Le Lézard
Classified in: Business, Covid-19 virus
Subjects: EARNINGS, Conference Call, Webcast

Cincinnati Bell Reports Second Quarter 2020 Results


Cincinnati Bell Inc. (NYSE:CBB), today announced financial results for the second quarter of 2020.

Leigh Fox, President and Chief Executive Officer of Cincinnati Bell, commented, "Given the uncertainty and volatility surrounding COVID-19, our second quarter results were strong. For E&C, even when impacted by our involvement in the FCC's Keep Americans Connected Pledge and COVID business disruption, our performance demonstrates the importance of high-speed data connectivity provided by our robust fiber networks. Additionally, the growth in our recurring IT services more than offset volatility in hardware purchasing during this period, driving an impressive 24% increase in Adjusted EBITDA year-over-year."

Mr. Fox concluded, "We appreciate our shareholders' continued support and adoption of the MIP merger agreement. Our team has been working closely with MIP, which has made significant progress on all major regulatory filings as we continue working to ensure a successful close in the first half of 2021."

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 an 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 Brookfield merger agreement. Consistent with that determination, and following the expiration of the negotiation period during which Brookfield declined to propose an amendment to the Brookfield merger agreement, Cincinnati Bell terminated the Brookfield merger agreement. In connection with the termination, Cincinnati Bell paid Brookfield an approximately $25 million break-up fee.

On May 7, 2020, Cincinnati Bell's shareholders adopted the MIP merger agreement at a virtual special meeting of shareholders.

MIP is a fund managed by Macquarie Infrastructure and Real Assets ("MIRA"). In addition to MIP, certain Special Opportunities funds or co-investment vehicles managed by the Private Equity Group of Ares Management Corporation (NYSE: ARES) ("Ares Management"), and entities controlled by the Retail Employees Superannuation Trust ("REST"), an Australian superannuation fund managed by Retail Employees Superannuation Pty Limited, have agreed to provide equity financing for the Transaction.

MIRA is a global alternative asset manager with extensive experience in investing 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 March 31, 2020, MIRA had $136.95 billion in assets under management (based on proportionate enterprise value), of which $107.9 billion were invested in infrastructure assets.

Ares Management is a 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 March 31, 2020 and employs approximately 1,200 employees in over 20 offices in more than 10 countries.

REST is a widely held Australian public offer pension fund managing over AUD 52 billion (USD $36 billion) on behalf of approximately 1.7 million members.

The Transaction is expected to close in the first half of 2021. It is subject to customary closing conditions, including receipt of certain regulatory approvals.

INVESTOR RELATIONS:
Kei Lawson, 513-565-0510
Takeitha.Lawson@cinbell.com
or
MEDIA:
Josh Pichler, 513-565-0310
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 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 Transaction and the expected timetable for completing the Transaction, 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.

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, 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.

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
June 30,

 

Change

 

Six Months
Ended
June 30,

 

Change

 

 

2020

 

2019

 

$

 

%

 

2020

 

2019

 

$

 

%

Revenue

 

$

380.0

 

 

$

384.2

 

 

$

(4.2

)

 

 

(1

)%

 

$

760.0

 

 

$

763.8

 

 

$

(3.8

)

 

 

0

%

Costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and products

 

 

193.4

 

 

 

195.5

 

 

 

(2.1

)

 

 

(1

)%

 

 

387.1

 

 

 

393.2

 

 

 

(6.1

)

 

 

(2

)%

Selling, general and administrative

 

 

81.3

 

 

 

87.2

 

 

 

(5.9

)

 

 

(7

)%

 

 

169.3

 

 

 

173.3

 

 

 

(4.0

)

 

 

(2

)%

Depreciation and amortization

 

 

74.7

 

 

 

74.2

 

 

 

0.5

 

 

 

1

%

 

 

148.9

 

 

 

153.6

 

 

 

(4.7

)

 

 

(3

)%

Restructuring and severance related charges

 

 

0.4

 

 

 

1.8

 

 

 

(1.4

)

 

 

(78

)%

 

 

15.6

 

 

 

5.1

 

 

 

10.5

 

 

n/m

 

Transaction and integration costs

 

 

2.5

 

 

 

0.6

 

 

 

1.9

 

 

n/m

 

 

 

31.6

 

 

 

3.6

 

 

 

28.0

 

 

n/m

 

Operating income

 

 

27.7

 

 

 

24.9

 

 

 

2.8

 

 

 

11

%

 

 

7.5

 

 

 

35.0

 

 

 

(27.5

)

 

 

(79

)%

Interest expense

 

 

33.5

 

 

 

34.9

 

 

 

(1.4

)

 

 

(4

)%

 

 

67.2

 

 

 

70.0

 

 

 

(2.8

)

 

 

(4

)%

Other components of pension and postretirement benefit plans expense

 

 

3.8

 

 

 

3.0

 

 

 

0.8

 

 

 

27

%

 

 

6.4

 

 

 

5.6

 

 

 

0.8

 

 

 

14

%

Other (income) expense, net

 

 

(0.2

)

 

 

0.1

 

 

 

(0.3

)

 

n/m

 

 

 

(1.0

)

 

 

(0.9

)

 

 

(0.1

)

 

 

11

%

Loss before income taxes

 

 

(9.4

)

 

 

(13.1

)

 

 

3.7

 

 

 

(28

)%

 

 

(65.1

)

 

 

(39.7

)

 

 

(25.4

)

 

 

64

%

Income tax benefit

 

 

(1.6

)

 

 

(7.6

)

 

 

6.0

 

 

 

(79

)%

 

 

(23.3

)

 

 

(7.3

)

 

 

(16.0

)

 

n/m

 

Net loss

 

 

(7.8

)

 

 

(5.5

)

 

 

(2.3

)

 

 

42

%

 

 

(41.8

)

 

 

(32.4

)

 

 

(9.4

)

 

 

29

%

Preferred stock dividends

 

 

2.6

 

 

 

2.6

 

 

 

-

 

 

 

-

 

 

 

5.2

 

 

 

5.2

 

 

 

-

 

 

 

-

 

Net loss applicable to common shareowners

 

$

(10.4

)

 

$

(8.1

)

 

$

(2.3

)

 

 

28

%

 

$

(47.0

)

 

$

(37.6

)

 

$

(9.4

)

 

 

25

%

Basic and diluted net loss per common share

 

$

(0.21

)

 

$

(0.16

)

 

 

 

 

 

 

 

 

 

$

(0.93

)

 

$

(0.75

)

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(in millions)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

- Basic

 

 

50.6

 

 

 

50.4

 

 

 

 

 

 

 

 

 

 

 

50.6

 

 

 

50.3

 

 

 

 

 

 

 

 

 

- Diluted

 

 

50.6

 

 

 

50.4

 

 

 

 

 

 

 

 

 

 

 

50.6

 

 

 

50.3

 

 

 

 

 

 

 

 

 

Cincinnati Bell Inc.

Entertainment and Communications Income Statement

(Unaudited)

(Dollars in millions)

 

 

 

Three Months
Ended
June 30,

 

Change

 

Six Months
Ended
June 30,

 

Change

 

 

2020

 

2019

 

 

$

 

%

 

2020

 

2019

 

$

 

%

Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

239.7

 

 

$

250.5

 

 

$

(10.8

)

 

 

(4

)%

 

$

483.5

 

 

$

500.8

 

 

$

(17.3

)

 

 

(3

)%

Operating costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and products

 

 

103.9

 

 

 

112.0

 

 

 

(8.1

)

 

 

(7

)%

 

 

211.9

 

 

 

227.3

 

 

 

(15.4

)

 

 

(7

)%

Selling, general and administrative

 

 

40.8

 

 

 

45.2

 

 

 

(4.4

)

 

 

(10

)%

 

 

85.8

 

 

 

89.7

 

 

 

(3.9

)

 

 

(4

)%

Depreciation and amortization

 

 

64.5

 

 

 

63.4

 

 

 

1.1

 

 

 

2

%

 

 

128.4

 

 

 

126.1

 

 

 

2.3

 

 

 

2

%

Restructuring and severance related charges

 

 

-

 

 

 

0.9

 

 

 

(0.9

)

 

n/m

 

 

 

14.8

 

 

 

4.2

 

 

 

10.6

 

 

n/m

 

Total operating costs and expenses

 

 

209.2

 

 

 

221.5

 

 

 

(12.3

)

 

 

(6

)%

 

 

440.9

 

 

 

447.3

 

 

 

(6.4

)

 

 

(1

)%

Operating income

 

$

30.5

 

 

$

29.0

 

 

$

1.5

 

 

 

5

%

 

$

42.6

 

 

$

53.5

 

 

$

(10.9

)

 

 

(20

)%

Cincinnati Bell Inc.

Entertainment and Communications Revenue

(Unaudited)

(Dollars in millions)

 

 

 

Three Months Ended
June 30, 2020

 

Three Months Ended
June 30, 2019

 

 

Cincinnati

 

Hawaii

 

Total

 

Cincinnati

 

Hawaii

 

Total

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer / SMB Fiber *

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

$

42.1

 

 

$

8.9

 

 

$

51.0

 

 

$

38.8

 

 

$

7.9

 

 

$

46.7

 

Video

 

 

38.8

 

 

 

9.5

 

 

 

48.3

 

 

 

40.6

 

 

 

11.0

 

 

 

51.6

 

Voice

 

 

7.2

 

 

 

2.7

 

 

 

9.9

 

 

 

9.2

 

 

 

2.7

 

 

 

11.9

 

Other

 

 

0.4

 

 

 

0.2

 

 

 

0.6

 

 

 

0.4

 

 

 

0.1

 

 

 

0.5

 

Total Consumer / SMB Fiber

 

 

88.5

 

 

 

21.3

 

 

 

109.8

 

 

 

89.0

 

 

 

21.7

 

 

 

110.7

 

Enterprise Fiber

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

21.7

 

 

 

10.0

 

 

 

31.7

 

 

 

21.1

 

 

 

10.2

 

 

 

31.3

 

Legacy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

23.8

 

 

 

13.2

 

 

 

37.0

 

 

 

26.3

 

 

 

15.2

 

 

 

41.5

 

Voice

 

 

28.3

 

 

 

25.9

 

 

 

54.2

 

 

 

31.8

 

 

 

27.6

 

 

 

59.4

 

Other

 

 

3.0

 

 

 

4.0

 

 

 

7.0

 

 

 

3.5

 

 

 

4.1

 

 

 

7.6

 

Total Legacy

 

 

55.1

 

 

 

43.1

 

 

 

98.2

 

 

 

61.6

 

 

 

46.9

 

 

 

108.5

 

Total Entertainment & Communications

 

$

165.3

 

 

$

74.4

 

 

$

239.7

 

 

$

171.7

 

 

$

78.8

 

 

$

250.5

 

 

 

Six Months Ended
June 30, 2020

 

Six Months Ended
June 30, 2019

 

 

Cincinnati

 

Hawaii

 

Total

 

Cincinnati

 

Hawaii

 

Total

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer / SMB Fiber *

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

$

83.0

 

 

$

17.4

 

 

$

100.4

 

 

$

76.2

 

 

$

15.8

 

 

$

92.0

 

Video

 

 

77.6

 

 

 

19.4

 

 

 

97.0

 

 

 

80.8

 

 

 

22.5

 

 

 

103.3

 

Voice

 

 

16.1

 

 

 

5.4

 

 

 

21.5

 

 

 

18.4

 

 

 

5.5

 

 

 

23.9

 

Other

 

 

0.7

 

 

 

0.4

 

 

 

1.1

 

 

 

0.7

 

 

 

0.3

 

 

 

1.0

 

Total Consumer / SMB Fiber

 

 

177.4

 

 

 

42.6

 

 

 

220.0

 

 

 

176.1

 

 

 

44.1

 

 

 

220.2

 

Enterprise Fiber

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

42.9

 

 

 

20.4

 

 

 

63.3

 

 

 

42.2

 

 

 

19.4

 

 

 

61.6

 

Legacy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

48.2

 

 

 

27.1

 

 

 

75.3

 

 

 

52.3

 

 

 

31.1

 

 

 

83.4

 

Voice

 

 

57.8

 

 

 

52.8

 

 

 

110.6

 

 

 

64.8

 

 

 

56.0

 

 

 

120.8

 

Other

 

 

6.2

 

 

 

8.1

 

 

 

14.3

 

 

 

7.0

 

 

 

7.8

 

 

 

14.8

 

Total Legacy

 

 

112.2

 

 

 

88.0

 

 

 

200.2

 

 

 

124.1

 

 

 

94.9

 

 

 

219.0

 

Total Entertainment & Communications

 

$

332.5

 

 

$

151.0

 

 

$

483.5

 

 

$

342.4

 

 

$

158.4

 

 

$

500.8

 

 

* Represents Fioptics in Cincinnati

Cincinnati Bell Inc.

Entertainment and Communications Metric Information

(Unaudited)

(In thousands)

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2020

 

2020

 

2019

 

2019

 

2019

Cincinnati Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fioptics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet FTTP *

 

230.6

 

 

224.3

 

 

219.2

 

 

214.6

 

 

210.8

 

Internet FTTN *

 

28.9

 

 

30.0

 

 

31.4

 

 

32.5

 

 

34.0

 

Total Fioptics Internet

 

259.5

 

 

254.3

 

 

250.6

 

 

247.1

 

 

244.8

 

Video

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video FTTP *

 

109.7

 

 

111.2

 

 

112.7

 

 

113.5

 

 

114.5

 

Video FTTN *

 

21.4

 

 

21.9

 

 

22.4

 

 

23.0

 

 

23.5

 

Total Fioptics Video

 

131.1

 

 

133.1

 

 

135.1

 

 

136.5

 

 

138.0

 

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fioptics Voice Lines

 

105.3

 

 

105.3

 

 

106.8

 

 

108.0

 

 

108.8

 

Fioptics Units Passed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units Passed FTTP *

 

489.6

 

 

486.6

 

 

484.8

 

 

482.0

 

 

480.1

 

Units Passed FTTN *

 

138.6

 

 

138.6

 

 

138.6

 

 

138.6

 

 

138.7

 

Total Fioptics Units Passed

 

628.2

 

 

625.2

 

 

623.4

 

 

620.6

 

 

618.8

 

Enterprise Fiber

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ethernet Bandwidth (Gb)

 

5,756

 

 

5,487

 

 

5,228

 

 

5,006

 

 

4,672

 

Legacy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DSL

 

62.7

 

 

63.3

 

 

64.0

 

 

65.9

 

 

67.9

 

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Voice Lines

 

186.4

 

 

191.2

 

 

196.8

 

 

202.9

 

 

210.3

 

 

* Fiber-to-the-Premise (FTTP), Fiber-to-the-Node (FTTN)

Cincinnati Bell Inc.

Entertainment and Communications Metric Information

(Unaudited)

(In thousands)

 

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2020

 

2020

 

2019

 

2019

 

2019

Hawaii Metrics

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer / SMB Fiber

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Internet FTTP *

 

57.4

 

 

56.4

 

 

55.4

 

 

54.6

 

 

53.7

 

Internet FTTN *

 

12.1

 

 

12.4

 

 

12.8

 

 

13.2

 

 

13.4

 

Total Consumer / SMB Fiber Internet

 

69.5

 

 

68.8

 

 

68.2

 

 

67.8

 

 

67.1

 

Video

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Video FTTP *

 

31.0

 

 

29.6

 

 

30.6

 

 

31.8

 

 

33.0

 

Video FTTN *

 

11.8

 

 

11.5

 

 

12.1

 

 

13.2

 

 

13.9

 

Total Consumer / SMB Fiber Video

 

42.8

 

 

41.1

 

 

42.7

 

 

45.0

 

 

46.9

 

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consumer / SMB Fiber Voice Lines

 

29.9

 

 

29.9

 

 

30.0

 

 

30.1

 

 

30.1

 

Consumer / SMB Fiber Units Passed

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Units Passed FTTP *

 

176.2

 

 

174.9

 

 

173.5

 

 

170.6

 

 

169.2

 

Units Passed FTTN *

 

72.5

 

 

72.5

 

 

72.9

 

 

72.8

 

 

72.9

 

Total Consumer / SMB Fiber Units Passed

 

248.7

 

 

247.4

 

 

246.4

 

 

243.4

 

 

242.1

 

Enterprise Fiber

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Ethernet Bandwidth (Gb)

 

3,691

 

 

3,619

 

 

3,651

 

 

3,424

 

 

2,924

 

Legacy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Data

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

DSL

 

40.3

 

 

41.1

 

 

42.9

 

 

44.3

 

 

45.7

 

Voice

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Legacy Voice Lines

 

165.1

 

 

173.0

 

 

177.1

 

 

183.0

 

 

187.6

 

 

* 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
June 30,

 

Change

 

Six Months
Ended
June 30,

 

Change

 

 

2020

 

2019

 

$

 

%

 

2020

 

2019

 

$

 

%

Income Statement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

147.0

 

 

$

140.2

 

 

$

6.8

 

 

5

%

 

$

289.3

 

 

$

276.5

 

 

$

12.8

 

 

5

%

Operating costs and expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cost of services and products

 

 

95.9

 

 

 

89.7

 

 

 

6.2

 

 

7

%

 

 

187.5

 

 

 

178.9

 

 

 

8.6

 

 

5

%

Selling, general and administrative

 

 

35.4

 

 

 

37.8

 

 

 

(2.4

)

 

(6

)%

 

 

73.7

 

 

 

75.0

 

 

 

(1.3

)

 

(2

)%

Depreciation and amortization

 

 

10.2

 

 

 

10.7

 

 

 

(0.5

)

 

(5

)%

 

 

20.5

 

 

 

27.4

 

 

 

(6.9

)

 

(25

)%

Restructuring and severance related charges

 

 

0.3

 

 

 

0.9

 

 

 

(0.6

)

 

(67

)%

 

 

0.7

 

 

 

0.9

 

 

 

(0.2

)

 

(22

)%

Total operating costs and expenses

 

 

141.8

 

 

 

139.1

 

 

 

2.7

 

 

2

%

 

 

282.4

 

 

 

282.2

 

 

 

0.2

 

 

0

%

Operating income (loss)

 

$

5.2

 

 

$

1.1

 

 

$

4.1

 

 

n/m

 

 

$

6.9

 

 

$

(5.7

)

 

$

12.6

 

 

n/m

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Consulting

 

$

47.2

 

 

$

38.1

 

 

$

9.1

 

 

24

%

 

$

89.1

 

 

$

77.0

 

 

$

12.1

 

 

16

%

Cloud

 

 

20.4

 

 

 

22.8

 

 

 

(2.4

)

 

(11

)%

 

 

41.9

 

 

 

47.2

 

 

 

(5.3

)

 

(11

)%

Communications

 

 

55.2

 

 

 

48.3

 

 

 

6.9

 

 

14

%

 

 

106.4

 

 

 

95.7

 

 

 

10.7

 

 

11

%

Infrastructure Solutions

 

 

24.2

 

 

 

31.0

 

 

 

(6.8

)

 

(22

)%

 

 

51.9

 

 

 

56.6

 

 

 

(4.7

)

 

(8

)%

Total IT Services and Hardware Revenue

 

$

147.0

 

 

$

140.2

 

 

$

6.8

 

 

5

%

 

$

289.3

 

 

$

276.5

 

 

$

12.8

 

 

5

%

 

 

June 30,

 

March 31,

 

December 31,

 

September 30,

 

June 30,

 

 

2020

 

2020

 

2019

 

2019

 

2019

Consulting

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Billable Resources

 

1,305

 

 

1,222

 

 

1,034

 

 

1,007

 

 

1,039

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Communications

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

NaaS Locations

 

5,048

 

 

4,593

 

 

4,047

 

 

3,492

 

 

2,988

 

SD - WAN Locations

 

2,575

 

 

2,337

 

 

2,197

 

 

1,849

 

 

1,743

 

Hosted UCaaS Profiles

 

276,360

 

 

277,092

 

 

274,654

 

 

270,335

 

 

254,679

 

Cincinnati Bell Inc.

Net Debt (Non-GAAP)

(Unaudited)

(Dollars in millions)

 

 

 

June 30,

 

December 31,

 

 

2020

 

2019

Receivables Facility

 

$

165.5

 

 

$

131.5

 

Credit Agreement - Tranche B Term Loan due 2024

 

 

589.5

 

 

 

592.5

 

Credit Agreement - Revolving Credit Facility

 

 

65.0

 

 

 

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

 

 

3.6

 

 

 

5.2

 

Finance lease liabilities

 

 

68.2

 

 

 

73.8

 

Net unamortized premium

 

 

1.2

 

 

 

1.3

 

Unamortized note issuance costs

 

 

(21.0

)

 

 

(22.9

)

Total debt

 

 

1,957.2

 

 

 

1,923.6

 

Less: Cash and cash equivalents

 

 

(7.0

)

 

 

(11.6

)

Net debt (Non-GAAP)

 

$

1,950.2

 

 

$

1,912.0

 

Cincinnati Bell Inc.

Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)

(Unaudited)

(Dollars in millions)

 

 

 

Three Months Ended June 30, 2020

 

 

Entertainment &
Communications

 

IT Services
& Hardware

 

Corporate

 

Total
Company

Net loss (GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(7.8

)

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.6

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33.5

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.2

)

Other components of pension and postretirement benefit plans expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.8

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) (GAAP)

 

$

30.5

 

 

$

5.2

 

 

$

(8.0

)

 

$

27.7

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

64.5

 

 

 

10.2

 

 

 

-

 

 

 

74.7

 

Restructuring and severance related charges

 

 

-

 

 

 

0.3

 

 

 

0.1

 

 

 

0.4

 

Transaction and integration costs

 

 

-

 

 

 

-

 

 

 

2.5

 

 

 

2.5

 

Transaction related employee retention agreements

 

 

-

 

 

 

-

 

 

 

0.8

 

 

 

0.8

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

1.3

 

 

 

1.3

 

Adjusted EBITDA (Non-GAAP)

 

$

95.0

 

 

$

15.7

 

 

$

(3.3

)

 

$

107.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin (Non-GAAP)

 

 

40

%

 

 

11

%

 

 

-

 

 

 

28

%

 

 

Three Months Ended June 30, 2019

 

 

Entertainment &
Communications

 

IT Services
& Hardware

 

Corporate

 

Total
Company

Net loss (GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(5.5

)

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7.6

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

34.9

 

Other expense, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

0.1

 

Other components of pension and postretirement benefit plans expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

3.0

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) (GAAP)

 

$

29.0

 

 

$

1.1

 

 

$

(5.2

)

 

$

24.9

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

63.4

 

 

 

10.7

 

 

 

0.1

 

 

 

74.2

 

Restructuring and severance related charges

 

 

0.9

 

 

 

0.9

 

 

 

-

 

 

 

1.8

 

Transaction and integration costs

 

 

-

 

 

 

-

 

 

 

0.6

 

 

 

0.6

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

1.6

 

 

 

1.6

 

Adjusted EBITDA (Non-GAAP)

 

$

93.3

 

 

$

12.7

 

 

$

(2.9

)

 

$

103.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin (Non-GAAP)

 

 

37

%

 

 

9

%

 

 

-

 

 

 

27

%

Year-over-year dollar change in Adjusted EBITDA

 

 

1.7

 

 

 

3.0

 

 

 

(0.4

)

 

 

4.3

 

Year-over-year percentage change in Adjusted EBITDA

 

 

2

%

 

 

24

%

 

 

14

%

 

 

4

%

Cincinnati Bell Inc.

Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)

(Unaudited)

(Dollars in millions)

 

 

 

Six Months Ended June 30, 2020

 

 

Entertainment &
Communications

 

IT Services
& Hardware

 

Corporate

 

Total
Company

Net loss (GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(41.8

)

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23.3

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

67.2

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1.0

)

Other components of pension and postretirement benefit plans expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

6.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) (GAAP)

 

$

42.6

 

 

$

6.9

 

 

$

(42.0

)

 

$

7.5

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

128.4

 

 

 

20.5

 

 

 

-

 

 

 

148.9

 

Restructuring and severance related charges

 

 

14.8

 

 

 

0.7

 

 

 

0.1

 

 

 

15.6

 

Transaction and integration costs

 

 

-

 

 

 

-

 

 

 

31.6

 

 

 

31.6

 

Employee contract termination costs

 

 

0.3

 

 

 

0.8

 

 

 

-

 

 

 

1.1

 

Transaction related employee retention agreements

 

 

-

 

 

 

-

 

 

 

1.4

 

 

 

1.4

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

3.0

 

 

 

3.0

 

Adjusted EBITDA (Non-GAAP)

 

$

186.1

 

 

$

28.9

 

 

$

(5.9

)

 

$

209.1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin (Non-GAAP)

 

 

38

%

 

 

10

%

 

 

-

 

 

 

28

%

 

 

Six Months Ended June 30, 2019

 

 

Entertainment &
Communications

 

IT Services
& Hardware

 

Corporate

 

Total
Company

Net loss (GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

$

(32.4

)

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income tax benefit

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(7.3

)

Interest expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

70.0

 

Other income, net

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(0.9

)

Other components of pension and postretirement benefit plans expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

5.6

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating income (loss) (GAAP)

 

$

53.5

 

 

$

(5.7

)

 

$

(12.8

)

 

$

35.0

 

Add:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

 

126.1

 

 

 

27.4

 

 

 

0.1

 

 

 

153.6

 

Restructuring and severance related charges

 

 

4.2

 

 

 

0.9

 

 

 

-

 

 

 

5.1

 

Transaction and integration costs

 

 

-

 

 

 

-

 

 

 

3.6

 

 

 

3.6

 

Stock-based compensation

 

 

-

 

 

 

-

 

 

 

3.4

 

 

 

3.4

 

Adjusted EBITDA (Non-GAAP)

 

$

183.8

 

 

$

22.6

 

 

$

(5.7

)

 

$

200.7

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Adjusted EBITDA Margin (Non-GAAP)

 

 

37

%

 

 

8

%

 

 

-

 

 

 

26

%

Year-over-year dollar change in Adjusted EBITDA

 

 

2.3

 

 

 

6.3

 

 

 

(0.2

)

 

 

8.4

 

Year-over-year percentage change in Adjusted EBITDA

 

 

1

%

 

 

28

%

 

 

4

%

 

 

4

%

Cincinnati Bell Inc.

Consolidated Statements of Cash Flows

(Unaudited)

(Dollars in millions)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

2020

 

2019

 

2020

 

2019

Cash provided by operating activities

 

$

44.5

 

 

$

62.0

 

 

$

73.6

 

 

$

118.8

 

Capital expenditures

 

 

(48.5

)

 

 

(54.1

)

 

 

(99.4

)

 

 

(110.6

)

Other, net

 

 

(1.7

)

 

 

0.1

 

 

 

(1.7

)

 

 

?

 

Cash used in investing activities

 

 

(50.2

)

 

 

(54.0

)

 

 

(101.1

)

 

 

(110.6

)

Net increase in corporate credit and receivables facilities with initial maturities less than 90 days

 

 

10.9

 

 

 

5.3

 

 

 

42.0

 

 

 

1.5

 

Repayment of debt

 

 

(6.0

)

 

 

(4.7

)

 

 

(12.2

)

 

 

(9.2

)

Debt issuance costs

 

 

(0.3

)

 

 

(0.6

)

 

 

(0.3

)

 

 

(0.7

)

Dividends paid on preferred stock

 

 

(2.6

)

 

 

(2.6

)

 

 

(5.2

)

 

 

(5.2

)

Other, net

 

 

?

 

 

 

?

 

 

 

(1.1

)

 

 

(0.8

)

Cash provided by (used in) financing activities

 

 

2.0

 

 

 

(2.6

)

 

 

23.2

 

 

 

(14.4

)

Effect of exchange rate changes on cash and cash equivalents

 

 

0.1

 

 

 

?

 

 

 

(0.3

)

 

 

0.1

 

Net (decrease) increase in cash and cash equivalents

 

 

(3.6

)

 

 

5.4

 

 

 

(4.6

)

 

 

(6.1

)

Cash and cash equivalents at beginning of period

 

 

10.6

 

 

 

3.9

 

 

 

11.6

 

 

 

15.4

 

Cash and cash equivalents at end of period

 

$

7.0

 

 

$

9.3

 

 

$

7.0

 

 

$

9.3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Reconciliation of Cash Provided by Operating Activities (GAAP) to

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Free Cash Flow (Non-GAAP)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash provided by operating activities

 

$

44.5

 

 

$

62.0

 

 

$

73.6

 

 

$

118.8

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Capital expenditures

 

 

(48.5

)

 

 

(54.1

)

 

 

(99.4

)

 

 

(110.6

)

Restructuring and severance related payments

 

 

3.5

 

 

 

4.0

 

 

 

11.8

 

 

 

10.8

 

Preferred stock dividends

 

 

(2.6

)

 

 

(2.6

)

 

 

(5.2

)

 

 

(5.2

)

Transaction and integration costs

 

 

7.7

 

 

 

2.4

 

 

 

35.5

 

 

 

4.2

 

Free cash flow (Non-GAAP)

 

$

4.6

 

 

$

11.7

 

 

$

16.3

 

 

$

18.0

 

Income tax payments (refunds)

 

$

?

 

 

$

0.5

 

 

$

(1.1

)

 

$

1.6

 

Cincinnati Bell Inc.

Capital Expenditures

(Unaudited)

(Dollars in millions)

 

 

 

Three Months Ended

 

 

June 30,
2020

 

March 31,
2020

 

December 31,
2019

 

September 30,
2019

 

June 30,
2019

Entertainment and Communications

 

$

42.2

 

 

$

44.4

 

 

$

51.0

 

 

$

51.3

 

 

$

47.9

 

IT Services and Hardware

 

 

6.3

 

 

 

6.5

 

 

 

5.5

 

 

 

5.4

 

 

 

6.1

 

Corporate

 

 

-

 

 

 

-

 

 

 

-

 

 

 

-

 

 

 

0.1

 

Total capital expenditures

 

$

48.5

 

 

$

50.9

 

 

$

56.5

 

 

$

56.7

 

 

$

54.1

 

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

 

 

June 30,
2020

 

June 30,
2019

Net loss applicable to common shareholders (GAAP)

 

$

(10.4

)

 

$

(8.1

)

Special items:

 

 

 

 

 

 

 

 

Restructuring and severance related charges

 

 

0.4

 

 

 

1.8

 

Transaction and integration costs

 

 

2.5

 

 

 

0.6

 

Income tax effect of special items *

 

 

(6.0

)

 

 

(0.9

)

Total special items

 

 

(3.1

)

 

 

1.5

 

Net loss applicable to common shareowners, excluding special items (Non-GAAP)

 

$

(13.5

)

 

$

(6.6

)

Weighted average diluted shares outstanding**

 

 

50.6

 

 

 

50.4

 

Diluted loss per common share (GAAP)

 

$

(0.21

)

 

$

(0.16

)

Adjusted diluted loss per common share (Non-GAAP)

 

$

(0.27

)

 

$

(0.13

)

 

* 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)

 

 

 

Six Months Ended

 

 

June 30,
2020

 

June 30,
2019

Net loss applicable to common shareholders (GAAP)

 

$

(47.0

)

 

$

(37.6

)

Special items:

 

 

 

 

 

 

 

 

Restructuring and severance related charges

 

 

15.6

 

 

 

5.1

 

Transaction and integration costs

 

 

31.6

 

 

 

3.6

 

Income tax effect of special items *

 

 

(3.7

)

 

 

(1.8

)

Total special items

 

 

43.5

 

 

 

6.9

 

Net loss applicable to common shareowners, excluding special items (Non-GAAP)

 

$

(3.5

)

 

$

(30.7

)

Weighted average diluted shares outstanding**

 

 

50.6

 

 

 

50.3

 

Diluted loss per common share (GAAP)

 

$

(0.93

)

 

$

(0.75

)

Adjusted diluted loss per common share (Non-GAAP)

 

$

(0.07

)

 

$

(0.61

)

 

* 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).

 


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