Cincinnati Bell (CBB) Beats Q3 Earnings, Revenue Estimates

Cincinnati Bell Inc. (NYSE:CBB) reported strong financial numbers in the third quarter of 2017 wherein both the top and the bottom line outpaced the Zacks Consensus Estimate.

On a GAAP basis, quarterly net loss came in at $13.8 million or a loss of 33 cents per share against net income of $16.2 million or 38 cents per share in the year-ago quarter. However, quarterly adjusted (excluding special items) earnings per share were 3 cents which surpassed the Zacks Consensus Estimate of a loss of 2 cents.

Quarterly total revenues of $289.2 million were down 7% year over year. However, the figure beat the Zacks Consensus Estimate of $286.3 million.

Operating income was $12.7 million compared with $25.5 million in the year-ago quarter. Adjusted EBITDA (earnings before interest, depreciation and amortization) decreased 1.7% year over year to $76.2 million in the reported quarter. Adjusted EBITDA margin was 26% compared with 25% in the year-ago quarter.

Cash Flow

In third-quarter 2017, Cincinnati Bell generated $33.9 million of cash from operating activities compared with $43.7 million in the prior-year quarter. Quarterly free cash flow was $6.4 million compared with a negative $24.3 million in the year-ago quarter.

Liquidity

Cincinnati Bell ended the third quarter of 2017 with cash and cash equivalents of $43.7 million compared with $9.7 million at the end of 2016. Total debt at the end of third quarter was $1,132.8 million compared with $1,206.6 million at the end of 2016.

Segmental Results

Entertainment and Communications revenues increased 2% year over year to $196.2 million owing to a 22% rise in consumer data and 20% rise in business video revenues. The increase was partially neutralized by a 13% decline in services & other Carrier revenues.

IT Services and Hardware revenues decreased 22% year over year to $96.3 million. The downside was due to a 32% decline in Management and Monitoring revenues, 24% decrease in Professional services revenues, partially mitigated by a 35% rise in unified communications revenues.

Subscribers Statistics

At the end of the third quarter of 2017, Cincinnati Bell had 0.1876 million residential voice lines, declining 8.4% year over year and 0.3240 million business voice lines, increasing 1.6% year over year. Long distance lines were 0.2991 million, reflecting a decline of 7.6%. DSL Internet subscribers were 0.0867 million, down 24.1%. Fioptics Internet customers were 0.2212 million, reflecting an increase of 19.2%. Fioptics video subscribers were 0.1435 million, up 7.6% year over year.

Outlook

In 2017, Cincinnati Bell expects revenues to be in the range of $1.35 - $1.40 billion and adjusted EBITDA to be approximately $305 million (+/- 2%).

Zacks Rank

Cincinnati Bell has a Zacks Rank #4 (Sell). A few better-ranked stocks in this league are TELUS Corp. (NYSE:TU) , Telefonica (MC:TEF) Brasil SA (NYSE:VIV) and British Group plc (NYSE:BT) , each carrying 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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