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Cincinnati Bell (CBB) Misses Q4 Earnings, Revenue Estimates

Zacks

Cincinnati Bell Inc. CBB reported disappointing financial numbers in fourth-quarter 2016 wherein both the top line and bottom line fell short of the Zacks Consensus Estimate.

On a GAAP basis, quarterly net loss came in at $3.9 million or a loss of 9 cents per share compared with a net income of $30 million or 71 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special items) earnings per share of 1 cent underperform the Zacks Consensus Estimate of 3 cents.

Quarterly total revenue was $285.3 million, down 4% year over year and also below the Zacks Consensus Estimate of $305.3 million.

Operating income was $10.5 million, down a substantial 58% year over year owing to restructuring and severance related charges. Meanwhile, adjusted EBITDA (earnings before interest, depreciation and amortization) increased 4.7% year over year to $74.2 million in the reported quarter. EBITDA margin was 26% compared with 25% in the prior-year quarter.


Cash Flow

In fourth-quarter 2016, Cincinnati Bell generated $27.4 million of cash from operating activities compared with $16.2 million in the prior-year quarter. Quarterly free cash flow was a negative $71.8 million compared with a negative $55.9 million in the year-ago quarter.

Liquidity

Cincinnati Bell ended 2016 with cash and cash equivalents of $9.7 million compared with $14.8 million at the end of 2015. Net debt at quarter-end was $1,196.9 million compared with $1,230.2 million at 2015-end.

Segmental Results

Entertainment and Communications revenues rose 3% year over year to $193 million owing to a 23% rise in video revenues. The increase was partially neutralized by a 29% decline in services & other revenues.

IT Services and Hardware revenues decreased 9% year over year to $95.5 million. The downside was due to a 23% decline in telecom & IT hardware revenues, partially mitigated by a 37% rise in cloud services revenues.

Subscribers Statistics

At the end of 2016, Cincinnati Bell had 0.2013 million residential voice lines, down 7.6% year over year and 0.3224 million business voice lines, up 5.7% year over year. Long distance lines were 0.3173 million, down 6.6%. DSL Internet subscribers were 0.1056 million, down 21%. Fioptics Internet customers were 0.1976 million, up 28.6%. Fioptics video subscribers were 0.1376 million, up 20.3% year over year.

Cincinnati Bell Inc Price, Consensus and EPS Surprise

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

Outlook

Cincinnati Bell expects revenues and adjusted EBITDA of approximately $1.2 billion and $295 million (plus or minus 2%), respectively, in 2017.

Latest Deal

In Nov 2016, Cincinnati Bell declared a deal with The E.W. Scripps Company, an American broadcasting company in Cincinnati. Per the deal, Scripps’ wholly owned subsidiary – Newsy, a digital video news channel – will now be offered through its Fioptics cable television services. Newsy is accessible on devices such as Apple Inc.’s AAPL Apple TV, DISH Network Corp.’s DISH Sling TV, Roku, Amazon.com Inc.’s AMZN Fire TV and Google Chromecast. It is also available on mobile apps like iOS, Android and Kindle Fire. Cincinnati Bell currently carries 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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