Cincinnati Bell Inc. CBB reported tepid fourth-quarter 2019 results, wherein the top line declined year over year but GAAP net loss narrowed. In addition, the company missed both the top- and bottom-line estimates.
On a GAAP basis, net loss for the December quarter was $23.2 million or loss of 46 cents per share compared with net loss of $32.6 million or loss of 65 cents per share in the year-ago quarter. The improvement was primarily due to higher income tax expenses in the year-earlier quarter.
Non-GAAP net loss was $10.9 million or loss of 22 cents per share compared with net loss of $27.8 million or loss of 65 cents per share in the prior-year quarter. The bottom line was wider than the Zacks Consensus Estimate of a loss of 21 cents.
In full-year 2019, GAAP net loss was $77 million or loss of $1.53 per share compared with net loss of $80.2 million or loss of $1.73 per share a year ago. Non-GAAP net loss totaled $57 million or loss of $1.13 per share compared with net loss of $51.6 million or loss of $1.11 per share in 2018.
Cincinnati Bell Inc Price, Consensus and EPS Surprise
Cincinnati Bell Inc price-consensus-eps-surprise-chart | Cincinnati Bell Inc Quote
Quarterly revenues fell 8.6% year over year to $390.4 million, primarily due to lower revenues in both operating segments owing to challenging macroeconomic environment. The top line missed the consensus estimate of $392 million. Revenues in full-year 2019 were $1,536.7 million, up from $1,378.2 million in 2018.
Revenues from Entertainment and Communications declined 2.2% year over year to $246.4 million, with Cincinnati contributing $168.5 million and Hawaii $77.9 million. Customers transitioning away from lower margin linear video programming to over-the-top solutions resulted in revenue decrease in both the markets. Adjusted EBITDA was $89.6 million, down 1.1% from year-ago quarter.
IT Services and Hardware revenues were $150.4 million compared with $153.9 million in the year-ago quarter. Adjusted EBITDA was $18.6 million in the fourth quarter, down 5.6% year over year.
Overall operating income was $15.3 million compared with $24.4 million in the year-ago quarter, due to lower revenues. Adjusted EBITDA declined 4.6% to $102.6 million.
Cash Flow & Liquidity
In 2019, Cincinnati Bell generated $259.1 million of cash from operating activities compared with $214.7 million in 2018. As of Dec 31, 2019, the regional telephone company’s non-GAAP net debt totaled $1,912 million compared with $1,914.4 million a year ago.
During the quarter, Cincinnati Bell inked an agreement to be acquired by Toronto-based conglomerate, Brookfield Infrastructure Partners, at approximately $2.6 billion. Per the deal, the shareholders will be entitled to receive $10.50 in cash for each outstanding share. Subject to certain regulatory and shareholder approvals, the much-awaited transaction is expected to close by the end of 2020. The deal will help the company to deliver flexible data, video, voice and IP solutions with enhanced network coverage and broadband speed to customers primarily based in Ohio, Indiana, Kentucky and Hawaii, thereby improving its overall financial condition.
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 its 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). Better-ranked stocks in the broader industry include Bandwidth Inc. BAND, ATN International, Inc. ATNI and Calix, Inc CALX, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Bandwidth has long-term earnings growth expectation of 12.9%. It delivered positive earnings surprise of 67.6%, on average, in the trailing four quarters, beating estimates on each occasion.
ATN International surpassed earnings estimates twice in the trailing four quarters, the positive surprise being 143.9%, on average.
Calix has long-term earnings growth expectation of 6%. It delivered positive earnings surprise of 24%, on average, in the trailing four quarters, beating estimates thrice.
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