Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 8-K
 

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report: May 8, 2019


 
CINCINNATI BELL INC.
(Exact Name of Registrant as Specified in its Charter)


 
 
 
 
 
 
Ohio
 
001-8519
 
31-1056105
(State or other jurisdiction
of incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
221 East Fourth Street
Cincinnati, OH 45202
(Address of Principal Executive Office)
Registrant's telephone number, including area code: (513) 397-9900

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
o
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
o
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Securities Act. o





Securities Registered Pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol(s)
 
Name of Each Exchange on Which Registered
Common Shares ($0.01 par value)
 
CBB
 
New York Stock Exchange
Depositary Shares, each representing 1/20 interest in a Share of 6 ¾% Cumulative Convertible Preferred Stock, without par value
 
CBB.PB
 
New York Stock Exchange






Section 2 - Financial Information

Item 2.02     Results of Operations and Financial Condition

On May 8, 2019, Cincinnati Bell Inc. reported its financial results for the first quarter 2019. The earnings release is attached as Exhibit 99.1.
 
Section 7 - Regulation FD
 
Item 7.01     Regulation FD Disclosure
 
On May 8, 2019, Leigh R. Fox, the Company's president and chief executive officer, and Andrew R. Kaiser, the Company's chief financial officer, will present first quarter 2019 results. The presentation will be webcast both live and on-demand. To listen, go to the Investor Relations section of www.cincinnatibell.com, click on the Webcasts/Presentations tab and follow the instructions for accessing the webcast.
A copy of the presentation to be made during the meeting is attached to this Current Report as Exhibit 99.2.
In the first quarter of 2019, the Company determined that certain revenue in the IT Services and Hardware segment associated with nonrecurring projects is better aligned with Infrastructure Solutions, rather than Consulting, where it was previously reported. Revenue by practice utilizing this new classification has been included as Exhibit 99.3 to this Current Report on Form 8-K.
The information in Items 2.02 and 7.01 and the exhibits attached to this Current Report as Exhibits 99.1, 99.2 and 99.3 are being furnished and shall not be deemed "filed" for purposes of Section 18 of the Securities Act of 1934 or otherwise subject to the liabilities of that Section nor shall they be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Act of 1934, except as shall be expressly stated by specific reference in such filing.
 
Item 9.01    Financial Statements and Exhibits.

(d)
Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
 
 
Press release dated May 8, 2019
 
 
 
 
Presentation made during the Cincinnati Bell first quarter 2019 earnings conference call on May 8, 2019
 
 
 
 
IT Services & Hardware Revenue Reclass





Cautionary Statement Concerning Forward-Looking Statements


This report and the documents incorporated by reference herein contain forward-looking statements regarding future events and results that are subject to the “safe harbor” provisions of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, are statements that could be deemed forward-looking statements. These statements are based on current expectations, estimates, forecasts, and projections about the industries in which we operate and the beliefs and assumptions of our management. Words such as “expects,” “anticipates,” “predicts,” “projects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “continues,” “endeavors,” “strives,” “may,” or variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of future financial performance, anticipated growth and trends in businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause actual results to differ materially and adversely from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this release and those discussed in other documents the company filed with the Securities and Exchange Commission (SEC). More information on potential risks and uncertainties is available in our recent filings with the SEC, including Cincinnati Bell's Form 10-K report, Form 10-Q reports and Form 8-K reports. Actual results may differ materially and adversely from those expressed in any forward-looking statements. The company undertakes no obligation to revise or update any forward-looking statements for any reason. The forward-looking statements included in this report represent company estimates as of May 8, 2019. Cincinnati Bell anticipates that subsequent events and developments will cause its estimates to change.




SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 
 
 
 
 
 
 
 
CINCINNATI BELL INC.
 
 
 
 
 
Date:
May 8, 2019
 
By:
/s/ Christopher J. Wilson
 
 
 
 
Christopher J. Wilson
 
 
 
 
Vice President and General Counsel




EXHIBIT INDEX

Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
99.1
Press release dated May 8, 2019.
 
 
99.2
Presentation made during the Cincinnati Bell first quarter 2019 earnings conference call on May 8, 2019.
 
 
 
 
 
 
99.3
IT Services & Hardware Revenue Reclass




Exhibit


Cincinnati Bell Reports First Quarter 2019 Results

HIGHLIGHTS
Revenue of $380 million and operating income totaling $10 million
Adjusted EBITDA1 of $98 million - in line with company expectations
Cincinnati Fioptics revenue totaled $87 million, adding 6,100 new fiber to the premise (“FTTP”) internet subscribers during the quarter
IT Services and Hardware revenue of $136 million, up $9 million from a year ago
Hawaiian Telcom contributed revenue of $87 million and Adjusted EBITDA of $24 million
Cash provided by operating activities totaled $57 million with free cash flow2 of $6 million

CINCINNATI - May 8, 2019 - Cincinnati Bell Inc. (NYSE:CBB), today announced financial results for the first quarter of 2019.
Leigh Fox, President and Chief Executive Officer of Cincinnati Bell, commented, "Our first quarter results provided a great start to the year. The investments in dense metro fiber and the expansion of our IT services footprint continue to differentiate Cincinnati Bell in the marketplace.”
Mr. Fox added, “We are pleased to reaffirm our financial guidance for 2019 as we continue to execute on our strategic objectives, positioning Cincinnati Bell and its stakeholders for long-term success.”
Consolidated Results
Consolidated revenue totaled $380 million and operating income was $10 million for the first quarter of 2019
Adjusted EBITDA of $98 million in the first quarter of 2019, up $19 million year-over-year including contributions from the merger with Hawaiian Telcom on July 2, 2018
Net loss for the first quarter of 2019 totaled $27 million, resulting in diluted loss per share of $0.59, driven by accelerated depreciation of certain cloud-related assets associated with insourcing initiatives from one of our largest customers, as well as increased restructuring and severance related charges and interest expense compared to a year ago
Entertainment and Communications Segment
Entertainment and Communications revenue totaled $250 million for the first quarter of 2019
Cincinnati revenue totaled $171 million, down 2% from the prior year
Fioptics revenue totaled $87 million, up 5% year-over-year
Fioptics internet subscribers totaled 243,300, up 10,500 compared to a year ago
Fioptics video subscribers totaled 139,200, down 7,100 year-over-year
Fioptics is available to approximately 76% of Greater Cincinnati, which includes a combination of fiber to the premise ("FTTP") and fiber to the node ("FTTN") addresses





During the first quarter of 2019, 5,300 additional homes and businesses were passed with FTTP, which is available to 477,600 addresses, approximately 60% of Cincinnati's total addressable market
Hawaii revenue totaled $80 million in the first quarter of 2019, consistent with the prior quarter
Consumer / SMB Fiber revenue totaled $22 million, up 4% sequentially
Consumer / SMB Fiber internet subscribers totaled 66,600, adding 700 new customers in the quarter
Video subscribers were 47,800, down 1,000 from the prior quarter
Consumer / SMB Fiber is available to approximately 50% of Hawaii, which includes a combination of FTTP and FTTN addresses
During the first quarter of 2019, 1,100 additional homes and businesses were passed with FTTP, which is available to 168,100 addresses, approximately 35% of Hawaii's total addressable market
Adjusted EBITDA was $91 million for the first quarter of 2019, consistent with the prior quarter
IT Services and Hardware Segment
IT Services and Hardware revenue totaled $136 million for the first quarter of 2019, up $9 million year-over-year including contributions from Hawaiian Telcom
Consulting revenue totaled $39 million for the first quarter, up $8 million year-over-year
Cloud revenue of $24 million increased $2 million compared to the prior year despite insourcing initiatives from one of our largest customers
Certain cloud revenue from this customer totaled $4 million in the first quarter of 2019 generating Adjusted EBITDA of $3 million; compared to the first quarter of 2018, in which certain cloud revenue from the customer totaled $7 million resulting in Adjusted EBITDA of $5 million
Communications revenue was $47 million, up $7 million year-over-year
Infrastructure Solutions revenue totaled $26 million, down $8 million from a year ago
Adjusted EBITDA of $10 million for the first quarter of 2019, down $2 million year-over-year
Cash Flow and Financial Position
Operating cash flows totaled $57 million for the first quarter of 2019 with free cash flow of $6 million
Liquidity of $190 million as of March 31, 2019, with no significant maturities until 2024
Capital expenditures were $57 million for the first quarter of 2019
Gross Net Operating Loss carryforward of approximately $710 million as of March 31, 2019








2019 Outlook
Cincinnati Bell is reaffirming the following guidance for 2019 as previously provided on February 14, 2019:
Category
2019
Guidance Range
Revenue
$1,515M - $1,575M


Adjusted EBITDA
$400M - $410M



Conference Call/Webcast
Cincinnati Bell will host a conference call on Wednesday, May 8, 2019 at 9:00 a.m. (ET) to discuss its financial results for the first quarter of 2019. A live webcast of the call will be available via the Investor Relations section of www.cincinnatibell.com. Callers can dial toll-free (888) 204-4368 or toll (929) 477-0402. A taped replay of the conference call will be available starting at 12:00 p.m. (ET) on Wednesday, May 8, 2019 until 12:00 p.m. (ET) on Wednesday, May 22, 2019. To access the telephone replay, please dial toll-free (888) 203-1112 or toll (719) 457-0820, and then enter the conference ID number 8208777. An archived webcast will be available for replay following the conclusion of the live event in the Investor Relations section of www.cincinnatibell.com.

INVESTOR RELATIONS CONTACT:
Kei Lawson, 513-565-0510
E-mail: Takeitha.Lawson@cinbell.com

or

MEDIA CONTACT:
Josh Pichler, 513-565-0310
E-mail: Josh.Pichler@cinbell.com

Safe Harbor Note
This release may contain “forward-looking” statements, as defined in federal securities laws including the Private Securities Litigation Reform Act of 1995, which are based on our current expectations, estimates, forecasts and projections. Statements that are not historical facts, including statements about the beliefs, expectations and future plans and strategies of the Company, are forward-looking statements. Actual results may differ materially from those expressed in any forward-looking statements. The following important factors, among other things, could cause or contribute to actual results being materially and adversely different from those described or implied by such forward-looking statements including, but not limited to: those discussed in this release; we operate in highly competitive industries, and customers may not continue to purchase products or services, which would result in reduced revenue and loss of





market share; we may be unable to grow our revenues and cash flows despite the initiatives we have implemented; failure to anticipate the need for and introduce new products and services or to compete with new technologies may compromise our success in the telecommunications industry; our access lines, which generate a significant portion of our cash flows and profits, are decreasing in number and if we continue to experience access line losses similar to the past several years, our revenues, earnings and cash flows from operations may be adversely impacted; our failure to meet performance standards under our agreements could result in customers terminating their relationships with us or customers being entitled to receive financial compensation, which would lead to reduced revenues and/or increased costs; we generate a substantial portion of our revenue by serving a limited geographic area; a large customer accounts for a significant portion of our revenues and accounts receivable and the loss or significant reduction in business from this customer would cause operating revenues to decline and could negatively impact profitability and cash flows; maintaining our telecommunications networks requires significant capital expenditures, and our inability or failure to maintain our telecommunications networks could have a material impact on our market share and ability to generate revenue; increases in broadband usage may cause network capacity limitations, resulting in service disruptions or reduced capacity for customers; we may be liable for material that content providers distribute on our networks; cyber attacks or other breaches of network or other information technology security could have an adverse effect on our business; natural disasters, terrorists acts or acts of war could cause damage to our infrastructure and result in significant disruptions to our operations; the regulation of our businesses by federal and state authorities may, among other things, place us at a competitive disadvantage, restrict our ability to price our products and services and threaten our operating licenses; we depend on a number of third party providers, and the loss of, or problems with, one or more of these providers may impede our growth or cause us to lose customers; a failure of back-office information technology systems could adversely affect our results of operations and financial condition; if we fail to extend or renegotiate our collective bargaining agreements with our labor union when they expire or if our unionized employees were to engage in a strike or other work stoppage, our business and operating results could be materially harmed; the loss of any of the senior management team or attrition among key sales associates could adversely affect our business, financial condition, results of operations and cash flows; our debt could limit our ability to fund operations, raise additional capital, and fulfill our obligations, which, in turn, would have a material adverse effect on our businesses and prospects generally; our indebtedness imposes significant restrictions on us; we depend on our loans and credit facilities to provide for our short-term financing requirements in excess of amounts generated by operations, and the availability of those funds may be reduced or limited; the servicing of our indebtedness is dependent on our ability to generate cash, which could be impacted by many factors beyond our control; we depend on the receipt of dividends or other intercompany transfers from our subsidiaries and investments; the trading price of our common shares may be volatile, and the value of an investment in our common shares may decline; the uncertain economic environment, including uncertainty in the U.S. and world securities markets, could





impact our business and financial condition; our future cash flows could be adversely affected if we are unable to fully realize our deferred tax assets; adverse changes in the value of assets or obligations associated with our employee benefit plans could negatively impact shareowners’ deficit and liquidity; third parties may claim that we are infringing upon their intellectual property, and we could suffer significant litigation or licensing expenses or be prevented from selling products; third parties may infringe upon our intellectual property, and we may expend significant resources enforcing our rights or suffer competitive injury; we could be subject to a significant amount of litigation, which could require us to pay significant damages or settlements; we could incur significant costs resulting from complying with, or potential violations of, environmental, health and human safety laws; the possibility that the expected synergies and value creation from our acquisition of Hawaiian Telcom will not be realized or will not be realized within the expected time period; the risk that the businesses of the Company and Hawaiian Telcom will not be integrated successfully; the risk that unexpected costs will be incurred; and the other risks and uncertainties detailed in our filings with the SEC, including our Form 10-K report, Form 10-Q reports and Form 8-K reports.
These forward-looking statements are based on information, plans and estimates as of the date hereof and there may be other factors that may cause our actual results to differ materially from these forward-looking statements. We assume no obligation to update the information contained in this release except as required by applicable law.
Use of Non-GAAP Financial Measures
This press release contains information about adjusted earnings before interest, taxes, depreciation and amortization (Adjusted EBITDA), Adjusted EBITDA margin, net debt, net income (loss) applicable to common shareholders excluding special items and free cash flow. These are non-GAAP financial measures used by Cincinnati Bell management when evaluating results of operations and cash flow. Management believes these measures also provide users of the financial statements with additional and useful comparisons of current results of operations and cash flows with past and future periods. Non-GAAP financial measures should not be construed as being more important than comparable GAAP measures. Detailed reconciliations of these non-GAAP financial measures to comparable GAAP financial measures have been included in the tables distributed with this release and are available in the Investor Relations section of www.cincinnatibell.com.
1Adjusted EBITDA provides a useful measure of operational performance. The company defines Adjusted EBITDA as GAAP operating income plus depreciation, amortization, stock based compensation, restructuring and severance related charges, (gain) loss on sale or disposal of assets, transaction and integration costs, asset impairments, and other special items. Adjusted EBITDA should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with the measure as defined by other companies.





Adjusted EBITDA margin provides a useful measure of operational performance. The company defines Adjusted EBITDA margin as Adjusted EBITDA divided by revenue. Adjusted EBITDA margin should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with the measure as defined by other companies.
2Free cash flow provides a useful measure of operational performance, liquidity and financial health. The company defines free cash flow as cash provided by (used in) operating activities, adjusted for restructuring and severance related payments, transaction and integration payments, less capital expenditures and preferred stock dividends. Free cash flow should not be considered as an alternative to net income (loss), operating income (loss), cash flow from operating activities, or the change in cash on the balance sheet and may not be comparable with free cash flow as defined by other companies. Although the company believes there is no comparable GAAP measure for free cash flow, the attached financial information reconciles cash provided by operating activities to free cash flow.
Net debt provides a useful measure of liquidity and financial health. The company defines net debt as the sum of the face amount of short-term and long-term debt, unamortized premium and/or discount and unamortized note issuance costs, offset by cash and cash equivalents.
Net income (loss) applicable to common shareholders excluding special items in total and per share provides a useful measure of operating performance. Net income (loss) applicable to common shareholders excluding special items should not be considered as an alternative to comparable GAAP measures of profitability and may not be comparable with net income (loss) excluding special items as defined by other companies.

About Cincinnati Bell Inc.
With headquarters in Cincinnati, Ohio, Cincinnati Bell Inc. (NYSE: CBB) delivers integrated communications solutions to residential and business customers over its fiber-optic and copper networks including high-speed internet, video, voice and data. Cincinnati Bell provides service in areas of Ohio, Kentucky, Indiana and Hawaii. In addition, enterprise customers across the United States and Canada rely on CBTS and OnX, wholly-owned subsidiaries, for efficient, scalable office communications systems and end-to-end IT solutions. For more information, please visit www.cincinnatibell.com. The information on the Company’s website is not incorporated by reference in this press release.






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Consolidated Statements of Operations
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
 
March 31,
 
Change
 
 
 
 
 
 
2019
 
2018
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
379.6

 
$
295.7

 
$
83.9

 
28%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
197.7

 
149.4

 
48.3

 
32%
 
 
 
Selling, general and administrative
 
86.1

 
68.4

 
17.7

 
26%
 
 
 
Depreciation and amortization
 
79.4

 
51.2

 
28.2

 
55%
 
 
 
Restructuring and severance related charges
 
3.3

 
0.3

 
3.0

 
n/m
 
 
 
Transaction and integration costs
 
3.0

 
2.2

 
0.8

 
36%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
10.1

 
24.2

 
(14.1
)
 
(58)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
35.1

 
30.8

 
4.3

 
14%
 
 
Other components of pension and postretirement benefit plans expense
 
2.6

 
3.3

 
(0.7
)
 
(21)%
 
 
Other income, net
 
(1.0
)
 
(0.4
)
 
(0.6
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Loss before income taxes
 
(26.6
)
 
(9.5
)
 
(17.1
)
 
n/m
 
 
Income tax expense (benefit)
 
0.3

 
(1.2
)
 
1.5

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss
 
(26.9
)
 
(8.3
)
 
(18.6
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
 
2.6

 
2.6

 

 
0%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net loss applicable to common shareowners

 
$
(29.5
)
 
$
(10.9
)
 
$
(18.6
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic and diluted net loss per common share
 
$
(0.59
)
 
$
(0.26
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 - Basic
 
50.3

 
42.3

 
 
 
 
 
 
 
 - Diluted
 
50.3

 
42.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Entertainment and Communications Income Statement
 

 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
March 31,
 
Change
 
 
 
 
 
2019
 
2018
 
$
 
%
 
 
Income Statement
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
250.3

 
$
174.2

 
$
76.1

 
44%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
115.3

 
77.6

 
37.7

 
49%
 
 
 
Selling, general and administrative
 
44.5

 
27.1

 
17.4

 
64%
 
 
 
Depreciation and amortization
 
62.7

 
40.9

 
21.8

 
53%
 
 
 
Restructuring and severance related charges
 
3.3

 

 
3.3

 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
225.8

 
145.6

 
80.2

 
55%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income

 
$
24.5

 
$
28.6

 
$
(4.1
)
 
(14)%
 
 
 
 
 
 
 
 
 
 
 

 











































Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
Three Months Ended
 
 
 
 
 
March 31, 2019
 
 
 
March 31, 2018
 
 
 
 
 
Cincinnati
 
Hawaii
 
Total
 
 
 
Cincinnati
 
Hawaii
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer / SMB Fiber *
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
37.4

 
$
7.9

 
$
45.3

 
 
 
$
34.4

 
$

 
$
34.4

 
 
 
Video
 
40.2

 
11.5

 
51.7

 
 
 
39.2

 

 
39.2

 
 
 
Voice
 
9.2

 
2.8

 
12.0

 
 
 
9.1

 

 
9.1

 
 
 
Other
 
0.3

 
0.2

 
0.5

 
 
 
0.3

 

 
0.3

 
 
 
Total Consumer / SMB Fiber
 
87.1

 
22.4

 
109.5

 
 
 
83.0

 

 
83.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Fiber
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
21.1

 
9.2

 
30.3

 
 
 
20.8

 

 
20.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
26.0

 
15.9

 
41.9

 
 
 
29.7

 

 
29.7

 
 
 
Voice
 
33.0

 
28.4

 
61.4

 
 
 
37.9

 

 
37.9

 
 
 
Other
 
3.5

 
3.7

 
7.2

 
 
 
2.8

 

 
2.8

 
 
 
Total Legacy
 
62.5

 
48.0

 
110.5

 
 
 
70.4

 

 
70.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Entertainment & Communications
 
$
170.7

 
$
79.6

 
$
250.3

 
 
 
$
174.2

 
$

 
$
174.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Represents Fioptics in Cincinnati
 
 
 
 
 
 
 
 
 






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Entertainment and Communications Metric Information
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
 
 
 
2019
 
2018
 
2018
 
2018
 
2018
 
 
 
 
 
 
 
 
 
 
 
Cincinnati Metrics
 
 
 
 
 
 
 
 
 
 
Fioptics
 
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
 
Internet FTTP *
207.6

 
201.5

 
196.8

 
192.7

 
187.8

 
 
 
Internet FTTN *
35.7

 
37.5

 
39.8

 
42.6

 
45.0

 
 
 
Total Fioptics Internet
243.3


239.0


236.6


235.3


232.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Video
 
 
 
 
 
 
 
 
 
 
 
 
Video FTTP
115.2

 
115.0

 
115.6

 
118.1

 
118.1

 
 
 
Video FTTN
24.0

 
24.9

 
25.9

 
27.0

 
28.2

 
 
 
Total Fioptics Video
139.2


139.9


141.5


145.1


146.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
 
 
 
 
 
Fioptics Voice Lines
109.0

 
107.6

 
107.0

 
107.6

 
106.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fioptics Units Passed
 
 
 
 
 
 
 
 
 
 
 
 
Units Passed FTTP
477.6

 
472.3

 
459.1

 
449.3

 
440.5

 
 
 
Units Passed FTTN
138.5

 
138.7

 
139.5

 
139.9

 
140.3

 
 
 
Total Fioptics Units Passed
616.1


611.0


598.6


589.2


580.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Fiber
 
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
 
Ethernet Bandwidth (Gb)
4,540

 
4,565

 
4,331

 
4,133

 
4,046

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
 
DSL
69.6

 
72.0

 
74.1

 
75.2

 
78.1

 
 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
 
 
 
 
 
Legacy Voice Lines
218.0


226.2


232.7


240.6


251.4

 
 
 
 
 
 
 
 
 
 
 
 
 
* Fiber to the Premise (FTTP), Fiber to the Node (FTTN)
 
 
 
 
 
 




























Cincinnati Bell Inc.
 
 
 
 
 
 
 
Entertainment and Communications Metric Information
(Unaudited)
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
 
December 31,
 
September 30,
 
 
 
 
 
 
 
2019
 
2018
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
 
Hawaii Metrics
 
 
 
 
 
 
 
 
Consumer / SMB Fiber
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
Internet FTTP *
 
52.7

 
51.6

 
49.5

 
 
 
 
Internet FTTN *
 
13.9

 
14.3

 
14.5

 
 
 
 
Total Consumer / SMB Fiber Internet
 
66.6

 
65.9

 
64.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Video
 
 
 
 
 
 
 
 
 
 
Video FTTP
 
33.5

 
33.8

 
33.3

 
 
 
 
Video FTTN
 
14.3

 
15.0

 
15.3

 
 
 
 
Total Consumer / SMB Fiber Video
 
47.8

 
48.8

 
48.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
 
 
 
Consumer / SMB Fiber Voice Lines
 
30.3

 
30.3

 
29.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer / SMB Fiber Units Passed **
 
 
 
 
 
 
 
 
 
 
Units Passed FTTP
 
168.1

 
167.0

 
163.6

 
 
 
 
Units Passed FTTN
 
73.4

 
73.5

 
73.3

 
 
 
 
Total Consumer / SMB Fiber Units Passed
 
241.5

 
240.5

 
236.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Fiber
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
Ethernet Bandwidth (Gb)
 
2,413

 
2,091

 
1,948

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legacy
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
DSL
 
47.2

 
48.7

 
50.4

 
 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
 
 
 
Legacy Voice Lines
 
192.8

 
197.8

 
203.4

 
 
 
 
 
 
 
 
 
 
 
 
 
* Fiber to the Premise (FTTP), Fiber to the Node (FTTN)
 
** Includes units passed for both consumer and business on Oahu and neighboring islands.






Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
IT Services and Hardware Income Statement and Metric Information
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
 
 
 
 
 
March 31,
 
Change
 
 
 
 
 
 
2019
 
2018
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
Income Statement
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
136.3

 
$
127.6

 
$
8.7

 
7%
 
 
 
 
 
 
 
 
 


 

 
Operating costs and expenses
 
 
 
 
 


 

 
 
Cost of services and products
 
89.2

 
77.7

 
11.5

 
15%
 
 
Selling, general and administrative
 
37.2

 
38.0

 
(0.8
)
 
(2)%
 
 
Depreciation and amortization
 
16.7

 
10.2

 
6.5

 
64%
 
 
Restructuring and severance related charges
 

 
0.3

 
(0.3
)
 
n/m
 
 
 
 
 
 
 
 
 
 


 

 
 
Total operating costs and expenses
 
143.1

 
126.2

 
16.9

 
13%
 
 
 
 
 
 
 
 
 


 

 
Operating Income
 
$
(6.8
)
 
$
1.4

 
$
(8.2
)
 
n/m
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 


 

 
 
Consulting
 
$
38.9

 
$
31.3

 
$
7.6

 
24%
 
 
Cloud
 
24.4

 
22.6

 
1.8

 
8%
 
 
Communications
 
47.4

 
40.6

 
6.8

 
17%
 
 
Infrastructure Solutions
 
25.6

 
33.1

 
(7.5
)
 
(23)%
 
 
Total IT Services and Hardware Revenue
 
$
136.3

 
$
127.6

 
$
8.7

 
7%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
 
 
 
2019
 
2018
 
2018
 
2018
 
2018
 
 
 
 
 
 
 
 
 
 
 
 
Consulting
 
 
 
 
 
 
 
 
 
 
 
 
Billable Resources
1039

 
1039

 
999

 
926

 
888

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Communications
 
 
 
 
 
 
 
 
 
 
 
 
NaaS Locations
2,550

 
2257

 
1,101

 
782

 
564

 
 
 
SD - WAN Locations
1,002

 
803

 
488

 
310

 
117

 
 
 
Hosted UCaaS Profiles*
244,482

 
239,581

 
223,311

 
192,175

 
178,457

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Includes Hawaii Hosted UCaaS Profiles beginning September 30, 2018
 
 
 
 
 






Cincinnati Bell Inc.
 
 
 
 
 
 
Net Debt (Non-GAAP)
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
(Dollars and shares in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
March 31,
 
 
December 31,
 
 
 
 
2019
 
 
2018
 
 
 
 
 
 
 
 
 
Receivables Facility
 
$
175.8

 
 
$
176.6

 
Credit Agreement - Tranche B Term Loan due 2024
 
597.0

 
 
598.5

 
Credit Agreement - Revolving Credit Facility
 
15.0

 
 
18.0

 
7 1/4% Senior Notes due 2023
 
22.3

 
 
22.3

 
7% Senior Notes due 2024
 
625.0

 
 
625.0

 
8% Senior Notes due 2025
 
350.0

 
 
350.0

 
Cincinnati Bell Telephone Notes
 
87.9

 
 
87.9

 
Other financing lease agreements
 
3.1

 
 
3.1

 
Capital leases
 
80.7

 
 
73.9

 
Net unamortized premium
 
1.6

 
 
1.7

 
Unamortized note issuance costs
 
(26.1
)
 
 
(27.2
)
 
 
 
 
 
 
 
 
 
 
Total debt
 
1,932.3

 
 
1,929.8

 
 
 
 
 
 
 
 
 
Less: Cash and cash equivalents
 
(3.9
)
 
 
(15.4
)
 
 
 
 
 
 
 
 
 
 
Net debt (Non-GAAP)
 
$
1,928.4

 
 
$
1,914.4

 
 
 
 
 
 
 
 
 
 
 
 





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
Reconciliation of Net Income (GAAP) to Adjusted EBITDA (Non-GAAP)
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2019
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net loss (GAAP)
 
 
 
 
 
 
 
$
(26.9
)
 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
0.3

 
 
Interest expense
 
 
 
 
 
 
 
35.1

 
 
Other income, net
 
 
 
 
 
 
 
(1.0
)
 
 
Other components of pension and postretirement benefit plans expense
 
 
 
 
 
 
 
2.6

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
24.5

 
$
(6.8
)
 
$
(7.6
)
 
$
10.1

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
62.7

 
16.7

 

 
79.4

 
 
Restructuring and severance related charges
 
3.3

 

 

 
3.3

 
 
Transaction and integration costs
 

 

 
3.0

 
3.0

 
 
Stock-based compensation
 

 

 
1.8

 
1.8

 
Adjusted EBITDA (Non-GAAP)
 
$
90.5

 
$
9.9

 
$
(2.8
)
 
$
97.6

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
36
%
 
7
 %
 

 
26
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended March 31, 2018
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net loss (GAAP)
 
 
 
 
 
 
 
$
(8.3
)
 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
 
 
 
 
 
 
(1.2
)
 
 
Interest expense
 
 
 
 
 
 
 
30.8

 
 
Other income, net
 
 
 
 
 
 
 
(0.4
)
 
 
Other components of pension and postretirement benefit plans expense
 
 
 
 
 
 
 
3.3

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
28.6

 
$
1.4

 
$
(5.8
)
 
$
24.2

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
40.9

 
10.2

 
0.1

 
51.2

 
 
Restructuring and severance related charges
 

 
0.3

 

 
0.3

 
 
Transaction and integration costs
 

 

 
2.2

 
2.2

 
 
Stock-based compensation
 

 

 
0.9

 
0.9

 
Adjusted EBITDA (Non-GAAP)
 
$
69.5

 
$
11.9

 
$
(2.6
)
 
$
78.8

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
40
%
 
9
 %
 

 
27
%
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year dollar change in Adjusted EBITDA
 
$
21.0

 
$
(2.0
)
 
$
(0.2
)
 
$
18.8

 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year percentage change in Adjusted EBITDA
 
30
%
 
(17
)%

8
%
 
24
%





Cincinnati Bell Inc.
 
 
 
 
 
Consolidated Statements of Cash Flows
 
 
 
 
 
(Unaudited)
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
March 31,
 
 
 
 
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
 
$
56.8

 
$
58.5

 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
 
(56.5
)
 
(32.7
)
 
 
 
Acquisitions of businesses
 

 
(2.8
)
 
 
 
Other, net
 
(0.1
)
 
(0.1
)
 
 
 
 
 
 
 
 
 
 
Cash used in investing activities
 
(56.6
)
 
(35.6
)
 
 
 
 
 
 
 
 
 
 
 
Net decrease in corporate credit and receivables facilities with initial maturities less than 90 days
 
(3.8
)
 

 
 
 
Repayment of debt
 
(4.5
)
 
(3.0
)
 
 
 
Debt issuance costs
 
(0.1
)
 
(0.4
)
 
 
 
Dividends paid on preferred stock
 
(2.6
)
 
(2.6
)
 
 
 
Other, net
 
(0.8
)
 
(2.0
)
 
 
 
 
 
 
 
 
 
 
Cash used in financing activities
 
(11.8
)
 
(8.0
)
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash

 
0.1

 
0.8

 
 
 
 
 
 
 
 
 
 
Net (decrease) increase in cash, cash equivalents and restricted cash
 
(11.5
)
 
15.7

 
 
Cash, cash equivalents and restricted cash at beginning of period
 
15.4

 
396.5

 
 
 
 
 
 
 
 
 
 
Cash, cash equivalents and restricted cash at end of period

 
$
3.9

 
$
412.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Cash Provided by Operating Activities (GAAP) to
 
 
 
 
 
 
 
Free Cash Flow (Non-GAAP)
 
 
 
 
 
 
Cash provided by operating activities
 
$
56.8

 
$
58.5

 
 
Adjustments:
 
 
 
 
 
 
 
Capital expenditures
 
(56.5
)
 
(32.7
)
 
 
 
Restructuring and severance related payments
 
6.8

 
7.3

 
 
 
Preferred stock dividends
 
(2.6
)
 
(2.6
)
 
 
 
Transaction and integration costs
 
1.8

 
2.2

 
 
 
 
 
 
 
 
 
 
 
   Free cash flow (Non-GAAP)
 
$
6.3

 
$
32.7

 
 
 
 
 
 
 
 
 
 
Income tax payments (refunds)
 
$
1.1

 
$
(0.1
)