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Cincinnati Bell (CBB) Q2 Loss Narrows Y/Y, Revenues Rise

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Cincinnati Bell Inc. (CBB - Free Report) reported higher-than-expected second-quarter 2019 financial results, wherein both the top line and the bottom line surpassed the respective Zacks Consensus Estimate.

Following the announcement, its share price increased 20.3% to eventually close at $4.27 on Friday.

Net Loss

On a GAAP basis, net loss was $8.1 million or loss of 16 cents per share compared with net loss of $16.4 million or loss of 39 cents per share in the year-ago quarter. The narrower loss was due to top-line growth, partially offset by higher operating expenses.

Non-GAAP net loss came in at $6.6 million or loss of 13 cents per share compared with net loss of $7.9 million or loss of 19 cents per share in the prior-year quarter. The bottom line was narrower than the Zacks Consensus Estimate of a loss of 26 cents.

Revenues

Quarterly revenues grew 29.4% year over year to $384.2 million backed by impressive results from investments in fiber and IT services. Also, the top line, surpassed the consensus estimate of $376 million.

Cincinnati Bell Inc Price, Consensus and EPS Surprise

Cincinnati Bell Inc Price, Consensus and EPS Surprise

Cincinnati Bell Inc price-consensus-eps-surprise-chart | Cincinnati Bell Inc Quote

Segmental Performance

Revenues from Entertainment and Communications improved 44% year over year to $250.5 million, primarily driven by strong sales in fiber businesses. Cincinnati Bell’s merger with Hawaiian Telcom significantly expanded its high-quality metro fiber asset portfolio to meet the increased need for bandwidth and support the demand for IoT ecosystems.

IT Services and Hardware revenues increased 9.3% year over year to $140.2 million. Notably, the rise was driven by 13.7% growth in Consulting revenues and 16.3% increase from Communications revenues.

Other Details

Overall operating income was $24.9 million compared with $20.2 million in the year-ago quarter. Adjusted EBITDA increased $23 million to $103.1 million.

Cash Flow & Liquidity

During the second quarter, Cincinnati Bell generated $62 million of cash from operating activities compared with $31.4 million in the year-ago quarter. As of Jun 30, 2019, the regional telephone company’s net debt (non-GAAP) totaled $1,927.8 million.

2019 Outlook

Cincinnati Bell has reiterated guidance for full-year 2019, reflecting expected contribution from Hawaiian Telcom. Notably, the company continues to anticipate revenues between $1,515 million and $1,575 million, and adjusted EBITDA in the range of $400-$410 million.

Moving Ahead

Cincinnati Bell is focused on transforming itself from a legacy copper-based telecommunications company to a technology company with contemporary fiber assets servicing both consumer and business customers with flexible data, video, voice and IP solutions. With a well-designed marketing program, popular brand value and strong reputation of offering high-quality service, the company expects to increase its Entertainment and Communications revenues. Also, the expansion of the company's geographic footprint in IT services has brought enhanced scale and client diversification, supporting its transformation to a hybrid IT solutions provider.

Zacks Rank & Key Picks

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

Some better-ranked stocks in the same space are Telephone and Data Systems, Inc. (TDS - Free Report) , BCE, Inc. (BCE - Free Report) and Frontier Communications Corporation (FTR - Free Report) . While Telephone and Data Systems sports a Zacks Rank #1 (Strong Buy), BCE and Frontier Communications carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Telephone and Data Systems outpaced estimates in the last reported quarter by 18.47%.

BCE delivered average positive earnings surprise of 2.27% in the trailing four quarters.

Frontier Communications pulled off average positive earnings surprise of 115.81% in the trailing four quarters.

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