Broadwing’s First Quarter Financial Results Show Solid Improvement
Broadwing’s First Quarter Financial Results Show Solid Improvement
Enterprise Market Success Broadens; Bank Debt Reduced by 15 PercentCINCINNATI—April 17, 2002--Broadwing Inc. (NYSE:BRW) today announced financial results for the first quarter. Earnings before interest, taxes, depreciation and amortization (EBITDA) grew 2 percent to $147 million while, as expected, revenue decreased 4 percent to $537 million.
“We are encouraged by the trends we saw in the first quarter,” said Rick Ellenberger, Broadwing Inc. chairman-elect and CEO. “Our core businesses were strengthened, our capital spending of $53 million was the lowest ever, we retired $284 million of our bank debt, and the 4 percent revenue decline was primarily attributable to our earlier disclosed decision to exit the construction business. The decisive actions we undertook to restructure our business are generating measurable cost savings as every one of our businesses achieved good sequential EBITDA improvement.”
Broadwing's Cincinnati-based businesses continued to leverage the advantage of having a customer-centric, integrated market approach with the reach of the national all-optical switched network. In the quarter, Cincinnati Bell expanded its award-winning customer service, and continued to manage its cost structure.
On a consolidated basis, the Cincinnati Bell businesses reported EBITDA growth of 9 percent and revenue growth of 4 percent.
Local Communications Services
Broadwing's local-exchange company, Cincinnati Bell Telephone, produced another quarter of solid financial performance, delivering EBITDA growth of 3 percent to $106 million and revenue that grew 2 percent to $210 million. Results were driven by growth in data, voice, and IP services sold on Broadwing's national network, continued penetration of bundled services, and a steady increase in ADSL subscribers. Furthermore, revenue per employee continues to climb, increasing 8 percent over the first quarter last year.
Cincinnati Bell's EBITDA margin remained a solid 51 percent, driven by strong cost management and expanding revenue per household.
As the market share leader with 28 percent of the Cincinnati market, CBW is focused on maximizing its financial profitability. EBITDA improved 58 percent from a year ago to $23 million, capital spending declined 20 percent to $8 million, and revenue increased 9 percent to $62 million.
Cincinnati Bell Wireless' EBITDA margin expanded almost 12 points to 37 percent. For the quarter, the company produced net income of $7 million.
Broadwing Communications, the company's national broadband services business, has gained positive impact from its late 2001 restructuring and continued success with high-value enterprise customers. This is most apparent in EBITDA that increased 135 percent sequentially to $20 million as the company's focus on quality revenue and aggressive cost management began to take hold. Compared with a year ago, EBITDA declined 38 percent.
For the quarter, revenue declined 10 percent from the same quarter a year ago to $269 million. After taking into account the company's previously announced plans to exit the construction business and rationalize its data/collocation hosting centers, revenue only decreased 2 percent.
Other Communications Services
Cincinnati Bell Any Distance, the company's award-winning long distance offering, continues to add market share and now has captured 68 percent of the residential market and 39 percent of the business market.
As announced earlier this quarter, the company sold its yellow page directory business for $345 million. As a result of the sale, all prior periods have been restated to reflect the Directory business as a discontinued operation and the company's bank debt was reduced by 15%.
In total, Other Communications Services businesses increased revenue 8 percent over the first quarter of 2001 to $20 million, while EBITDA was essentially breakeven.
“I am pleased by our continued success in expanding the diversity of our product set and customer segments,” said Kevin Mooney, chief operating officer, Broadwing Inc. “During the quarter, we saw some weakness in our carrier business offset by solid execution in our consumer and enterprise businesses. I am also pleased with how rapidly we implemented our reorganization and moved up market in the enterprise sector.”
In the quarter, the company recorded an increase to its fourth quarter 2001 restructure charge of $17 million for additional vendor contract termination charges.
For the period, the company reported earnings per share of $0.83. Excluding non-recurring gains, restructuring charges and discontinued operations from 2002 and 2001 of $1.00 and $0.01, respectively, the company's loss of $0.17 per share represents a $0.01 per share improvement over a $0.18 per share loss in the first quarter of 2001.
“The positive trends of the first quarter are a direct result of the confidence and spirit of Broadwing's employees to manage the company through this challenging period in our industry and execute against our financial targets,” said Ellenberger.
Broadwing will host a conference call discussing the first quarter results on Wednesday, April 17 at 9:00 a.m. EDT, which can be accessed by dialing 800-422-9256 (internationally at 847-619-6928) at least fifteen minutes prior to start time. The conference call will also be web-cast on the company's website at www.broadwing.com. A taped replay will be available for one week by calling 888-843-8996 (internationally at 630-652-3044), passcode 5616158.
Broadwing Inc. (NYSE: BRW) is an integrated communications company comprised of Broadwing Communications and Cincinnati Bell. Broadwing Communications leads the industry as the world's first intelligent, all-optical, switched network provider and offers businesses nationwide a competitive advantage by providing data, voice and Internet solutions that are flexible, reliable and innovative on its 18,500-mile optical network and its award-winning IP backbone. Cincinnati Bell is one of the nation's most respected and best performing local exchange and wireless providers with a legacy of unparalleled customer service excellence and financial strength. The company was recently ranked number one in customer satisfaction by J.D. Power and Associates for local residential telephone service and residential long distance among mainstream users. Cincinnati Bell provides a wide range of telecommunications products and services to residential and business customers in Ohio, Kentucky and Indiana. Broadwing Inc. is headquartered in Cincinnati, Ohio. For more information, visit www.broadwing.com.
Note: Information included in this news release contains forward-looking statements that involve potential risks and uncertainties. Broadwing's future results could differ materially from those discussed herein. Factors that could cause or contribute to such differences include, but are not limited to, Broadwing's ability to maintain its market position in communications services, general economic trends affecting the purchase of telecommunication services, world and national events that may affect the ability to provide services, and its ability to develop and launch new products and services. More information on potential risks and uncertainties is available in the company's recent filings with the Securities and Exchange Commission, including the 2001 Form 10-K for Broadwing Inc. and Broadwing Communications Inc.