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Cincinnati Bell (CBB) Misses Q1 Earnings & Revenue Estimates

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Cincinnati Bell Inc. reported disappointing results in the first quarter of 2018, wherein both the top line and the bottom line missed the Zacks Consensus Estimate.   

On a GAAP basis, quarterly net loss came in at $10.9 million or 26 cents per share against net profit of $58 million or $1.37 per share in the year-ago quarter. The significant decline in year-over-year earnings despite top-line growth was primarily due to higher operating expenses. Further, quarterly adjusted (excluding special items) loss per share was 19 cents, wider than the Zacks Consensus Estimate of loss of 15 cents.

Cincinnati Bell Inc Price, Consensus and EPS Surprise

 

Cincinnati Bell Inc Price, Consensus and EPS Surprise | Cincinnati Bell Inc Quote

Quarterly total revenues of $295.7 million were up 18% year over year driven by solid demand of fiber-based products and inorganic growth. However, the figure lagged the Zacks Consensus Estimate of $299 million.

Operating income was $24.2 million against a loss of $1.8 million in the year-ago quarter. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) increased $5.8 million year over year to $78.8 million in the reported quarter owing to higher revenues. However, adjusted EBITDA margin was 27% compared with 29% in the year-ago quarter.

Segmental Results

Entertainment and Communications revenues dipped 1% year over year to $174.2 million owing to a 14% fall in the legacy network revenues. The decline was partially offset by a 13% rise in Fioptics revenues.

IT Services and Hardware revenues increased 58% year over year to $127.6 million. However, there was a sharp 58% rise in operating costs and expenses, bringing down the operating income to $1.4 million, which still remained 56% higher than the year-ago quarter tally.

Balance Sheet & Cash Flow

Total cash provided by operating activities was $58.5 million for the first three months of 2018 compared with $53.9 million in the prior-year period. Cincinnati Bell exited the quarter with total cash and cash equivalents of $412.2 million compared with a mere $44.7 million in the prior-year quarter. This significant difference was due to higher cash used in financing activities. Total debt at quarter end was $ 1,745.1 million.

Outlook

Cincinnati Bell has reaffirmed its earlier guidance for 2018 and continues to expect revenues to be between $1,200 million and $1,275 million, and adjusted EBITDA between $320 million and $330 million.

Zacks Rank & Key Picks

Cincinnati Bell currently carries a Zacks Rank #4 (Sell). Some better-ranked stocks worth considering in the broader industry are MYR Group Inc. (MYRG - Free Report) , sporting a Zacks Rank #1 (Strong Buy), BT Group PLC , and TELE2 AB ADR (TLTZY - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

MYR Group is currently trading at a forward P/E (F1) of 19.02x.

BT Group PLC is currently trading at a forward P/E (F1) of 8.24x.

TELE2 is currently trading at a forward P/E (F1) of 17.32x.

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