FULL YEAR HIGHLIGHTS
- Revenue totaled $1,378 million
generating strong Adjusted EBITDA1 of $372 million - both in-line
with financial guidance reflecting the merger with Hawaiian Telcom
(closed on July 2, 2018)
- Operating income totaled $83 million,
up $28 million year-over-year
- Hawaiian Telcom contributed revenue of
$175 million and Adjusted EBITDA of $47 million
- Cincinnati Fioptics revenue totaled
$341 million, up 10% from a year ago
- IT Services and Hardware Adjusted
EBITDA totaled $63 million, up $24 million from the prior year
- Cash provided by operating activities
totaled $215 million, up $11 million year-over-year
- Free cash flow2 totaled $41 million, up
$13 million year-over-year
FOURTH QUARTER 2018 HIGHLIGHTS
- Revenue of $399 million and Adjusted
EBITDA of $108 million, up 3% and 2% respectively compared to the
third quarter of 2018
- Operating income totaled $24 million,
up $10 million sequentially
- Fiber to the Premise (“FTTP”) internet
net activations offset legacy declines in both Cincinnati and
Hawaii, adding 4,700 and 2,100 FTTP internet subscribers,
respectively
- Entertainment and Communications
revenue of $252 million, consistent with the prior quarter
- IT Services and Hardware revenue of
$154 million, up 9% compared to the third quarter of 2018
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
- Consolidated revenue totaled $399
million for fourth quarter of 2018 and $1,378 million for the full
year
- Operating income was $24 million in the
fourth quarter of 2018 and $83 million for the full year
- Adjusted EBITDA totaled $108 million
for the fourth quarter of 2018 and $372 million for the full
year
- Net losses of $30 million and $70
million for the fourth quarter and full year of 2018, respectively,
were due to transaction and integration costs as well as increased
interest expense due to financing the mergers with Hawaiian Telcom
and OnX
Entertainment and Communications Segment
- Entertainment and Communications
revenue totaled $252 million for the fourth quarter of 2018 and
$853 million for the full year
- Cincinnati revenue totaled $172 million
in the fourth quarter and $694 million for the full year, both down
1% from the prior year due to legacy declines, excluding the
one-time $5 million fiber build project in the second quarter of
2017
- Fioptics revenue totaled $87 million
for the fourth quarter and $341 million for the full year, up 8%
and 10%, respectively, year-over-year
- Fioptics internet subscribers totaled
239,000 at the end of the fourth quarter, up 12,400 compared to a
year ago
- Fioptics video subscribers totaled
139,900, down 6,600 year-over-year
- Fioptics is available to 611,000 homes
and businesses, or approximately 75% of Greater Cincinnati which
includes fiber to the premise ("FTTP") and fiber to the node
("FTTN")
- In 2018, we passed 41,000 new addresses
with FTTP, and now offer FTTP to 58% of Cincinnati's total
addressable market
- Hawaii revenue totaled $80 million in
the fourth quarter of 2018, consistent with the prior quarter, and
contributed $159 million since the close of the merger on July 2,
2018
- Consumer / SMB Fiber internet
subscribers totaled 65,900, up 1,900 compared to the previous
quarter
- Video subscribers were 48,800,
consistent with the prior quarter
- Consumer/SMB Fiber is available to
approximately 221,500 addresses on Oahu, covering approximately 68%
of the island
- Adjusted EBITDA was $91 million for the
fourth quarter of 2018 and $317 million for the full year, up $24
million and $40 million, respectively, due to contributions from
Hawaiian Telcom
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
- IT Services and Hardware revenue
totaled $154 million for the fourth quarter of 2018 and $551
million for the full year, up $22 million and $166 million
year-over-year respectively due to contributions from OnX and
Hawaiian Telcom
- Consulting revenue totaled $45 million
for the fourth quarter and $165 million for the full year, up $5
million and $76 million year-over-year, respectively
- Cloud revenue was $26 million in the
fourth quarter and $98 million in 2018, up $3 million and $17
million, respectively, compared to the prior year
- Communications revenue of $50 million
in the fourth quarter and $179 million for the full year, up $10
million and $18 million year-over-year, respectively
- Infrastructure Solutions revenue of $33
million in the fourth quarter and $109 million in 2018, up $4
million and $55 million, respectively
- Adjusted EBITDA was $20 million for the
fourth quarter and $63 million for the full year, up $5 million and
$24 million, respectively, including contributions from OnX
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
- Cash provided by operating activities
totaled $215 million for the full year of 2018, an increase of $11
million year-over-year
- Free cash flow totaled $41 million for
the full year of 2018, compared to $28 million a year ago
- Liquidity of $207 million as of
December 31, 2018, with no significant maturities until 2024
- Capital expenditures were $221 million
for the full year of 2018, including $44 million for Hawaiian
Telcom since the close of the merger on July 2, 2018
- Gross Net Operating Loss carryforward
of $674 million as of December 31, 2018
2019 Outlook
- Hawaiian Telcom is projected to
contribute $350 million to $360 million of revenue in 2019, growing
Adjusted EBITDA year-over-year to $95 million to $100 million
- Additional insourcing initiatives from
one of our largest customers is conservatively expected to decrease
Adjusted EBITDA by $15 million to $20 million during 2019 as
compared to the prior year
- Cincinnati Bell is providing the
following guidance for 2019, which includes the assumptions
previously described:
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, 513-565-0510E-mail:
Takeitha.Lawson@cinbell.com
or
MEDIA CONTACT:Josh Pichler, 513-565-0310E-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
CommunicationsIncome Statement
(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)
Cincinnati Bell Inc. Entertainment and
Communications Metric Information (Unaudited) (In
thousands) December 31,
September 30, 2018 2018 Hawaii Metrics
Consumer / SMB Fiber
Data
Internet FTTP * 51.6 49.5 Internet FTTN * 14.3 14.5 Total
Consumer / SMB Fiber Internet 65.9 64.0
Video
Video FTTP 33.8 33.3 Video FTTN 15.0 15.3 Total Consumer /
SMB Fiber Video 48.8 48.6
Voice
Consumer / SMB Fiber Voice Lines 30.3 29.9
Consumer / SMB Fiber
Units Passed **
Units Passed FTTP 167.0 163.6 Units Passed FTTN 73.5 73.3
Total Consumer / SMB Fiber Units Passed 240.5 236.9
Enterprise Fiber
Data
Ethernet Bandwidth (Gb) 2,091 1,948
Legacy
Data
DSL 48.7 50.4
Voice
Legacy Voice Lines 197.8 203.4 *Fiber to the Premise (FTTP),
Fiber to the Node (FTTN) ** Includes units passed for both
consumer and business on Oahu and neighboring islands.
Cincinnati Bell Inc. IT Services and Hardware Income
Statement and Metric Information (Unaudited) (Dollars
in millions) Three Months Ended
Twelve Months Ended December 31, Change
December 31, Change 2018 2017 $
% 2018 2017 $ % Income
Statement Revenue $ 153.9 $ 132.3 $ 21.6 16 % $ 550.9 $ 385.1 $
165.8 43 % Operating costs and expenses Cost of services and
products 92.6 78.0 14.6 19 % 335.7 247.0 88.7 36 % Selling, general
and administrative 41.6 39.6 2.0 5 % 152.1 98.6 53.5 54 %
Depreciation and amortization 11.0 10.1 0.9 9 % 41.0 29.1 11.9 41 %
Restructuring and severance related charges — 2.6
(2.6 ) n/m 4.9 5.1 (0.2 ) (4 )% Total
operating costs and expenses 145.2 130.3 14.9
11 % 533.7 379.8 153.9 41 % Operating
income $ 8.7 $ 2.0 $ 6.7 n/m $ 17.2 $
5.3 $ 11.9 n/m
Revenue Consulting $
45.3 $ 40.0 $ 5.3 13 % $ 165.3 $ 89.3 $ 76.0 85 % Cloud 26.2 23.5
2.7 11 % 98.0 81.0 17.0 21 % Communications 49.4 39.9 9.5 24 %
178.5 160.6 17.9 11 % Infrastructure Solutions 33.0 28.9
4.1 14 % 109.1 54.2 54.9 n/m
Total IT Services and Hardware Revenue $ 153.9 $ 132.3
$ 21.6 16 % $ 550.9 $ 385.1 $ 165.8
43 %
December 31, September 30, June 30, March
31, 2018 2018 2018 2018
Consulting Billable Resources 1039 999 926 888
Communications NaaS Locations 2257 1,101 782 564 SD - WAN
Locations 803 488 310 117 Hosted UCaaS Profiles* 239,581 223,311
192,175 178,457
* Includes Hawaii Hosted UCaaS Profiles
beginning September 30, 2018
Cincinnati Bell Inc. Net Debt (Non-GAAP)
(Unaudited) (Dollars in millions) December
31, December 31, 2018 2017
Receivables Facility $ 176.6 $ — Credit Agreement - Tranche B Term
Loan due 2024 598.5 600.0 Credit Agreement - Revolving Credit
Facility 18.0 — 7 1/4% Senior Notes due 2023 22.3 22.3 7% Senior
Notes due 2024 625.0 625.0 8% Senior Notes due 2025 350.0 350.0
Cincinnati Bell Telephone Notes 87.9 87.9 Other financing lease
arrangements 3.1 — Capital leases 73.9 82.9 Net unamortized premium
1.7 1.9 Unamortized note issuance costs (27.2 ) (22.3 )
Total debt 1,929.8 1,747.7 Less: Cash and cash equivalents
(15.4 ) (396.5 ) * Net debt (Non-GAAP) $ 1,914.4 $
1,351.2 * Includes restricted cash of $378.7 million,
which was used to fund the merger with Hawaiian Telcom that closed
on July 2, 2018.
Cincinnati
Bell Inc. Reconciliation of Net (loss) Income (GAAP) to
Adjusted EBITDA (Non-GAAP) (Unaudited) (Dollars in
millions)
Three Months Ended December 31, 2018
Entertainment & IT Services & Total
Communications Hardware Corporate
Company Net loss (GAAP) $ (30.0 ) Add: Income
tax expense 15.4 Interest expense 35.2 Other expense, net 0.8 Other
components of pension and postretirement benefit plans expense 3.0
Operating income (loss) (GAAP) $ 24.2 $ 8.7 $
(8.5 ) $ 24.4 Add: Depreciation and amortization 63.3 11.0 0.1 74.4
Restructuring and severance related charges 3.1 — 0.3 3.4
Transaction and integration costs — — 4.3 4.3 Stock-based
compensation — — 1.1 1.1
Adjusted
EBITDA (Non-GAAP) $ 90.6 $ 19.7 $ (2.7 ) $ 107.6
Adjusted EBITDA Margin (Non-GAAP) 36 % 13 % —
27 %
Three
Months Ended December 31, 2017 Entertainment & IT
Services & Total Communications
Hardware Corporate Company Net loss
(GAAP) $ (11.9 ) Add: Income tax benefit (9.8 ) Interest
expense 30.3 Loss on extinguishment of debt 3.2 Other income, net
(2.1 ) Other components of pension and postretirement benefit plans
expense 7.2
Operating income (loss) (GAAP) $
22.9 $ 2.0 $ (8.0 ) $ 16.9 Add: Depreciation and amortization 42.7
10.1 0.1 52.9 Restructuring and severance related charges 0.9 2.6 —
3.5 Transaction and integration costs — — 4.1 4.1 Stock-based
compensation — — 0.7 0.7
Adjusted
EBITDA (Non-GAAP) $ 66.5 $ 14.7 $ (3.1 ) $ 78.1
Adjusted EBITDA Margin (Non-GAAP) 38 % 11 % —
26 %
Year-over-year dollar change in Adjusted EBITDA
$ 24.1 $ 5.0 $ 0.4 $ 29.5
Year-over-year percentage
change in Adjusted EBITDA 36 % 34 % (13 )% 38 %
Cincinnati Bell Inc. Reconciliation
of Net (loss) Income (GAAP) to Adjusted EBITDA (Non-GAAP)
(Unaudited) (Dollars in millions)
Twelve Months
Ended December 31, 2018 Entertainment & IT
Services & Total Communications
Hardware Corporate Company Net loss
(GAAP) $ (69.8 ) Add: Income tax expense 9.4 Interest expense
131.5 Loss on extinguishment of debt 1.3 Other income, net (1.6 )
Other components of pension and postretirement benefit plans
expense 12.5
Operating income (loss) (GAAP) $
103.3 $ 17.2 $ (37.2 ) $ 83.3 Add: Depreciation and amortization
210.8 41.0 0.2 252.0 Restructuring and severance related charges
3.1 4.9 0.3 8.3 Transaction and integration costs — — 22.5 22.5
Stock-based compensation — — 5.6 5.6
Adjusted EBITDA (Non-GAAP) $ 317.2 $ 63.1 $
(8.6 ) $ 371.7
Adjusted EBITDA Margin
(Non-GAAP) 37 % 11 % — 27 %
Twelve Months Ended December 31, 2017
Entertainment & IT Services & Total
Communications Hardware Corporate
Company Net income (GAAP) $ 40.0 Add: Income
tax expense 26.7 Interest expense 85.2 Gain on sale of CyrusOne
(117.7 ) Loss on extinguishment of debt 3.2 Other expense, net 1.4
Other components of pension and postretirement benefit plans
expense 16.6
Operating income (loss) (GAAP) $
86.1 $ 5.3 $ (36.0 ) $ 55.4 Add: Depreciation and amortization
163.7 29.1 0.2 193.0 Restructuring and severance related charges
27.6 5.1 — 32.7 Transaction and integration costs — — 18.5 18.5
Stock-based compensation — — 5.9 5.9
Adjusted EBITDA (Non-GAAP) $ 277.4 $ 39.5 $
(11.4 ) $ 305.5
Adjusted EBITDA Margin
(Non-GAAP) 39 % 10 % — 29 %
Year-over-year dollar
change in Adjusted EBITDA $ 39.8 $ 23.6 $ 2.8 $ 66.2
Year-over-year percentage change in Adjusted EBITDA 14 % 60
% (25 )% 22 %
Cincinnati Bell
Inc. Consolidated Statements of Cash Flows
(Unaudited) (Dollars in millions)
Three Months Ended Twelve Months Ended December
31, December 31, 2018 2017 2018
2017 Cash provided by operating activities $ 91.9
$ 46.6 $ 214.7 $ 203.4 Capital
expenditures (79.9 ) (62.3 ) (220.6 ) (210.5 ) Proceeds from sale
of Investment in CyrusOne — — — 140.7 Acquisitions of businesses —
(157.4 ) (216.8 ) (167.0 ) Other, net 0.1 (0.3 ) — —
Cash used in investing activities (79.8 ) (220.0 )
(437.4 ) (236.8 ) Proceeds from issuance of long-term debt —
943.0 — 943.0 Net increase (decrease) in corporate credit and
receivables facilities with initial maturities less than 90 days
0.4 — 194.6 (89.5 ) Repayment of debt (4.4 ) (396.6 ) (328.7 )
(403.0 ) Debt issuance costs (0.7 ) (17.8 ) (11.7 ) (19.1 )
Dividends paid on preferred stock (2.6 ) (2.6 ) (10.4 ) (10.4 )
Other, net 0.2 0.2 (1.9 ) (0.8 ) Cash (used
in) provided by financing activities (7.1 ) 526.2 (158.1 )
420.2 Effect of exchange rate changes on cash, cash
equivalents and restricted cash (0.2 ) — (0.3 ) —
Net increase (decrease) in cash, cash equivalents and
restricted cash 4.8 352.8 (381.1 ) 386.8 Cash, cash equivalents and
restricted cash at beginning of period 10.6 43.7
396.5 9.7 Cash, cash equivalents and
restricted cash at end of period $ 15.4 $ 396.5 $
15.4 $ 396.5
Reconciliation of Cash Provided by
Operating Activities (GAAP) to Free Cash Flow (Non-GAAP)
Cash provided by operating activities $ 91.9 $ 46.6 $ 214.7 $ 203.4
Adjustments: Capital expenditures (79.9 ) (62.3 ) (220.6 ) (210.5 )
Restructuring and severance related payments 1.7 2.4 16.4 29.4
Preferred stock dividends (2.6 ) (2.6 ) (10.4 ) (10.4 ) Transaction
and integration costs* 3.0 7.2 40.9 16.1
Free cash flow (Non-GAAP) $ 14.1 $ (8.7 ) $
41.0 $ 28.0 Income tax payments (refunds) $
(0.6 ) $ 3.3 $ (13.8 ) $ (12.9 )
* For the twelve months ended December 31, 2018, the adjustment
for transaction and integration costs includes a $3.5 million
payment of accrued interest on Hawaiian Telcom’s debt that was
repaid upon the completion of the merger and a $5.0 million
contribution to Hawaiian Telcom's pension plan. The pension plan
contribution was required by the Public Utilities Commission of the
State of Hawaii in order to complete the merger between Cincinnati
Bell Inc. and Hawaiian Telcom.
Cincinnati Bell Inc.
Capital Expenditures (Unaudited) (Dollars in
millions) Three Months Ended December 31,
2018 September 30, 2018 June 30, 2018 March
31, 2018 December 31, 2017 Entertainment and
Communications $ 72.3 $ 62.3 $ 31.8 $ 27.6 $ 55.1 IT Services and
Hardware 7.4 7.4 6.5 5.1 7.2 Corporate 0.2 — —
— — Total capital expenditures $ 79.9 $ 69.7 $
38.3 $ 32.7 $ 62.3
Cincinnati Bell
Inc.
Reconciliation of Net (Loss) Income
Applicable to Common Shareholders (GAAP) to Net (Loss) Income
Applicable to Common Shareholders,Excluding Special Items
(Non-GAAP) and Adjusted Diluted Earnings Per Share
(Non-GAAP)
(Unaudited) (Dollars in millions, except per share
amounts) Three Months Ended December 31,
2018 December 31, 2017 Net (loss) income
applicable to common shareholders (GAAP) $ (32.6 ) $ (14.5 )
Special items: Transaction and integration costs 4.3 4.1
Restructuring and severance related charges 3.4 3.5 Loss on
extinguishment of debt, net — 3.2 Pension settlement charges 0.1
4.0 Other income, net — (0.7 ) Income tax effect of special items *
(3.0 ) (2.7 ) Total special items 4.8 11.4 Net (loss)
income applicable to common shareowners, excluding special items
(Non-GAAP) $ (27.8 ) $ (3.1 ) Weighted average diluted
shares outstanding** 50.2 42.2 Diluted
earnings per common share (GAAP) $ (0.65 ) $ (0.34 )
Adjusted diluted (loss) earnings per common share (Non-GAAP) $
(0.55 ) $ (0.07 ) * Special items have been tax effected
utilizing the normalized effective tax rate for the period, with
the exception of transaction and integration costs, which are
treated as a discrete item. ** Weighted average diluted shares
outstanding based on net (loss) income applicable to common
shareowners, excluding special items (Non-GAAP).
Cincinnati Bell Inc.
Reconciliation of Net (Loss) Income
Applicable to Common Shareholders (GAAP) to Net (Loss) Income
Applicable to Common Shareholders,Excluding Special Items
(Non-GAAP) and Adjusted Diluted Earnings Per Share
(Non-GAAP)
(Unaudited) (Dollars in millions, except per share
amounts) Twelve Months Ended December 31,
2018 December 31, 2017 Net (loss) income
applicable to common shareholders (GAAP) $ (80.2 ) $ 29.6
Special items: Restructuring and severance related charges 8.3 32.7
Loss on extinguishment of debt 1.3 3.2 Transaction and integration
costs 22.5 18.5 Gain on sale of Investment in CyrusOne — (117.7 )
Impairment of equity method investment — 4.7 Pension settlement
charges 0.1 4.0 Other income, net — (0.7 ) Income tax effect of
special items * (3.6 ) 27.0 Total special items 28.6 (28.3 )
Net (loss) income applicable to common shareowners,
excluding special items (Non-GAAP) $ (51.6 ) $ 1.3
Weighted average diluted shares outstanding** 46.3 42.4
Diluted earnings per common share (GAAP) $ (1.73 ) $
0.70 Adjusted diluted (loss) earnings per common
share (Non-GAAP) $ (1.11 ) $ 0.03 * Special items
have been tax effected utilizing the normalized effective tax rate
for the period, with the exception of transaction and integration
costs, which are treated as a discrete item. ** Weighted average
diluted shares outstanding based on net (loss) income applicable to
common shareowners, excluding special items (Non-GAAP).
Cincinnati Bell Inc.
Reconciliation of Operating Income (GAAP) Guidance to Adjusted
EBITDA (Non-GAAP) Guidance (Unaudited) (Dollars in
millions) Low
High 2019 Operating Income (GAAP) Guidance Range $ 87
$ 102 Add: Depreciation and amortization 295 290
Restructuring and severance related charges 5 5 Transaction and
integration costs 5 5 Stock compensation expense 8 8
2019 Adjusted EBITDA (Non-GAAP) Guidance Range $
400 $ 410
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190214005396/en/
Cincinnati Bell Inc.Investor contact:Kei
Lawson, 513-565-0510Takeitha.Lawson@cinbell.com
Media contact:Josh Pichler,
513-565-0310Josh.Pichler@cinbell.com
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