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Cincinnati Bell Reports Fourth-Quarter and Full-Year 2014 Results
Last update: 19/02/2015 7:00:02 am
Cincinnati Bell Reports Fourth Quarter and Full Year 2014 Results
Highlights:
-- Generated Wireline revenue growth for the first time since 2007 -
Fioptics annual revenue exceeded $140 million, up more than 40 percent
year-over-year
-- Achieved financial guidance (excluding Wireless) - revenue totaled $1.1
billion and Adjusted EBITDA1 was $335 million
-- Sold 16 million CyrusOne partnership units for $356 million of cash -
proceeds were used to repay debt, increasing cash flow $15 million
annually
-- Completed sale of wireless spectrum licenses for cash proceeds of $194
million
-- Produced positive Free cash flow2 for the year totaling $12 million
CINCINNATI--(BUSINESS WIRE)--February 19, 2015--
Cincinnati Bell Inc. (NYSE:CBB) today announced financial results for the full year and fourth quarter of 2014 highlighted by the successful execution of its key initiatives and achieving its full year financial guidance (excluding Wireless). For the first time since 2007, the company generated year-over-year Wireline revenue growth on continued demand for strategic fiber products. The company also succeeded in its goal of producing positive free cash flow for the year. In addition, Cincinnati Bell used proceeds from the sale of its wireless spectrum and the partial monetization of its investment in CyrusOne to reduce net debt(3) by more than $500 million during the year.
"We have made remarkable strides towards transforming Cincinnati Bell into a growing fiber based entertainment, communications and IT solutions company," said Ted Torbeck, president and chief executive officer. "Our results demonstrate this team's ability to execute on its objectives and provide confidence to accelerate our fiber investments."
Torbeck also added, "Our efforts in 2015 will be focused on the efficient deployment of fiber with a renewed emphasis on enhancing customer experiences to capitalize on our unique market opportunity."
CONSOLIDATED RESULTS(4)
Year-to-date consolidated revenue was $1.3 billion, a 3 percent increase over the prior year as demand for strategic products and increased hardware sales more than offset declines in Wireless revenue and legacy products. Strategic revenue totaled $436 million for the year, up 21 percent compared to a year ago. Fourth quarter consolidated revenue totaled $308 million, consistent with the prior year. Adjusted EBITDA for the year was $379 million and $78 million in the fourth quarter. Operating income equaled $116 million and $7 million for the full year and fourth quarter of 2014, respectively. Adjusted EBITDA and operating income were down from a year ago primarily due to increased costs associated with preparing to shut-down wireless operations and accelerating our fiber investments. Net income for the year totaled $76 million, resulting in diluted earnings per share of $0.31.
SEGMENT RESULTS
Wireline Segment
Wireline strategic revenue totaled $311 million during 2014, up 23 percent over the prior year, as growth from these products outpaced legacy declines each quarter in 2014.
-- Wireline revenue totaled $188 million for the quarter and $741 million
for the full year, up $6 million and $16 million, respectively, from the
same periods in 2013.
-- Fioptics revenue increased 40 percent compared to a year ago,
totaling $40 million for the quarter and $142 million for the
year.
-- Strategic business revenue totaled $166 million (including $8
million of Fioptics revenue) for the full year, up 12 percent
compared to the prior year. Fourth quarter strategic revenue for
business customers totaled $42 million (including $2 million of
Fioptics revenue).
-- Operating income for the quarter was $36 million, down from $43 million
in the same period of 2013. Full year 2014 operating income was $183
million, down 4 percent compared to 2013.
-- Adjusted EBITDA totaled $74 million and $318 million, for the fourth
quarter and full year of 2014, respectively. Adjusted EBITDA results were
down from a year ago due to the following: loss of higher margin access
lines, costs to support our fiber acceleration, projects aimed at
streamlining operations and shared service functions, and other one-time
expenses incurred during the fourth quarter.
-- Fioptics video subscribers increased by 3,600 in the quarter and 17,200
for the year. Fioptics video subscribers totaled 91,400, up 23 percent
compared to the end of 2013.
-- Fioptics internet subscribers totaled 113,700, up more than 40 percent
from a year ago. The company added 7,000 new Fioptics internet
subscribers in the quarter, and 33,800 for the year.
-- In 2014, we passed 59,000 units with Fioptics. The Fioptics suite of
products is now available to 335,000 residential and business customers,
more than 40 percent of Greater Cincinnati.
IT Services and Hardware Segment
Strong enterprise demand for hardware and strategic products generated year-over-year revenue growth of $89 million and improved Adjusted EBITDA margins(5) .
-- Revenue for the quarter was $110 million, up $23 million from the fourth
quarter of 2013. Full year revenue was $433 million, up 26 percent
compared to the prior year.
-- Strategic managed and professional services revenue was $37
million in the quarter and $139 million for the full year, both up
17 percent compared to the prior year.
-- Hardware revenue was $71 million for the quarter, up 32 percent
year-over-year. Full year hardware revenue was $288 million, up 29
percent compared to 2013.
-- Operating income totaled $4 million for the quarter and $20 million for
the year, up $2 million and $11 million, respectively, compared to the
prior year.
-- Adjusted EBITDA for the quarter was $7 million, up $2 million from a year
ago. Full year Adjusted EBITDA totaled $32 million, up 63 percent from
the prior year.
Wireless Segment
In the second quarter of 2014 we entered into agreements to sell our wireless spectrum licenses and certain other assets related to our wireless business. The agreement to sell our spectrum licenses closed in the third quarter for cash proceeds totaling $194 million. However, we plan to continue providing wireless service until no later than April 6, 2015 as we migrate subscribers to other carriers. At that time, we will transfer certain capital lease obligations and other assets valued at approximately $25 million.
-- Revenue was $17 million for the fourth quarter and $133 million for the
full year.
-- Operating losses totaled $26 million and $66 million for the fourth
quarter and full year of 2014, respectively.
-- Fourth quarter Adjusted EBITDA totaled $2 million and full year Adjusted
EBITDA was $44 million.
-- At the end of the year we had 82,400 wireless subscribers.
Investment in CyrusOne
Cincinnati Bell effectively owns 44 percent of CyrusOne, which is reported as an equity method investment, valued at $785 million as of December 31, 2014.
-- Reported revenue of $87 million and Adjusted EBITDA of $45 million for
the fourth quarter of 2014. For the full year, CyrusOne reported revenue
of $331 million and Adjusted EBITDA of $169 million.
-- Announced a 50 percent increase in the quarterly dividend for the first
quarter of 2015 ($0.315 per common share and equivalent).
-- CyrusOne provided 2015 guidance targets for Revenue and Adjusted EBITDA,
indicating expected growth of 14 percent and 12 percent, respectively, at
the mid-point of the range.
2015 Outlook
Cincinnati Bell is providing the following guidance for 2015:
Category 2015 Guidance
Revenue $1.1 billion
Adjusted EBITDA $297 million*
*Plus or minus 2 percent
Conference Call/Webcast
Cincinnati Bell will host a conference call on February 19 at 10:00 a.m. (ET) to discuss its results for the fourth quarter and full year of 2014. A live webcast of the call will be available via the Investor Relations section of www.cincinnatibell.com. The conference call dial-in number is (888) 287-5563. Callers located outside of the U.S. and Canada may dial (719) 325-2376. A taped replay of the conference call will be available one hour after the conclusion of the call until 10:00 a.m. on Thursday, March 5, 2015. For U.S. callers, the replay will be available at (888) 203-1112. For callers outside of the U.S. and Canada, the replay will be available at (719) 457-0820. The replay reference number is 9905311. An archived version of the webcast will also be available in the Investor Relations section of www.cincinnatibell.com.
Safe Harbor Note
This release and the documents incorporated by reference herein contain forward-looking statements regarding future events and our future 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," variations of such words and similar expressions are intended to identify such forward-looking statements. In addition, any statements that refer to projections of our future financial performance, our anticipated growth and trends in our businesses, and other characterizations of future events or circumstances are forward-looking statements. Readers are cautioned these
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February 19, 2015 07:00 ET (12:00 GMT)
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