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Cincinnati Bell (CBB) Reports Wider-Than-Expected Loss in Q2

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Cincinnati Bell Inc. (CBB - Free Report) reported disappointing results in the second 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 $16.4 million or 39 cents per share compared with net loss of $0.3 million or 1 cent per share in the year-ago quarter. The deterioration in the bottom line despite top-line growth was primarily due to higher operating expenses and increased interest costs related to the financing of the merger with Hawaiian Telcom.  Quarterly adjusted (excluding special items) loss per share was 19 cents, wider than the Zacks Consensus Estimate of loss of 13 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 $296.8 million were up 14.4% year over year driven by continued solid demand of fiber-based products as well as inorganic growth. However, the figure lagged the Zacks Consensus Estimate of $298 million.

Operating income was $20.2 million compared with $24.4 million reported in the year-ago quarter. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) increased $2.3 million year over year to $80.1 million in the reported quarter. However, adjusted EBITDA margin was 27% compared with 30% in the year-ago quarter.

Segmental Results

Entertainment and Communicationsrevenues declined 3.9% year over year to $173.9 million. The fall was primarily due to the completion of a onetime fiber build in the year-ago quarter. This was partially offset by a 11% year-over-year increase in Fioptics revenues.

IT Services and Hardwarerevenues increased 51.3% year over year to $128.3 million. However, there was a sharp 49% rise in operating costs and expenses, resulting in the operating loss of $0.2 million. This compares favorably with operating loss of $1.5 million in the year-ago quarter.

Balance Sheet & Cash Flow

Total cash provided by operating activities was $89.9 million for the first six months of 2018 compared with $122.9 million in the prior-year period. Cincinnati Bell exited the quarter with total cash and cash equivalents of $396.8 million compared with $58.2 million in the prior-year quarter. Total debt at the quarter end was $1,744.1 million.

Notable Developments

In July, the company completed the acquisition of Hawaiian Telcom Holdco, Inc. The merger takes Cincinnati Bell a step forward toward expanding its portfolio of next-generation fiber offerings and securing fiber density value for customers and shareholders. It positions the company at the forefront of innovation in telecommunications and establishes a platform for future growth.


Cincinnati Bell has revised its earlier guidance for 2018, reflecting expected contributions from Hawaiian Telcom in the second half of 2018. Notably, the company currently expects revenues to be between $1,375 million and $1,460 million, and adjusted EBITDA in the range of $363-$379 million.

Cincinnati Bell currently carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks are Atlantic Power Corporation (AT - Free Report) , Telephone and Data Systems, Inc. (TDS - Free Report) and Ameren Corporation (AEE - Free Report) . While Atlantic Power Corporation sports a Zacks Rank #1 (Strong Buy), Telephone and Data Systems and Ameren Corporation carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Atlantic Power Corporation surpassed estimates twice in the trailing four quarters with an average beat of 7.24%.

Telephone and Data Systems exceeded estimates twice in the trailing four quarters with an average beat of 88.80%.

Ameren Corporation surpassed estimates thrice in the trailing four quarters with an average beat of 7.69%.

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