Cincinnati Bell Inc. (NYSE:CBB), today announced financial results for the first quarter of 2020.
Leigh Fox, President and Chief Executive Officer of Cincinnati Bell, commented, "We started the year with strong momentum and great performance. Heading into the second quarter, we recognize there will be volatility resulting from the COVID-19 pandemic and have identified opportunities to mitigate the impact. We remain confident the team will execute on our initiatives and deliver solid results."
Mr. Fox continued, "Our agreement to be acquired by MIP is an important milestone for Cincinnati Bell, with the transaction price of $15.50 per share reflecting the robust process executed to ensure maximum value for all of our stakeholders. This is an exciting opportunity for the Company and we look forward to continuing to engage with MIP to ensure a successful close."
1 | The last trading day prior to the date when Cincinnati Bell's original merger agreement with Brookfield was executed. |
CONSOLIDATED RESULTS
Entertainment and Communications Segment
IT Services and Hardware Segment
Macquarie Infrastructure Partners Transaction Details
On March 13, 2020, Cincinnati Bell Inc. ("Cincinnati Bell" or "the Company"), together with MIP, announced an agreement through which a MIP-controlled subsidiary will acquire all outstanding shares of Cincinnati Bell for $15.50 per share in a cash transaction valued at approximately $2.9 billion, including debt (the "Transaction").
The Transaction follows the determination by Cincinnati Bell's Board of Directors, after consultation with its legal and financial advisors, that the MIP proposal constituted a "Superior Company Proposal" as defined in Cincinnati Bell's previously announced merger agreement with Brookfield. Consistent with that determination and following the expiration of the negotiation period during which Brookfield declined to propose an amendment to the merger agreement, Cincinnati Bell terminated that agreement. In connection with the termination, Cincinnati Bell has paid Brookfield a $25 million break-up fee.
MIP is a fund managed by Macquarie Infrastructure and Real Assets ("MIRA"). Certain Special Opportunities funds ("Ares Funds") managed by the Private Equity Group of Ares Management Corporation (NYSE: ARES) ("Ares Management") have agreed to provide equity financing for the Transaction.
MIRA is one of the world's leading alternative asset managers and a highly experienced investor in the communications infrastructure industry. For more than two decades, MIRA has partnered with investors, governments and communities to manage, develop and enhance assets relied on by more than 100 million people each day. As of September 30, 2019, MIRA managed $135.6 billion in assets that are essential to the sustainable development of economies and communities, including; 155 portfolio businesses, ~600 properties and 4.7 million hectares of farmland.
Ares Management is a leading global alternative investment manager operating three integrated businesses across Credit, Private Equity and Real Estate. Ares Management's global platform had $149 billion of assets under management as of December 31, 2019 and employs approximately 1,200 employees in over 20 offices in more than 10 countries.
The Transaction is expected to close in the first half of 2021. It has received unanimous approval of Cincinnati Bell's Board of Directors and is subject to customary closing conditions, including Cincinnati Bell shareholder approval and regulatory approval.
INVESTOR RELATIONS CONTACT:
Kei Lawson, 513-565-0510
E-mail: [email protected]
or
MEDIA CONTACT:
Josh Pichler, 513-565-0310
E-mail: [email protected]
Additional Information and Where to Find It
This communication may be deemed to be solicitation material in respect of the proposed acquisition of the Company by MIRA. In connection with the proposed acquisition, the Company has filed relevant materials with the U.S. Securities and Exchange Commission (the "SEC"), including the definitive proxy statement filed on March 25, 2020 and mailed to holders of the Company's common shares and 6 3?4% cumulative convertible preferred shares beginning on March 31, 2020 (the "Proxy Statement"). Shareholders of the Company are urged to read all relevant documents filed with the SEC, including the Proxy Statement, because they will contain important information about the proposed merger and the parties to the proposed merger. Investors and shareholders are able to obtain the documents (once available) free of charge at the SEC's website at www.sec.gov, or free of charge from the Company at investor.cincinnatibell.com or by directing a request to the Company's Investor Relations Department at 1-800-345-6301 or [email protected].
Participants in the Solicitation
The Company and its directors, executive officers, other members of management and employees, under SEC rules, may be deemed to be "participants" in the solicitation of proxies from the shareholders in favor of the proposed merger with MIRA. Information regarding the interests of these participants which may, in some cases, be different than those of the shareholders generally, is included in the Proxy Statement, the Company's Proxy Statement on Schedule 14A for its 2019 Annual Meeting of Shareholders, which was filed with the SEC on March 19, 2019, and its Annual Report on Form 10-K for the fiscal year ended December 31, 2019, which was filed with the SEC on February 24, 2020. These documents may be obtained free of charge from the sources indicated above.
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 concerning plans, objectives, goals, strategies, future events, future revenues or performance, financing needs, plans or intentions relating to acquisitions and restructuring, business trends, statements regarding the proposed merger with MIRA ("the merger") and the expected timetable for completing the merger, are forward-looking statements. Words such as "expects," "anticipates," "predicts," "projects," "intends," "plans," "believes," "seeks," "estimates," "continues," "endeavors," "strives," "will," "may," "proposes," "potential," "could," "should," "outlook," or variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, anticipated growth and trends in businesses, and other characterizations of future events or circumstances are forward-looking statements. There are a number of risks, uncertainties and other important factors that could cause our actual results to differ materially from the forward-looking statements contained in this report. 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:
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.
2Adjusted 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, transaction related employee retention agreements, asset impairments, and other special items. 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.
3Free 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 March 31, |
|
Change |
||||||||||||
|
|
2020 |
|
2019 |
|
$ |
|
% |
||||||||
Revenue |
|
$ |
380.0 |
|
|
$ |
379.6 |
|
|
$ |
0.4 |
|
|
|
0 |
% |
Costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products |
|
|
193.7 |
|
|
|
197.7 |
|
|
|
(4.0 |
) |
|
|
(2 |
)% |
Selling, general and administrative |
|
|
88.0 |
|
|
|
86.1 |
|
|
|
1.9 |
|
|
|
2 |
% |
Depreciation and amortization |
|
|
74.2 |
|
|
|
79.4 |
|
|
|
(5.2 |
) |
|
|
(7 |
)% |
Restructuring and severance related charges |
|
|
15.2 |
|
|
|
3.3 |
|
|
|
11.9 |
|
|
n/m |
|
|
Transaction and integration costs |
|
|
29.1 |
|
|
|
3.0 |
|
|
|
26.1 |
|
|
n/m |
|
|
Operating (loss) income |
|
|
(20.2 |
) |
|
|
10.1 |
|
|
|
(30.3 |
) |
|
n/m |
|
|
Interest expense |
|
|
33.7 |
|
|
|
35.1 |
|
|
|
(1.4 |
) |
|
|
(4 |
)% |
Other components of pension and postretirement benefit plans expense |
|
|
2.6 |
|
|
|
2.6 |
|
|
|
- |
|
|
|
0 |
% |
Other income, net |
|
|
(0.8 |
) |
|
|
(1.0 |
) |
|
|
0.2 |
|
|
|
(20 |
)% |
Loss before income taxes |
|
|
(55.7 |
) |
|
|
(26.6 |
) |
|
|
(29.1 |
) |
|
n/m |
|
|
Income tax (benefit) expense |
|
|
(21.7 |
) |
|
|
0.3 |
|
|
|
(22.0 |
) |
|
n/m |
|
|
Net loss |
|
|
(34.0 |
) |
|
|
(26.9 |
) |
|
|
(7.1 |
) |
|
|
26 |
% |
Preferred stock dividends |
|
|
2.6 |
|
|
|
2.6 |
|
|
|
- |
|
|
|
- |
|
Net loss applicable to common shareowners |
|
$ |
(36.6 |
) |
|
$ |
(29.5 |
) |
|
$ |
(7.1 |
) |
|
|
24 |
% |
Basic and diluted net loss per common share |
|
$ |
(0.72 |
) |
|
$ |
(0.59 |
) |
|
|
|
|
|
|
|
|
Weighted average common shares outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in millions) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- Basic |
|
|
50.5 |
|
|
|
50.3 |
|
|
|
|
|
|
|
|
|
- Diluted |
|
|
50.5 |
|
|
|
50.3 |
|
|
|
|
|
|
|
|
|
Cincinnati Bell Inc. Entertainment and Communications Income Statement (Unaudited) (Dollars in millions) |
||||||||||||||||
|
|
Three Months Ended March 31, |
|
Change |
||||||||||||
|
|
2020 |
|
2019 |
|
$ |
|
% |
||||||||
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
243.8 |
|
|
$ |
250.3 |
|
|
$ |
(6.5 |
) |
|
|
(3 |
)% |
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products |
|
|
108.0 |
|
|
|
115.3 |
|
|
|
(7.3 |
) |
|
|
(6 |
)% |
Selling, general and administrative |
|
|
45.0 |
|
|
|
44.5 |
|
|
|
0.5 |
|
|
|
1 |
% |
Depreciation and amortization |
|
|
63.9 |
|
|
|
62.7 |
|
|
|
1.2 |
|
|
|
2 |
% |
Restructuring and severance related charges |
|
|
14.8 |
|
|
|
3.3 |
|
|
|
11.5 |
|
|
n/m |
|
|
Total operating costs and expenses |
|
|
231.7 |
|
|
|
225.8 |
|
|
|
5.9 |
|
|
|
3 |
% |
Operating income |
|
$ |
12.1 |
|
|
$ |
24.5 |
|
|
$ |
(12.4 |
) |
|
|
(51 |
)% |
|
|
Three Months Ended |
|
Three Months Ended |
||||||||||||||||||||
|
|
March 31, 2020 |
|
March 31, 2019 |
||||||||||||||||||||
|
|
Cincinnati |
|
Hawaii |
|
Total |
|
Cincinnati |
|
Hawaii |
|
Total |
||||||||||||
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer / SMB Fiber * |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
$ |
40.9 |
|
|
$ |
8.5 |
|
|
$ |
49.4 |
|
|
$ |
37.4 |
|
|
$ |
7.9 |
|
|
$ |
45.3 |
|
Video |
|
|
38.8 |
|
|
|
9.9 |
|
|
|
48.7 |
|
|
|
40.2 |
|
|
|
11.5 |
|
|
|
51.7 |
|
Voice |
|
|
8.9 |
|
|
|
2.7 |
|
|
|
11.6 |
|
|
|
9.2 |
|
|
|
2.8 |
|
|
|
12.0 |
|
Other |
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.5 |
|
|
|
0.3 |
|
|
|
0.2 |
|
|
|
0.5 |
|
Total Consumer / SMB Fiber |
|
|
88.9 |
|
|
|
21.3 |
|
|
|
110.2 |
|
|
|
87.1 |
|
|
|
22.4 |
|
|
|
109.5 |
|
Enterprise Fiber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
21.2 |
|
|
|
10.4 |
|
|
|
31.6 |
|
|
|
21.1 |
|
|
|
9.2 |
|
|
|
30.3 |
|
Legacy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
24.4 |
|
|
|
13.9 |
|
|
|
38.3 |
|
|
|
26.0 |
|
|
|
15.9 |
|
|
|
41.9 |
|
Voice |
|
|
29.5 |
|
|
|
26.9 |
|
|
|
56.4 |
|
|
|
33.0 |
|
|
|
28.4 |
|
|
|
61.4 |
|
Other |
|
|
3.2 |
|
|
|
4.1 |
|
|
|
7.3 |
|
|
|
3.5 |
|
|
|
3.7 |
|
|
|
7.2 |
|
Total Legacy |
|
|
57.1 |
|
|
|
44.9 |
|
|
|
102.0 |
|
|
|
62.5 |
|
|
|
48.0 |
|
|
|
110.5 |
|
Total Entertainment & Communications |
|
$ |
167.2 |
|
|
$ |
76.6 |
|
|
$ |
243.8 |
|
|
$ |
170.7 |
|
|
$ |
79.6 |
|
|
$ |
250.3 |
|
* Represents Fioptics in Cincinnati |
Cincinnati Bell Inc. Entertainment and Communications Metric Information (Unaudited) (In thousands) |
||||||||||||||||||||
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
||||||||||
|
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
||||||||||
Cincinnati Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fioptics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet FTTP * |
|
|
224.3 |
|
|
|
219.2 |
|
|
|
214.6 |
|
|
|
210.8 |
|
|
|
207.6 |
|
Internet FTTN * |
|
|
30.0 |
|
|
|
31.4 |
|
|
|
32.5 |
|
|
|
34.0 |
|
|
|
35.7 |
|
Total Fioptics Internet |
|
|
254.3 |
|
|
|
250.6 |
|
|
|
247.1 |
|
|
|
244.8 |
|
|
|
243.3 |
|
Video |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video FTTP * |
|
|
111.2 |
|
|
|
112.7 |
|
|
|
113.5 |
|
|
|
114.5 |
|
|
|
115.2 |
|
Video FTTN * |
|
|
21.9 |
|
|
|
22.4 |
|
|
|
23.0 |
|
|
|
23.5 |
|
|
|
24.0 |
|
Total Fioptics Video |
|
|
133.1 |
|
|
|
135.1 |
|
|
|
136.5 |
|
|
|
138.0 |
|
|
|
139.2 |
|
Voice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fioptics Voice Lines |
|
|
105.3 |
|
|
|
106.8 |
|
|
|
108.0 |
|
|
|
108.8 |
|
|
|
109.0 |
|
Fioptics Units Passed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Passed FTTP * |
|
|
486.6 |
|
|
|
484.8 |
|
|
|
482.0 |
|
|
|
480.1 |
|
|
|
477.6 |
|
Units Passed FTTN * |
|
|
138.6 |
|
|
|
138.6 |
|
|
|
138.6 |
|
|
|
138.7 |
|
|
|
138.5 |
|
Total Fioptics Units Passed |
|
|
625.2 |
|
|
|
623.4 |
|
|
|
620.6 |
|
|
|
618.8 |
|
|
|
616.1 |
|
Enterprise Fiber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ethernet Bandwidth (Gb) |
|
|
5,487 |
|
|
|
5,228 |
|
|
|
5,006 |
|
|
|
4,672 |
|
|
|
4,540 |
|
Legacy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSL |
|
|
63.3 |
|
|
|
64.0 |
|
|
|
65.9 |
|
|
|
67.9 |
|
|
|
69.6 |
|
Voice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Voice Lines |
|
|
191.2 |
|
|
|
196.8 |
|
|
|
202.9 |
|
|
|
210.3 |
|
|
|
218.0 |
|
* Fiber-to-the-Premise (FTTP), Fiber-to-the-Node (FTTN) |
Cincinnati Bell Inc. Entertainment and Communications Metric Information (Unaudited) (In thousands) |
||||||||||||||||||||
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
||||||||||
|
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
||||||||||
Hawaii Metrics |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer / SMB Fiber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Internet FTTP * |
|
|
56.4 |
|
|
|
55.4 |
|
|
|
54.6 |
|
|
|
53.7 |
|
|
|
52.7 |
|
Internet FTTN * |
|
|
12.4 |
|
|
|
12.8 |
|
|
|
13.2 |
|
|
|
13.4 |
|
|
|
13.9 |
|
Total Consumer / SMB Fiber Internet |
|
|
68.8 |
|
|
|
68.2 |
|
|
|
67.8 |
|
|
|
67.1 |
|
|
|
66.6 |
|
Video |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Video FTTP * |
|
|
29.6 |
|
|
|
30.6 |
|
|
|
31.8 |
|
|
|
33.0 |
|
|
|
33.5 |
|
Video FTTN * |
|
|
11.5 |
|
|
|
12.1 |
|
|
|
13.2 |
|
|
|
13.9 |
|
|
|
14.3 |
|
Total Consumer / SMB Fiber Video |
|
|
41.1 |
|
|
|
42.7 |
|
|
|
45.0 |
|
|
|
46.9 |
|
|
|
47.8 |
|
Voice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consumer / SMB Fiber Voice Lines |
|
|
29.9 |
|
|
|
30.0 |
|
|
|
30.1 |
|
|
|
30.1 |
|
|
|
30.3 |
|
Consumer / SMB Fiber Units Passed |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Units Passed FTTP * |
|
|
174.9 |
|
|
|
173.5 |
|
|
|
170.6 |
|
|
|
169.2 |
|
|
|
168.1 |
|
Units Passed FTTN * |
|
|
72.5 |
|
|
|
72.9 |
|
|
|
72.8 |
|
|
|
72.9 |
|
|
|
73.4 |
|
Total Consumer / SMB Fiber Units Passed |
|
|
247.4 |
|
|
|
246.4 |
|
|
|
243.4 |
|
|
|
242.1 |
|
|
|
241.5 |
|
Enterprise Fiber |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Ethernet Bandwidth (Gb) |
|
|
3,619 |
|
|
|
3,651 |
|
|
|
3,424 |
|
|
|
2,924 |
|
|
|
2,413 |
|
Legacy |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DSL |
|
|
41.1 |
|
|
|
42.9 |
|
|
|
44.3 |
|
|
|
45.7 |
|
|
|
47.2 |
|
Voice |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Legacy Voice Lines |
|
|
173.0 |
|
|
|
177.1 |
|
|
|
183.0 |
|
|
|
187.6 |
|
|
|
192.8 |
|
* Fiber-to-the-Premise (FTTP), Fiber-to-the-Node (FTTN) |
Cincinnati Bell Inc. IT Services and Hardware Income Statement and Metric Information (Unaudited) (Dollars in millions) |
||||||||||||||||
|
|
Three Months Ended |
|
|
|
|
|
|
|
|
||||||
|
|
March 31, |
|
Change |
||||||||||||
|
|
2020 |
|
2019 |
|
$ |
|
% |
||||||||
Income Statement |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
$ |
142.3 |
|
|
$ |
136.3 |
|
|
$ |
6.0 |
|
|
|
4 |
% |
Operating costs and expenses |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of services and products |
|
|
91.6 |
|
|
|
89.2 |
|
|
|
2.4 |
|
|
|
3 |
% |
Selling, general and administrative |
|
|
38.3 |
|
|
|
37.2 |
|
|
|
1.1 |
|
|
|
3 |
% |
Depreciation and amortization |
|
|
10.3 |
|
|
|
16.7 |
|
|
|
(6.4 |
) |
|
|
(38 |
)% |
Restructuring and severance related charges |
|
|
0.4 |
|
|
|
- |
|
|
|
0.4 |
|
|
n/m |
|
|
Total operating costs and expenses |
|
|
140.6 |
|
|
|
143.1 |
|
|
|
(2.5 |
) |
|
|
(2 |
)% |
Operating income (loss) |
|
$ |
1.7 |
|
|
$ |
(6.8 |
) |
|
$ |
8.5 |
|
|
n/m |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Consulting |
|
$ |
41.9 |
|
|
$ |
38.9 |
|
|
$ |
3.0 |
|
|
|
8 |
% |
Cloud |
|
|
21.5 |
|
|
|
24.4 |
|
|
|
(2.9 |
) |
|
|
(12 |
)% |
Communications |
|
|
51.2 |
|
|
|
47.4 |
|
|
|
3.8 |
|
|
|
8 |
% |
Infrastructure Solutions |
|
|
27.7 |
|
|
|
25.6 |
|
|
|
2.1 |
|
|
|
8 |
% |
Total IT Services and Hardware Revenue |
|
$ |
142.3 |
|
|
$ |
136.3 |
|
|
$ |
6.0 |
|
|
|
4 |
% |
|
|
March 31, |
|
December 31, |
|
September 30, |
|
June 30, |
|
March 31, |
||||||||||
|
|
2020 |
|
2019 |
|
2019 |
|
2019 |
|
2019 |
||||||||||
Consulting |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Billable Resources |
|
|
1,222 |
|
|
|
1,034 |
|
|
|
1,007 |
|
|
|
1,039 |
|
|
|
1,039 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Communications |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NaaS Locations |
|
|
4,593 |
|
|
|
4,047 |
|
|
|
3,492 |
|
|
|
2,988 |
|
|
|
2,550 |
|
SD - WAN Locations |
|
|
2,337 |
|
|
|
2,197 |
|
|
|
1,849 |
|
|
|
1,743 |
|
|
|
1,002 |
|
Hosted UCaaS Profiles |
|
|
277,092 |
|
|
|
274,654 |
|
|
|
270,335 |
|
|
|
254,679 |
|
|
|
244,482 |
|
Cincinnati Bell Inc. Net Debt (Non-GAAP) (Unaudited) (Dollars in millions) |
||||||||
|
|
March 31, |
|
December 31, |
||||
|
|
2020 |
|
2019 |
||||
Receivables Facility |
|
$ |
164.6 |
|
|
$ |
131.5 |
|
Credit Agreement - Tranche B Term Loan due 2024 |
|
|
591.0 |
|
|
|
592.5 |
|
Credit Agreement - Revolving Credit Facility |
|
|
55.0 |
|
|
|
57.0 |
|
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 agreements |
|
|
4.1 |
|
|
|
5.2 |
|
Finance lease liabilities |
|
|
69.6 |
|
|
|
73.8 |
|
Net unamortized premium |
|
|
1.3 |
|
|
|
1.3 |
|
Unamortized note issuance costs |
|
|
(21.8 |
) |
|
|
(22.9 |
) |
Total debt |
|
|
1,949.0 |
|
|
|
1,923.6 |
|
Less: Cash and cash equivalents |
|
|
(10.6 |
) |
|
|
(11.6 |
) |
Net debt (Non-GAAP) |
|
$ |
1,938.4 |
|
|
$ |
1,912.0 |
|
Cincinnati Bell Inc. Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP) (Unaudited) (Dollars in millions) |
||||||||||||||||
|
|
Three Months Ended March 31, 2020 |
||||||||||||||
|
|
Entertainment & Communications |
|
IT Services & Hardware |
|
Corporate |
|
Total Company |
||||||||
Net loss (GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(34.0 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax benefit |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(21.7 |
) |
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
33.7 |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(0.8 |
) |
Other components of pension and postretirement benefit plans expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP) |
|
$ |
12.1 |
|
|
$ |
1.7 |
|
|
$ |
(34.0 |
) |
|
$ |
(20.2 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
63.9 |
|
|
|
10.3 |
|
|
|
- |
|
|
|
74.2 |
|
Restructuring and severance related charges |
|
|
14.8 |
|
|
|
0.4 |
|
|
|
- |
|
|
|
15.2 |
|
Transaction and integration costs |
|
|
- |
|
|
|
- |
|
|
|
29.1 |
|
|
|
29.1 |
|
Employee contract termination costs |
|
|
0.3 |
|
|
|
0.8 |
|
|
|
- |
|
|
|
1.1 |
|
Transaction related employee retention agreements |
|
|
- |
|
|
|
- |
|
|
|
0.6 |
|
|
|
0.6 |
|
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
1.7 |
|
|
|
1.7 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
91.1 |
|
|
$ |
13.2 |
|
|
$ |
(2.6 |
) |
|
$ |
101.7 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin (Non-GAAP) |
|
|
37 |
% |
|
|
9 |
% |
|
|
- |
|
|
|
27 |
% |
|
|
Three Months Ended March 31, 2019 |
||||||||||||||
|
|
Entertainment & Communications |
|
IT Services & Hardware |
|
Corporate |
|
Total Company |
||||||||
Net loss (GAAP) |
|
|
|
|
|
|
|
|
|
|
|
|
|
$ |
(26.9 |
) |
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
0.3 |
|
Interest expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
35.1 |
|
Other income, net |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1.0 |
) |
Other components of pension and postretirement benefit plans expense |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating income (loss) (GAAP) |
|
$ |
24.5 |
|
|
$ |
(6.8 |
) |
|
$ |
(7.6 |
) |
|
$ |
10.1 |
|
Add: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
|
62.7 |
|
|
|
16.7 |
|
|
|
- |
|
|
|
79.4 |
|
Restructuring and severance related charges |
|
|
3.3 |
|
|
|
- |
|
|
|
- |
|
|
|
3.3 |
|
Transaction and integration costs |
|
|
- |
|
|
|
- |
|
|
|
3.0 |
|
|
|
3.0 |
|
Stock-based compensation |
|
|
- |
|
|
|
- |
|
|
|
1.8 |
|
|
|
1.8 |
|
Adjusted EBITDA (Non-GAAP) |
|
$ |
90.5 |
|
|
$ |
9.9 |
|
|
$ |
(2.8 |
) |
|
$ |
97.6 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA Margin (Non-GAAP) |
|
|
36 |
% |
|
|
7 |
% |
|
|
- |
|
|
|
26 |
% |
Year-over-year dollar change in Adjusted EBITDA |
|
|
0.6 |
|
|
|
3.3 |
|
|
|
0.2 |
|
|
|
4.1 |
|
Year-over-year percentage change in Adjusted EBITDA |
|
|
1 |
% |
|
|
33 |
% |
|
|
(7 |
)% |
|
|
4 |
% |
Cincinnati Bell Inc. Consolidated Statements of Cash Flows (Unaudited) (Dollars in millions) |
||||||||
|
|
Three Months Ended |
||||||
|
|
March 31, |
||||||
|
|
2020 |
|
2019 |
||||
Cash provided by operating activities |
|
$ |
29.1 |
|
|
$ |
56.8 |
|
Capital expenditures |
|
|
(50.9 |
) |
|
|
(56.5 |
) |
Other, net |
|
|
- |
|
|
|
(0.1 |
) |
Cash used in investing activities |
|
|
(50.9 |
) |
|
|
(56.6 |
) |
Net increase (decrease) in corporate credit and receivables facilities with initial maturities less than 90 days |
|
|
31.1 |
|
|
|
(3.8 |
) |
Repayment of debt |
|
|
(6.2 |
) |
|
|
(4.5 |
) |
Debt issuance costs |
|
|
- |
|
|
|
(0.1 |
) |
Dividends paid on preferred stock |
|
|
(2.6 |
) |
|
|
(2.6 |
) |
Other, net |
|
|
(1.1 |
) |
|
|
(0.8 |
) |
Cash provided by (used in) financing activities |
|
|
21.2 |
|
|
|
(11.8 |
) |
Effect of exchange rate changes on cash and cash equivalents |
|
|
(0.4 |
) |
|
|
0.1 |
|
Net decrease in cash and cash equivalents |
|
|
(1.0 |
) |
|
|
(11.5 |
) |
Cash and cash equivalents at beginning of period |
|
|
11.6 |
|
|
|
15.4 |
|
Cash and cash equivalents at end of period |
|
$ |
10.6 |
|
|
$ |
3.9 |
|
|
|
|
|
|
|
|
|
|
Reconciliation of Cash Provided by Operating Activities (GAAP) to |
|
|
|
|
|
|
|
|
Free Cash Flow (Non-GAAP) |
|
|
|
|
|
|
|
|
Cash provided by operating activities |
|
$ |
29.1 |
|
|
$ |
56.8 |
|
Adjustments: |
|
|
|
|
|
|
|
|
Capital expenditures |
|
|
(50.9 |
) |
|
|
(56.5 |
) |
Restructuring and severance related payments |
|
|
8.3 |
|
|
|
6.8 |
|
Preferred stock dividends |
|
|
(2.6 |
) |
|
|
(2.6 |
) |
Transaction and integration costs |
|
|
27.8 |
|
|
|
1.8 |
|
Free cash flow (Non-GAAP) |
|
$ |
11.7 |
|
|
$ |
6.3 |
|
Income tax (refunds) payments |
|
$ |
(1.1 |
) |
|
$ |
1.1 |
|
Cincinnati Bell Inc. Capital Expenditures (Unaudited) (Dollars in millions) |
||||||||||||||||||||
|
|
Three Months Ended |
||||||||||||||||||
|
|
March 31, 2020 |
|
December 31, 2019 |
|
September 30, 2019 |
|
June 30, 2019 |
|
March 31, 2019 |
||||||||||
Entertainment and Communications |
|
$ |
44.4 |
|
|
$ |
51.0 |
|
|
$ |
51.3 |
|
|
$ |
47.9 |
|
|
$ |
51.1 |
|
IT Services and Hardware |
|
|
6.5 |
|
|
|
5.5 |
|
|
|
5.4 |
|
|
|
6.1 |
|
|
|
5.4 |
|
Corporate |
|
|
- |
|
|
|
- |
|
|
|
- |
|
|
|
0.1 |
|
|
|
- |
|
Total capital expenditures |
|
$ |
50.9 |
|
|
$ |
56.5 |
|
|
$ |
56.7 |
|
|
$ |
54.1 |
|
|
$ |
56.5 |
|
Cincinnati Bell Inc. Reconciliation of Net (Loss) Income Applicable to Common Shareholders (GAAP) to Net Income (Loss) 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 |
||||||
|
|
March 31, 2020 |
|
March 31, 2019 |
||||
Net loss applicable to common shareholders (GAAP) |
|
$ |
(36.6 |
) |
|
$ |
(29.5 |
) |
Special items: |
|
|
|
|
|
|
|
|
Restructuring and severance related charges |
|
|
15.2 |
|
|
|
3.3 |
|
Transaction and integration costs |
|
|
29.1 |
|
|
|
3.0 |
|
Income tax effect of special items * |
|
|
2.3 |
|
|
|
(0.9 |
) |
Total special items |
|
|
46.6 |
|
|
|
5.4 |
|
Net income (loss) applicable to common shareowners, excluding special items (Non-GAAP) |
|
$ |
10.0 |
|
|
$ |
(24.1 |
) |
Weighted average diluted shares outstanding** |
|
|
51.2 |
|
|
|
50.3 |
|
Diluted loss per common share (GAAP) |
|
$ |
(0.72 |
) |
|
$ |
(0.59 |
) |
Adjusted diluted earnings (loss) per common share (Non-GAAP) |
|
$ |
0.20 |
|
|
$ |
(0.48 |
) |
* |
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 income (loss) applicable to common shareowners, excluding special items (Non-GAAP). |
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