||||||
| Transaction and integration costs | 4.3 | 4.1 | 0.2 | 5 | % | 22.5 | 18.5 | 4.0 | 22 | % | |||||||||||||||||||||||
| Operating income | 24.4 | 16.9 | 7.5 | 44 | % | 83.3 | 55.4 | 27.9 | 50 | % | |||||||||||||||||||||||
| Interest expense | 35.2 | 30.3 | 4.9 | 16 | % | 131.5 | 85.2 | 46.3 | 54 | % | |||||||||||||||||||||||
| Loss on extinguishment of debt | — | 3.2 | (3.2 | ) | n/m | 1.3 | 3.2 | (1.9 | ) | (59 | )% | ||||||||||||||||||||||
| Other components of pension and postretirement benefit plans expense | 3.0 | 7.2 | (4.2 | ) | (58 |
)% |
12.5 | 16.6 | (4.1 | ) | (25 | )% | |||||||||||||||||||||
| Gain on sale of Investment in CyrusOne | — | — | — | n/m | — | (117.7 | ) | 117.7 | n/m | ||||||||||||||||||||||||
| Other expense (income), net | 0.8 | (2.1 | ) | 2.9 | n/m | (1.6 | ) | 1.4 | (3.0 | ) | n/m | ||||||||||||||||||||||
| (Loss) income before income taxes | (14.6 | ) | (21.7 | ) | 7.1 | (33 | )% | (60.4 | ) | 66.7 | (127.1 | ) | n/m | ||||||||||||||||||||
| Income tax expense (benefit) | 15.4 | (9.8 | ) | 25.2 | n/m | 9.4 | 26.7 | (17.3 | ) | (65 | )% | ||||||||||||||||||||||
| Net (loss) income | (30.0 | ) | (11.9 | ) | (18.1 | ) | n/m | (69.8 | ) | 40.0 | (109.8 | ) | n/m | ||||||||||||||||||||
| Preferred stock dividends | 2.6 | 2.6 | — | — | 10.4 | 10.4 | — | — | |||||||||||||||||||||||||
| Net (loss) income applicable to common shareowners | $ | (32.6 | ) | $ | (14.5 | ) | $ | (18.1 | ) | n/m | $ | (80.2 | ) | $ | 29.6 | $ | (109.8 | ) | n/m | ||||||||||||||
| Basic net (loss) earnings per common share | $ | (0.65 | ) | $ | (0.34 | ) | $ | (1.73 | ) | $ | 0.70 | ||||||||||||||||||||||
| Diluted net (loss) earnings per common share | $ | (0.65 | ) | $ | (0.34 | ) | $ | (1.73 | ) | $ | 0.70 | ||||||||||||||||||||||
| Weighted average common shares outstanding | |||||||||||||||||||||||||||||||||
|
(in millions) |
|||||||||||||||||||||||||||||||||
| – Basic | 50.2 | 42.2 | 46.3 | 42.2 | |||||||||||||||||||||||||||||
| – Diluted | 50.2 | 42.2 | 46.3 | 42.4 | |||||||||||||||||||||||||||||
| Cincinnati Bell Inc. | ||||||||||||||||||||||||||||||||
|
Entertainment and Communications |
||||||||||||||||||||||||||||||||
| (Unaudited) | ||||||||||||||||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||||||||||||
| Three Months Ended | Twelve Months Ended | |||||||||||||||||||||||||||||||
| December 31, | Change | December 31, | Change | |||||||||||||||||||||||||||||
| 2018 | 2017 | $ | % | 2018 | 2017 | $ | % | |||||||||||||||||||||||||
| Income Statement | ||||||||||||||||||||||||||||||||
| Revenue | $ | 251.9 | $ | 175.0 | $ | 76.9 | 44 | % | $ | 853.4 | $ | 706.1 | $ | 147.3 | 21 | % | ||||||||||||||||
| Operating costs and expenses | ||||||||||||||||||||||||||||||||
| Cost of services and products | 113.4 | 78.9 | 34.5 | 44 | % | 388.2 | 308.6 | 79.6 | 26 | % | ||||||||||||||||||||||
| Selling, general and administrative | 47.9 | 29.6 | 18.3 | 62 | % | 148.0 | 120.1 | 27.9 | 23 | % | ||||||||||||||||||||||
| Depreciation and amortization | 63.3 | 42.7 | 20.6 | 48 | % | 210.8 | 163.7 | 47.1 | 29 | % | ||||||||||||||||||||||
| Restructuring and severance related charges | 3.1 | 0.9 | 2.2 | n/m | 3.1 | 27.6 | (24.5 | ) | (89 | )% | ||||||||||||||||||||||
| Total operating costs and expenses | 227.7 | 152.1 | 75.6 | 50 | % | 750.1 | 620.0 | 130.1 | 21 | % | ||||||||||||||||||||||
| Operating income | $ | 24.2 | $ | 22.9 | $ | 1.3 | 6 | % | $ | 103.3 | $ | 86.1 | $ | 17.2 | 20 | % | ||||||||||||||||
| Cincinnati Bell Inc. | |||||||||||||||||||||||||||
| Entertainment and Communications Revenue | |||||||||||||||||||||||||||
| (Unaudited) | |||||||||||||||||||||||||||
| (Dollars in millions) | |||||||||||||||||||||||||||
| Three Months Ended | Three Months Ended | ||||||||||||||||||||||||||
| December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||
| Cincinnati | Hawaii | Total | Cincinnati | Hawaii | Total | ||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||
| Consumer / SMB Fiber * | |||||||||||||||||||||||||||
| Data | $ | 36.5 | $ | 7.2 | $ | 43.7 | $ | 32.9 | $ | — | $ | 32.9 | |||||||||||||||
| Video | 40.5 | 11.5 | 52.0 | 38.4 | — | 38.4 | |||||||||||||||||||||
| Voice | 9.4 | 2.7 | 12.1 | 8.8 | — | 8.8 | |||||||||||||||||||||
| Other | 0.3 | 0.1 | 0.4 | 0.2 | — | 0.2 | |||||||||||||||||||||
| Total Consumer / SMB Fiber | 86.7 | 21.5 | 108.2 | 80.3 | — | 80.3 | |||||||||||||||||||||
| Enterprise Fiber | |||||||||||||||||||||||||||
| Data | 21.5 | 9.0 | 30.5 | 20.6 | — | 20.6 | |||||||||||||||||||||
| Legacy | |||||||||||||||||||||||||||
| Data | 26.8 | 16.3 | 43.1 | 31.2 | — | 31.2 | |||||||||||||||||||||
| Voice | 34.0 | 29.0 | 63.0 | 39.1 | — | 39.1 | |||||||||||||||||||||
| Other | 3.4 | 3.7 | 7.1 | 3.8 | — | 3.8 | |||||||||||||||||||||
| Total Legacy | 64.2 | 49.0 | 113.2 | 74.1 | — | 74.1 | |||||||||||||||||||||
| Total Entertainment & Communications | $ | 172.4 | $ | 79.5 | $ | 251.9 | $ | 175.0 | $ | — | $ | 175.0 | |||||||||||||||
| Twelve Months Ended | Twelve Months Ended | ||||||||||||||||||||||||||
| December 31, 2018 | December 31, 2017 | ||||||||||||||||||||||||||
| Cincinnati | Hawaii | Total | Cincinnati | Hawaii | Total | ||||||||||||||||||||||
| Revenue | |||||||||||||||||||||||||||
| Consumer / SMB Fiber * | |||||||||||||||||||||||||||
| Data | $ | 142.5 | $ | 13.5 | $ | 156.0 | $ | 126.3 | $ | — | $ | 126.3 | |||||||||||||||
| Video | 160.1 | 23.2 | 183.3 | 148.9 | — | 148.9 | |||||||||||||||||||||
| Voice | 37.4 | 5.4 | 42.8 | 33.6 | — | 33.6 | |||||||||||||||||||||
| Other | 1.2 | 0.2 | 1.4 | 1.1 | — | 1.1 | |||||||||||||||||||||
| Total Consumer / SMB Fiber | 341.2 | 42.3 | 383.5 | 309.9 | — | 309.9 | |||||||||||||||||||||
| Enterprise Fiber | |||||||||||||||||||||||||||
| Data | 84.3 | 17.7 | 102.0 | 86.1 | — | 86.1 | |||||||||||||||||||||
| Legacy | |||||||||||||||||||||||||||
| Data | 111.8 | 32.8 | 144.6 | 132.1 | — | 132.1 | |||||||||||||||||||||
| Voice | 143.4 | 58.7 | 202.1 | 165.4 | — | 165.4 | |||||||||||||||||||||
| Other | 13.5 | 7.7 | 21.2 | 12.6 | — | 12.6 | |||||||||||||||||||||
| Total Legacy | 268.7 | 99.2 | 367.9 | 310.1 | — | 310.1 | |||||||||||||||||||||
| Total Entertainment & Communications | $ | 694.2 | $ | 159.2 | $ | 853.4 | $ | 706.1 | $ | — | $ | 706.1 | |||||||||||||||
| * Represents Fioptics in Cincinnati | |||||||||||||||||||||||||||
| Cincinnati Bell Inc. | |||||||||||||||||
| Entertainment and Communications Metric Information | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| (In thousands) | |||||||||||||||||
| December 31, | September 30, | June 30, | March 31, | December 31, | |||||||||||||
| 2018 | 2018 | 2018 | 2018 | 2017 | |||||||||||||
| Cincinnati Metrics | |||||||||||||||||
| Fioptics | |||||||||||||||||
|
Data |
|||||||||||||||||
| Internet FTTP * | 201.5 | 196.8 | 192.7 | 187.8 | 179.6 | ||||||||||||
| Internet FTTN * | 37.5 | 39.8 | 42.6 | 45.0 | 47.0 | ||||||||||||
| Total Fioptics Internet | 239.0 | 236.6 | 235.3 | 232.8 | 226.6 | ||||||||||||
|
Video |
|||||||||||||||||
| Video FTTP | 115.0 | 115.6 | 118.1 | 118.1 | 116.5 | ||||||||||||
| Video FTTN | 24.9 | 25.9 | 27.0 | 28.2 | 30.0 | ||||||||||||
| Total Fioptics Video | 139.9 | 141.5 | 145.1 | 146.3 | 146.5 | ||||||||||||
|
Voice |
|||||||||||||||||
| Fioptics Voice Lines | 107.6 | 107.0 | 107.6 | 106.9 | 105.9 | ||||||||||||
|
Fioptics Units Passed |
|||||||||||||||||
| Units Passed FTTP | 472.3 | 459.1 | 449.3 | 440.5 | 431.3 | ||||||||||||
| Units Passed FTTN | 138.7 | 139.5 | 139.9 | 140.3 | 140.9 | ||||||||||||
| Total Fioptics Units Passed | 611.0 | 598.6 | 589.2 | 580.8 | 572.2 | ||||||||||||
| Enterprise Fiber | |||||||||||||||||
|
Data |
|||||||||||||||||
| Ethernet Bandwidth (Gb) | 4,565 | 4,331 | 4,133 | 4,046 | 3,919 | ||||||||||||
| Legacy | |||||||||||||||||
|
Data |
|||||||||||||||||
| DSL | 72.0 | 74.1 | 75.2 | 78.1 | 82.1 | ||||||||||||
|
Voice |
|||||||||||||||||
| Legacy Voice Lines | 226.2 | 232.7 | 240.6 | 251.4 | 262.0 | ||||||||||||
| *Fiber to the Premise (FTTP), Fiber to the Node (FTTN) | |||||||||||||||||
Contacts
Cincinnati Bell Inc.
Investor contact:
Kei
Lawson, 513-565-0510
Takeitha.Lawson@cinbell.com
Media contact:
Josh Pichler, 513-565-0310
Josh.Pichler@cinbell.com
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