Cincinnati Bell Inc. reported mixed financial numbers in the first quarter of 2017. While loss per share was narrower than the Zacks Consensus Estimate, revenues fell below the mark.
On a GAAP basis, quarterly net income came in at $57.8 million or $1.37 per share compared with a net income of $4.4 million or 10 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special items) loss per share of 1 cent outpaced the Zacks Consensus Estimate of 4 cents.
Quarterly total revenue was $278.2 million, down 4% year over year and also lower than the Zacks Consensus Estimate of $295 million.
Operating loss was $5.3 million compared with an operating income of $29.6 million in the year-ago quarter. Meanwhile, adjusted EBITDA (earnings before interest, depreciation and amortization) decreased 8.2% year over year to $70.9 million in the reported quarter. Adjusted EBITDA margin was 25% compared with 27% in the prior-year quarter.
Cash Flow
In first-quarter 2017, Cincinnati Bell generated $53.9 million of cash from operating activities compared with $65.7 million in the prior-year quarter. Quarterly free cash flow was $9.5 million compared with $7.9 million in the year-ago quarter.
Liquidity
Cincinnati Bell ended the first quarter of 2017 with cash and cash equivalents of $44.7 million compared with $9.7 million at the end of 2016. Total debt at first quarter-end was $1,121.9 million compared with $1,206.6 million at the end of 2016.
Segmental Results
Entertainment and Communications revenues rose 3% year over year to $195.3 million owing to a 24% rise in video revenues. The increase was partially neutralized by a 32% decline in services & other revenues.
IT Services and Hardware revenues decreased 16% year over year to $86.2 million. The downside was due to a 38% decline in Management and Monitoring revenues, 25% decline in Telecom and IT hardware revenues, partially mitigated by a 34% rise in cloud services revenues.
Subscribers Statistics
At the end of the first quarter of 2017, Cincinnati Bell had 0.1966 million residential voice lines, down 7.7% year over year and 0.3203 million business voice lines, up 1.4% year over year. Long distance lines were 0.311 million, down 6.9%. DSL Internet subscribers were 0.1001 million, down 21.8%. Fioptics Internet customers were 0.2073 million, up 26%. Fioptics video subscribers were 0.1411 million, up 17.6% year over year.
Outlook
In 2017, Cincinnati Bell expects revenues and adjusted EBITDA of approximately $1.2 billion and $295 million (+/-2%), respectively.
Cincinnati Bell currently carries a Zacks Rank #4 (Sell). The company is transforming itself from a legacy copper-based telecom operator to an IT company with contemporary fiber assets, offering flexible data, video, voice and IP solutions to both consumers and business customers. Better-ranked companies in this league are CenturyLink Inc. , Windstream Holdings Inc. and Frontier Communications Corp. . All three stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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Cincinnati Bell (CBB) Reports Narrower-than-Expected Q1 Loss
Cincinnati Bell Inc. reported mixed financial numbers in the first quarter of 2017. While loss per share was narrower than the Zacks Consensus Estimate, revenues fell below the mark.
On a GAAP basis, quarterly net income came in at $57.8 million or $1.37 per share compared with a net income of $4.4 million or 10 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special items) loss per share of 1 cent outpaced the Zacks Consensus Estimate of 4 cents.
Quarterly total revenue was $278.2 million, down 4% year over year and also lower than the Zacks Consensus Estimate of $295 million.
Operating loss was $5.3 million compared with an operating income of $29.6 million in the year-ago quarter. Meanwhile, adjusted EBITDA (earnings before interest, depreciation and amortization) decreased 8.2% year over year to $70.9 million in the reported quarter. Adjusted EBITDA margin was 25% compared with 27% in the prior-year quarter.
Cash Flow
In first-quarter 2017, Cincinnati Bell generated $53.9 million of cash from operating activities compared with $65.7 million in the prior-year quarter. Quarterly free cash flow was $9.5 million compared with $7.9 million in the year-ago quarter.
Liquidity
Cincinnati Bell ended the first quarter of 2017 with cash and cash equivalents of $44.7 million compared with $9.7 million at the end of 2016. Total debt at first quarter-end was $1,121.9 million compared with $1,206.6 million at the end of 2016.
Segmental Results
Entertainment and Communications revenues rose 3% year over year to $195.3 million owing to a 24% rise in video revenues. The increase was partially neutralized by a 32% decline in services & other revenues.
IT Services and Hardware revenues decreased 16% year over year to $86.2 million. The downside was due to a 38% decline in Management and Monitoring revenues, 25% decline in Telecom and IT hardware revenues, partially mitigated by a 34% rise in cloud services revenues.
Subscribers Statistics
At the end of the first quarter of 2017, Cincinnati Bell had 0.1966 million residential voice lines, down 7.7% year over year and 0.3203 million business voice lines, up 1.4% year over year. Long distance lines were 0.311 million, down 6.9%. DSL Internet subscribers were 0.1001 million, down 21.8%. Fioptics Internet customers were 0.2073 million, up 26%. Fioptics video subscribers were 0.1411 million, up 17.6% year over year.
Outlook
In 2017, Cincinnati Bell expects revenues and adjusted EBITDA of approximately $1.2 billion and $295 million (+/-2%), respectively.
Cincinnati Bell Inc Price, Consensus and EPS Surprise
Cincinnati Bell Inc Price, Consensus and EPS Surprise | Cincinnati Bell Inc Quote
Cincinnati Bell currently carries a Zacks Rank #4 (Sell). The company is transforming itself from a legacy copper-based telecom operator to an IT company with contemporary fiber assets, offering flexible data, video, voice and IP solutions to both consumers and business customers. Better-ranked companies in this league are CenturyLink Inc. , Windstream Holdings Inc. and Frontier Communications Corp. . All three stocks currently carry a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>