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Form 8-K CINCINNATI BELL INC For: Feb 14

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February 14, 2019 6:20 AM EST


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: February 14, 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




Section 2 - Financial Information

Item 2.02     Results of Operations and Financial Condition

On February 14, 2019, Cincinnati Bell Inc. reported its financial results for the fourth quarter and full year 2018. The earnings release is attached as Exhibit 99.1.
 
Section 7 - Regulation FD
 
Item 7.01     Regulation FD Disclosure
 
On February 14, 2019, Leigh R. Fox, the Company's president and chief executive officer, and Andrew R. Kaiser, the Company's chief financial officer, will present fourth quarter and full year 2018 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.
The information in Items 2.02 and 7.01 and the exhibits attached to this Current Report as Exhibit 99.1 and 99.2 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.

(c)
Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
 
 
Press release dated February 14, 2019.
 
 
 
 
Presentation made during the Cincinnati Bell fourth quarter and full year 2018 earnings conference call on February 14, 2019.




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 February 14, 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:
February 14, 2019
 
By:
/s/ Christopher J. Wilson
 
 
 
 
Christopher J. Wilson
 
 
 
 
Vice President and General Counsel



EXHIBIT INDEX

Exhibit No.
Description
 
 
 
 
 
 
 
 
 
 
99.1
Press release dated February 14, 2019.
 
 
99.2
Presentation made during the Cincinnati Bell fourth quarter and full year 2018 earnings conference call on February 14, 2019.





Cincinnati Bell Reports Fourth Quarter and Full Year 2018 Results

FULL YEAR HIGHLIGHTS
•
Revenue totaled $1,378 million generating strong Adjusted EBITDA1 of $372 million - both in-line with financial guidance reflecting the merger with Hawaiian Telcom (closed on July 2, 2018)
•
Operating income totaled $83 million, up $28 million year-over-year
•
Hawaiian Telcom contributed revenue of $175 million and Adjusted EBITDA of $47 million
•
Cincinnati Fioptics revenue totaled $341 million, up 10% from a year ago
•
IT Services and Hardware Adjusted EBITDA totaled $63 million, up $24 million from the prior year
•
Cash provided by operating activities totaled $215 million, up $11 million year-over-year
•
Free cash flow2 totaled $41 million, up $13 million year-over-year

FOURTH QUARTER 2018 HIGHLIGHTS
•
Revenue of $399 million and Adjusted EBITDA of $108 million, up 3% and 2% respectively compared to the third quarter of 2018
•
Operating income totaled $24 million, up $10 million sequentially
•
Fiber to the Premise (“FTTP”) internet net activations offset legacy declines in both Cincinnati and Hawaii, adding 4,700 and 2,100 FTTP internet subscribers, respectively
•
Entertainment and Communications revenue of $252 million, consistent with the prior quarter
•
IT Services and Hardware revenue of $154 million, up 9% compared to the third quarter of 2018

CINCINNATI - February 14, 2019 - Cincinnati Bell Inc. (NYSE: CBB), today announced financial results for the full year and fourth quarter of 2018.
Leigh Fox, President and Chief Executive Officer of Cincinnati Bell, commented, "The success of our expanded high-quality metro fiber assets and ability to capitalize on Cincinnati Bell’s 140+ year history as a communications provider continues to differentiate us from our traditional peer group.”
"I am proud of our strong financial performance and our ability to execute on our strategy of building two complementary lines of business. Looking ahead to 2019, our strategy is consistent - we will continue to invest where we are winning. We remain focused on efficiently expanding our fiber network and growing our IT Solutions business while maintaining a disciplined approach to capital allocation,” Mr. Fox concluded.
CONSOLIDATED RESULTS
•
Consolidated revenue totaled $399 million for fourth quarter of 2018 and $1,378 million for the full year
•
Operating income was $24 million in the fourth quarter of 2018 and $83 million for the full year
•
Adjusted EBITDA totaled $108 million for the fourth quarter of 2018 and $372 million for the full year




•
Net losses of $30 million and $70 million for the fourth quarter and full year of 2018, respectively, were due to transaction and integration costs as well as increased interest expense due to financing the mergers with Hawaiian Telcom and OnX
Entertainment and Communications Segment
•
Entertainment and Communications revenue totaled $252 million for the fourth quarter of 2018 and $853 million for the full year
–
Cincinnati revenue totaled $172 million in the fourth quarter and $694 million for the full year, both down 1% from the prior year due to legacy declines, excluding the one-time $5 million fiber build project in the second quarter of 2017
–
Fioptics revenue totaled $87 million for the fourth quarter and $341 million for the full year, up 8% and 10%, respectively, year-over-year
–
Fioptics internet subscribers totaled 239,000 at the end of the fourth quarter, up 12,400 compared to a year ago
–
Fioptics video subscribers totaled 139,900, down 6,600 year-over-year
–
Fioptics is available to 611,000 homes and businesses, or approximately 75% of Greater Cincinnati which includes fiber to the premise ("FTTP") and fiber to the node ("FTTN")
–
In 2018, we passed 41,000 new addresses with FTTP, and now offer FTTP to 58% of Cincinnati's total addressable market
–
Hawaii revenue totaled $80 million in the fourth quarter of 2018, consistent with the prior quarter, and contributed $159 million since the close of the merger on July 2, 2018
–
Consumer / SMB Fiber internet subscribers totaled 65,900, up 1,900 compared to the previous quarter
–
Video subscribers were 48,800, consistent with the prior quarter
–
Consumer/SMB Fiber is available to approximately 221,500 addresses on Oahu, covering approximately 68% of the island
•
Adjusted EBITDA was $91 million for the fourth quarter of 2018 and $317 million for the full year, up $24 million and $40 million, respectively, due to contributions from Hawaiian Telcom
Cincinnati Bell’s continued investment in dense metro fiber has allowed the Company to lock in fiber density value for its shareholders as demand for faster data speed and broadband usage continues to accelerate.
IT Services and Hardware Segment
•
IT Services and Hardware revenue totaled $154 million for the fourth quarter of 2018 and $551 million for the full year, up $22 million and $166 million year-over-year respectively due to contributions from OnX and Hawaiian Telcom




–
Consulting revenue totaled $45 million for the fourth quarter and $165 million for the full year, up $5 million and $76 million year-over-year, respectively
–
Cloud revenue was $26 million in the fourth quarter and $98 million in 2018, up $3 million and $17 million, respectively, compared to the prior year
–
Communications revenue of $50 million in the fourth quarter and $179 million for the full year, up $10 million and $18 million year-over-year, respectively
–
Infrastructure Solutions revenue of $33 million in the fourth quarter and $109 million in 2018, up $4 million and $55 million, respectively
•
Adjusted EBITDA was $20 million for the fourth quarter and $63 million for the full year, up $5 million and $24 million, respectively, including contributions from OnX
The company’s transformation from a traditional hardware reseller to a service oriented IT solutions provider continues to generate momentum across its expanded North American footprint, resulting in client diversification and the ability to capitalize on significant higher margin service revenue opportunities.
Cash Flow and Financial Position
•
Cash provided by operating activities totaled $215 million for the full year of 2018, an increase of $11 million year-over-year
•
Free cash flow totaled $41 million for the full year of 2018, compared to $28 million a year ago
•
Liquidity of $207 million as of December 31, 2018, with no significant maturities until 2024
•
Capital expenditures were $221 million for the full year of 2018, including $44 million for Hawaiian Telcom since the close of the merger on July 2, 2018
•
Gross Net Operating Loss carryforward of $674 million as of December 31, 2018
2019 Outlook
•
Hawaiian Telcom is projected to contribute $350 million to $360 million of revenue in 2019, growing Adjusted EBITDA year-over-year to $95 million to $100 million
•
Additional insourcing initiatives from one of our largest customers is conservatively expected to decrease Adjusted EBITDA by $15 million to $20 million during 2019 as compared to the prior year
•
Cincinnati Bell is providing the following guidance for 2019, which includes the assumptions previously described:
Category
2019
Guidance Range
Revenue
$1,515M - $1,575M


Adjusted EBITDA
$400M - $410M







Conference Call/Webcast
Cincinnati Bell will host a conference call on Thursday, February 14, 2019 at 9:00 a.m. (ET) to discuss its financial results for the fourth quarter and full year of 2018. A live webcast of the call will be available via the Investor Relations section of www.cincinnatibell.com. Callers can dial toll-free (800) 263-0877 or toll (323) 794-2094. A taped replay of the conference call will be available starting at 12:00 p.m. (ET) on Thursday, February 14, 2019 until Thursday, February 28, 2019 at midnight ET. To access the telephone replay, please dial toll-free (888) 203-1112 or toll (719) 457-0820, and then enter the conference ID number 9120332. 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

or

MEDIA CONTACT:
Josh Pichler, 513-565-0310

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 and other acquired companies 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. During the first quarter ended March 31, 2018, the Company revised its methodology to calculate Adjusted EBITDA to exclude stock-based compensation expense to align more closely with its peer group. In addition, the presentation of Adjusted EBITDA is adjusted for the amended accounting guidance adopted by the Company on January 1, 2018 and implemented retrospectively, which requires pension and postretirement benefit costs (excluding current service cost component) to be reported below operating income. 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 feels 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
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
 
 
December 31,
 
Change
 
December 31,
 
Change
 
 
 
 
 
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
399.0

 
$
301.2

 
$
97.8

 
32
 %
 
$
1,378.2

 
$
1,065.7

 
$
312.5

 
29
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
199.3

 
151.0

 
48.3

 
32
 %
 
698.7

 
531.0

 
167.7

 
32
 %
 
 
 
Selling, general and administrative
 
93.2

 
72.8

 
20.4

 
28
 %
 
313.4

 
235.1

 
78.3

 
33
 %
 
 
 
Depreciation and amortization
 
74.4

 
52.9

 
21.5

 
41
 %
 
252.0

 
193.0

 
59.0

 
31
 %
 
 
 
Restructuring and severance related charges
 
3.4

 
3.5

 
(0.1
)
 
(3
)%
 
8.3

 
32.7

 
(24.4
)
 
(75
)%
 
 
 
Transaction and integration costs
 
4.3

 
4.1

 
0.2

 
5
 %
 
22.5

 
18.5

 
4.0

 
22
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income
 
24.4

 
16.9

 
7.5

 
44
 %
 
83.3

 
55.4

 
27.9

 
50
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Interest expense
 
35.2

 
30.3

 
4.9

 
16
 %
 
131.5

 
85.2

 
46.3

 
54
 %
 
 
Loss on extinguishment of debt
 
—

 
3.2

 
(3.2
)
 
n/m

 
1.3

 
3.2

 
(1.9
)
 
(59
)%
 
 
Other components of pension and postretirement benefit plans expense
 
3.0

 
7.2

 
(4.2
)
 
(58
)%
 
12.5

 
16.6

 
(4.1
)
 
(25
)%
 
 
Gain on sale of Investment in CyrusOne
 
—

 
—

 
—

 
n/m

 
—

 
(117.7
)
 
117.7

 
n/m

 
 
Other expense (income), net
 
0.8

 
(2.1
)
 
2.9

 
n/m

 
(1.6
)
 
1.4

 
(3.0
)
 
n/m

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Loss) income before income taxes
 
(14.6
)
 
(21.7
)
 
7.1

 
(33
)%
 
(60.4
)
 
66.7

 
(127.1
)
 
n/m

 
 
Income tax expense (benefit)
 
15.4

 
(9.8
)
 
25.2

 
n/m

 
9.4

 
26.7

 
(17.3
)
 
(65
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income
 
(30.0
)
 
(11.9
)
 
(18.1
)
 
n/m

 
(69.8
)
 
40.0

 
(109.8
)
 
n/m

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred stock dividends
 
2.6

 
2.6

 
—

 
—

 
10.4

 
10.4

 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net (loss) income applicable to common shareowners

 
$
(32.6
)
 
$
(14.5
)
 
$
(18.1
)
 
n/m

 
$
(80.2
)
 
$
29.6

 
$
(109.8
)
 
n/m

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Basic net (loss) earnings per common share
 
$
(0.65
)
 
$
(0.34
)
 
 
 
 
 
$
(1.73
)
 
$
0.70

 
 
 
 
 
 
Diluted net (loss) earnings per common share
 
$
(0.65
)
 
$
(0.34
)
 
 
 
 
 
$
(1.73
)
 
$
0.70

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Weighted average common shares outstanding
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 - Basic
 
50.2

 
42.2

 
 
 
 
 
46.3

 
42.2

 
 
 
 
 
 
 
 - Diluted
 
50.2

 
42.2

 
 
 
 
 
46.3

 
42.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications Income Statement
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
 
December 31,
 
Change
 
December 31,
 
Change
 
 
 
 
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
 
Income Statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
251.9

 
$
175.0

 
$
76.9

 
44
%
 
$
853.4

 
$
706.1

 
$
147.3

 
21
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
113.4

 
78.9

 
34.5

 
44
%
 
388.2

 
308.6

 
79.6

 
26
 %
 
 
 
Selling, general and administrative
 
47.9

 
29.6

 
18.3

 
62
%
 
148.0

 
120.1

 
27.9

 
23
 %
 
 
 
Depreciation and amortization
 
63.3

 
42.7

 
20.6

 
48
%
 
210.8

 
163.7

 
47.1

 
29
 %
 
 
 
Restructuring and severance related charges
 
3.1

 
0.9

 
2.2

 
n/m

 
3.1

 
27.6

 
(24.5
)
 
(89
)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total operating costs and expenses
 
227.7

 
152.1

 
75.6

 
50
%
 
750.1

 
620.0

 
130.1

 
21
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Operating income

 
$
24.2

 
$
22.9

 
$
1.3

 
6
%
 
$
103.3

 
$
86.1

 
$
17.2

 
20
 %
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 




































Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
 
 
Three Months Ended
 
 
 
 
 
December 31, 2018
 
 
 
December 31, 2017
 
 
 
 
 
Cincinnati
 
Hawaii
 
Total
 
 
 
Cincinnati
 
Hawaii
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer / SMB Fiber *
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
36.5

 
$
7.2

 
$
43.7

 
 
 
$
32.9

 
$
—

 
$
32.9

 
 
 
Video
 
40.5

 
11.5

 
52.0

 
 
 
38.4

 
—

 
38.4

 
 
 
Voice
 
9.4

 
2.7

 
12.1

 
 
 
8.8

 
—

 
8.8

 
 
 
Other
 
0.3

 
0.1

 
0.4

 
 
 
0.2

 
—

 
0.2

 
 
 
Total Consumer / SMB Fiber
 
86.7

 
21.5

 
108.2

 
 
 
80.3

 
—

 
80.3

 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 


 
 
 
Enterprise Fiber
 
 
 
 
 


 
 
 
 
 
 
 


 
 
 
Data
 
21.5

 
9.0

 
30.5

 
 
 
20.6

 
—

 
20.6

 
 
 
 
 
 
 
 
 


 
 
 
 
 
 
 


 
 
 
Legacy
 
 
 
 
 


 
 
 
 
 
 
 


 
 
 
Data
 
26.8

 
16.3

 
43.1

 
 
 
31.2

 
—

 
31.2

 
 
 
Voice
 
34.0

 
29.0

 
63.0

 
 
 
39.1

 
—

 
39.1

 
 
 
Other
 
3.4

 
3.7

 
7.1

 
 
 
3.8

 
—

 
3.8

 
 
 
Total Legacy
 
64.2

 
49.0

 
113.2

 
 
 
74.1

 
—

 
74.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Entertainment & Communications
 
$
172.4

 
$
79.5


$
251.9

 
 
 
$
175.0


$
—


$
175.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended
 
 
 
Twelve Months Ended
 
 
 
 
 
December 31, 2018
 
 
 
December 31, 2017
 
 
 
 
 
Cincinnati
 
Hawaii
 
Total
 
 
 
Cincinnati
 
Hawaii
 
Total
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consumer / SMB Fiber *
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
$
142.5

 
$
13.5

 
$
156.0

 
 
 
$
126.3

 
$
—

 
$
126.3

 
 
 
Video
 
160.1

 
23.2

 
183.3

 
 
 
148.9

 
—

 
148.9

 
 
 
Voice
 
37.4

 
5.4

 
42.8

 
 
 
33.6

 
—

 
33.6

 
 
 
Other
 
1.2

 
0.2

 
1.4

 
 
 
1.1

 
—

 
1.1

 
 
 
Total Consumer / SMB Fiber
 
341.2

 
42.3


383.5

 
 
 
309.9


—


309.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Fiber
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
84.3

 
17.7

 
102.0

 
 
 
86.1

 
—

 
86.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Data
 
111.8

 
32.8

 
144.6

 
 
 
132.1

 
—

 
132.1

 
 
 
Voice
 
143.4

 
58.7

 
202.1

 
 
 
165.4

 
—

 
165.4

 
 
 
Other
 
13.5

 
7.7

 
21.2

 
 
 
12.6

 
—

 
12.6

 
 
 
Total Legacy
 
268.7

 
99.2


367.9

 
 
 
310.1


—


310.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Entertainment & Communications
 
$
694.2

 
$
159.2

 
$
853.4

 
 
 
$
706.1

 
$
—

 
$
706.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Represents Fioptics in Cincinnati
 
 
 
 
 
 
 




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Entertainment and Communications Metric Information
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
September 30,
 
June 30,
 
March 31,
 
December 31,
 
 
 
 
2018
 
2018
 
2018
 
2018
 
2017
Cincinnati Metrics
 
 
 
 
 
 
 
 
 
Fioptics
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
Internet FTTP *
201.5

 
196.8

 
192.7

 
187.8

 
179.6

 
 
Internet FTTN *
37.5

 
39.8

 
42.6

 
45.0

 
47.0

 
 
Total Fioptics Internet
239.0

 
236.6


235.3


232.8


226.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Video
 
 
 
 
 
 
 
 
 
 
 
Video FTTP
115.0

 
115.6

 
118.1

 
118.1

 
116.5

 
 
Video FTTN
24.9

 
25.9

 
27.0

 
28.2

 
30.0

 
 
Total Fioptics Video
139.9

 
141.5


145.1


146.3


146.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
 
 
 
 
Fioptics Voice Lines
107.6

 
107.0

 
107.6

 
106.9

 
105.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fioptics Units Passed
 
 
 
 
 
 
 
 
 
 
 
Units Passed FTTP
472.3

 
459.1

 
449.3

 
440.5

 
431.3

 
 
Units Passed FTTN
138.7

 
139.5

 
139.9

 
140.3

 
140.9

 
 
Total Fioptics Units Passed
611.0

 
598.6


589.2


580.8


572.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Enterprise Fiber
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
Ethernet Bandwidth (Gb)
4,565

 
4,331

 
4,133

 
4,046

 
3,919

 
 
 
 
 
 
 
 
 
 
 
 
 
Legacy
 
 
 
 
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
 
 
 
 
DSL
72.0

 
74.1

 
75.2

 
78.1

 
82.1

 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
 
 
 
 
Legacy Voice Lines
226.2

 
232.7

 
240.6

 
251.4

 
262.0

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





Cincinnati Bell Inc.
 
 
 
 
Entertainment and Communications Metric Information
(Unaudited)
 
 
 
 
(In thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
September 30,
 
 
 
 
 
 
2018
 
2018
 
Hawaii Metrics
 
 
 
 
 
Consumer / SMB Fiber
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
Internet FTTP *
51.6

 
49.5

 
 
 
 
Internet FTTN *
14.3

 
14.5

 
 
 
 
Total Consumer / SMB Fiber Internet
65.9

 
64.0

 
 
 
 
 
 
 
 
 
 
 
 
Video
 
 
 
 
 
 
 
Video FTTP
33.8

 
33.3

 
 
 
 
Video FTTN
15.0

 
15.3

 
 
 
 
Total Consumer / SMB Fiber Video
48.8

 
48.6

 
 
 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
Consumer / SMB Fiber Voice Lines
30.3

 
29.9

 
 
 
 
 
 
 
 
 
 
 
 
Consumer / SMB Fiber Units Passed **
 
 
 
 
 
 
 
Units Passed FTTP
167.0

 
163.6

 
 
 
 
Units Passed FTTN
73.5

 
73.3

 
 
 
 
Total Consumer / SMB Fiber Units Passed
240.5

 
236.9

 
 
 
 
 
 
 
 
 
 
 
Enterprise Fiber
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
Ethernet Bandwidth (Gb)
2,091

 
1,948

 
 
 
 
 
 
 
 
 
 
 
Legacy
 
 
 
 
 
 
Data
 
 
 
 
 
 
 
DSL
48.7

 
50.4

 
 
 
 
 
 
 
 
 
 
Voice
 
 
 
 
 
 
 
Legacy Voice Lines
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
 
 
 
 
 
Twelve Months Ended
 
 
 
 
 
 
 
 
 
 
December 31,
 
Change
 
December 31,
 
Change
 
 
 
 
 
 
2018
 
2017
 
$
 
%
 
2018
 
2017
 
$
 
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Income Statement
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue
 
$
153.9

 
$
132.3

 
$
21.6

 
16
%
 
$
550.9

 
$
385.1

 
$
165.8

 
43
 %
 
 
 
 
 
 
 
 
 


 

 
 
 
 
 
 
 
 
 
Operating costs and expenses
 
 
 
 
 


 

 
 
 
 
 
 
 
 
 
 
Cost of services and products
 
92.6

 
78.0

 
14.6

 
19
%
 
335.7

 
247.0

 
88.7

 
36
 %
 
 
Selling, general and administrative
 
41.6

 
39.6

 
2.0

 
5
%
 
152.1

 
98.6

 
53.5

 
54
 %
 
 
Depreciation and amortization
 
11.0

 
10.1

 
0.9

 
9
%
 
41.0

 
29.1

 
11.9

 
41
 %
 
 
Restructuring and severance related charges
 
—

 
2.6

 
(2.6
)
 
n/m

 
4.9

 
5.1

 
(0.2
)
 
(4
)%
 
 
 
 
 
 
 
 
 
 


 


 


 


 


 
 
 
 
Total operating costs and expenses
 
145.2

 
130.3

 
14.9

 
11
%
 
533.7

 
379.8

 
153.9

 
41
 %
 
 
 
 
 
 
 
 
 


 


 


 


 


 
 
 
Operating income
 
$
8.7

 
$
2.0

 
$
6.7

 
n/m

 
$
17.2

 
$
5.3

 
$
11.9

 
n/m

 
 
 
 
 
 
 
 


 

 
 
 
 
 
 
 
 
 
 
Revenue
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Consulting
$
45.3

 
$
40.0

 
$
5.3

 
13
%
 
$
165.3

 
$
89.3

 
$
76.0

 
85
 %
 
 
 
Cloud
26.2

 
23.5

 
2.7

 
11
%
 
98.0

 
81.0

 
17.0

 
21
 %
 
 
 
Communications
49.4

 
39.9

 
9.5

 
24
%
 
178.5

 
160.6

 
17.9

 
11
 %
 
 
 
Infrastructure Solutions
33.0

 
28.9

 
4.1

 
14
%
 
109.1

 
54.2

 
54.9

 
n/m

 
 
 
Total IT Services and Hardware Revenue
$
153.9

 
$
132.3

 
$
21.6

 
16
%
 
$
550.9

 
$
385.1

 
$
165.8

 
43
 %
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

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

 
999

 
926

 
888

 
 
 
 
 
 
 
 
 
 
 
 
 
Communications
 
 
 
 
 
 
 
 
 
 
NaaS Locations
2257

 
1,101

 
782

 
564

 
 
 
SD - WAN Locations
803

 
488

 
310

 
117

 
 
 
Hosted UCaaS Profiles*
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 in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
December 31,
 
 
December 31,
 
 
 
2018
 
 
2017
 
 
 
 
 
 
 
 
Receivables Facility
$
176.6

 
 
$
—

 
Credit Agreement - Tranche B Term Loan due 2024
598.5

 
 
600.0

 
Credit Agreement - Revolving Credit Facility
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 arrangements
3.1

 
 
—

 
Capital leases
73.9

 
 
82.9

 
Net unamortized premium
1.7

 
 
1.9

 
Unamortized note issuance costs
(27.2
)
 
 
(22.3
)
 
 
 
 
 
 
 
 
 
Total debt
1,929.8

 
 
1,747.7

 
 
 
 
 
 
 
 
Less: Cash and cash equivalents
(15.4
)
 
 
(396.5
)
*
 
 
 
 
 
 
 
 
Net debt (Non-GAAP)
$
1,914.4

 
 
$
1,351.2

 
 
 
 
 
 
 
 
* Includes restricted cash of $378.7 million, which was used to fund the merger with Hawaiian Telcom that closed on July 2, 2018.
 
 
 
 




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
Reconciliation of Net (loss) Income (GAAP) to Adjusted EBITDA (Non-GAAP)
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2018
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net loss (GAAP)
 
 
 
 
 
 
 
$
(30.0
)
 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
15.4

 
 
Interest expense
 
 
 
 
 
 
 
35.2

 
 
Other expense, net
 
 
 
 
 
 
 
0.8

 
 
Other components of pension and postretirement benefit plans expense
 
 
 
 
 
 
 
3.0

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
24.2

 
$
8.7

 
$
(8.5
)
 
$
24.4

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
63.3

 
11.0

 
0.1

 
74.4

 
 
Restructuring and severance related charges
 
3.1

 
—

 
0.3

 
3.4

 
 
Transaction and integration costs
 
—

 
—

 
4.3

 
4.3

 
 
Stock-based compensation
 
—

 
—

 
1.1

 
1.1

 
Adjusted EBITDA (Non-GAAP)
 
$
90.6

 
$
19.7

 
$
(2.7
)
 
$
107.6

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
36
%
 
13
%
 
—

 
27
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended December 31, 2017
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net loss (GAAP)
 
 
 
 
 
 
 
$
(11.9
)
 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax benefit
 
 
 
 
 
 
 
(9.8
)
 
 
Interest expense
 
 
 
 
 
 
 
30.3

 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
3.2

 
 
Other income, net
 
 
 
 
 
 
 
(2.1
)
 
 
Other components of pension and postretirement benefit plans expense
 
 
 
 
 
 
 
7.2

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
22.9

 
$
2.0

 
$
(8.0
)
 
$
16.9

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
42.7

 
10.1

 
0.1

 
52.9

 
 
Restructuring and severance related charges
 
0.9

 
2.6

 
—

 
3.5

 
 
Transaction and integration costs
 
—

 
—

 
4.1

 
4.1

 
 
Stock-based compensation
 
—

 
—

 
0.7

 
0.7

 
Adjusted EBITDA (Non-GAAP)
 
$
66.5

 
$
14.7

 
$
(3.1
)
 
$
78.1

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
38
%
 
11
%
 
—

 
26
%
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year dollar change in Adjusted EBITDA
 
$
24.1

 
$
5.0

 
$
0.4

 
$
29.5

 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year percentage change in Adjusted EBITDA
 
36
%
 
34
%

(13
)%
 
38
%













Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
Reconciliation of Net (loss) Income (GAAP) to Adjusted EBITDA (Non-GAAP)
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended December 31, 2018
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net loss (GAAP)
 
 
 
 
 
 
 
$
(69.8
)
 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
9.4

 
 
Interest expense
 
 
 
 
 
 
 
131.5

 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
1.3

 
 
Other income, net
 
 
 
 
 
 
 
(1.6
)
 
 
Other components of pension and postretirement benefit plans expense
 
 
 
 
 
 
 
12.5

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
103.3

 
$
17.2

 
$
(37.2
)
 
$
83.3

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
210.8

 
41.0

 
0.2

 
252.0

 
 
Restructuring and severance related charges
 
3.1

 
4.9

 
0.3

 
8.3

 
 
Transaction and integration costs
 
—

 
—

 
22.5

 
22.5

 
 
Stock-based compensation
 
—

 
—

 
5.6

 
5.6

 
Adjusted EBITDA (Non-GAAP)
 
$
317.2

 
$
63.1

 
$
(8.6
)
 
$
371.7

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
37
%
 
11
%
 
—

 
27
%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Twelve Months Ended December 31, 2017
 
 
 
 
Entertainment & Communications
 
IT Services & Hardware
 
Corporate
 
Total
Company
 
 
 
 
 
 
 
 
 
 
 
 
Net income (GAAP)
 
 
 
 
 
 
 
$
40.0

 
Add:
 
 
 
 
 
 
 
 
 
 
Income tax expense
 
 
 
 
 
 
 
26.7

 
 
Interest expense
 
 
 
 
 
 
 
85.2

 
 
Gain on sale of CyrusOne
 
 
 
 
 
 
 
(117.7
)
 
 
Loss on extinguishment of debt
 
 
 
 
 
 
 
3.2

 
 
Other expense, net
 
 
 
 
 
 
 
1.4

 
 
Other components of pension and postretirement benefit plans expense
 
 
 
 
 
 
 
16.6

 
 
 
 
 
 
 
 
 
 
 
 
Operating income (loss) (GAAP)
 
$
86.1

 
$
5.3

 
$
(36.0
)
 
$
55.4

 
Add:
 
 
 
 
 
 
 
 
 
 
Depreciation and amortization
 
163.7

 
29.1

 
0.2

 
193.0

 
 
Restructuring and severance related charges
 
27.6

 
5.1

 
—

 
32.7

 
 
Transaction and integration costs
 
—

 
—

 
18.5

 
18.5

 
 
Stock-based compensation
 
—

 
—

 
5.9

 
5.9

 
Adjusted EBITDA (Non-GAAP)
 
$
277.4

 
$
39.5

 
$
(11.4
)
 
$
305.5

 
 
 
 
 
 
 
 
 
 
 
 
Adjusted EBITDA Margin (Non-GAAP)
 
39
%
 
10
%
 
—

 
29
%
 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year dollar change in Adjusted EBITDA
 
$
39.8

 
$
23.6

 
$
2.8

 
$
66.2

 
 
 
 
 
 
 
 
 
 
 
 
Year-over-year percentage change in Adjusted EBITDA
 
14
%
 
60
%
 
(25
)%
 
22
%





Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
Consolidated Statements of Cash Flows
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
Twelve Months Ended
 
 
 
 
December 31,
 
December 31,
 
 
 
 
2018
 
2017
 
2018
 
2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
91.9

 
$
46.6

 
$
214.7

 
$
203.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(79.9
)
 
(62.3
)
 
(220.6
)
 
(210.5
)
 
 
 
Proceeds from sale of Investment in CyrusOne
—

 
—

 
—

 
140.7

 
 
 
Acquisitions of businesses
—

 
(157.4
)
 
(216.8
)
 
(167.0
)
 
 
 
Other, net
0.1

 
(0.3
)
 
—

 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Cash used in investing activities
(79.8
)
 
(220.0
)
 
(437.4
)
 
(236.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Proceeds from issuance of long-term debt
—

 
943.0

 
—

 
943.0

 
 
 
Net increase (decrease) in corporate credit and receivables facilities with initial maturities less than 90 days
0.4

 
—

 
194.6

 
(89.5
)
 
 
 
Repayment of debt
(4.4
)
 
(396.6
)
 
(328.7
)
 
(403.0
)
 
 
 
Debt issuance costs
(0.7
)
 
(17.8
)
 
(11.7
)
 
(19.1
)
 
 
 
Dividends paid on preferred stock
(2.6
)
 
(2.6
)
 
(10.4
)
 
(10.4
)
 
 
 
Other, net
0.2

 
0.2

 
(1.9
)
 
(0.8
)
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash (used in) provided by financing activities
(7.1
)
 
526.2

 
(158.1
)
 
420.2

 
 
 
 
 
 
 
 
 
 
 
 
 
Effect of exchange rate changes on cash, cash equivalents and restricted cash

(0.2
)
 
—

 
(0.3
)
 
—

 
 
 
 
 
 
 
 
 
 
 
 
 
Net increase (decrease) in cash, cash equivalents and restricted cash
4.8

 
352.8

 
(381.1
)
 
386.8

 
 
Cash, cash equivalents and restricted cash at beginning of period
10.6

 
43.7

 
396.5

 
9.7

 
 
 
 
 
 
 
 
 
 
 
 
 
Cash, cash equivalents and restricted cash at end of period

$
15.4

 
$
396.5

 
$
15.4

 
$
396.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Reconciliation of Cash Provided by Operating Activities (GAAP) to
 
 
 
 
 
 
 
 
 
 
Free Cash Flow (Non-GAAP)
 
 
 
 
 
 
 
 
 
Cash provided by operating activities
$
91.9

 
$
46.6

 
$
214.7

 
$
203.4

 
 
Adjustments:
 
 
 
 
 
 
 
 
 
 
Capital expenditures
(79.9
)
 
(62.3
)
 
(220.6
)
 
(210.5
)
 
 
 
Restructuring and severance related payments
1.7

 
2.4

 
16.4

 
29.4

 
 
 
Preferred stock dividends
(2.6
)
 
(2.6
)
 
(10.4
)
 
(10.4
)
 
 
 
Transaction and integration costs*
3.0

 
7.2

 
40.9

 
16.1

 
 
 
 
 
 
 
 

 
 
 
 
 
   Free cash flow (Non-GAAP)
$
14.1

 
$
(8.7
)
 
$
41.0

 
$
28.0

 
 
 
 
 
 
 
 
 
 
 
 
 
Income tax payments (refunds)
$
(0.6
)
 
$
3.3

 
$
(13.8
)
 
$
(12.9
)
 
 
 
 
 
 
 
 
 
 
 
 
 
* For the twelve months ended December 31, 2018, the adjustment for transaction and integration costs includes a $3.5 million payment of accrued interest on Hawaiian Telcom’s debt that was repaid upon the completion of the merger and a $5.0 million contribution to Hawaiian Telcom's pension plan. The pension plan contribution was required by the Public Utilities Commission of the State of Hawaii in order to complete the merger between Cincinnati Bell Inc. and Hawaiian Telcom.




Cincinnati Bell Inc.
 
 
 
 
 
 
 
 
 
Capital Expenditures
 
 
 
 
 
 
 
 
 
(Unaudited)
 
 
 
 
 
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Three Months Ended
 
December 31, 2018
 
September 30, 2018
 
June 30, 2018
 
March 31, 2018
 
December 31, 2017
 
 
 
 
 
 
 
 
 
 
Entertainment and Communications
$
72.3

 
$
62.3

 
$
31.8

 
$
27.6

 
$
55.1

IT Services and Hardware
7.4

 
7.4

 
6.5

 
5.1

 
7.2

Corporate
0.2

 
—

 
—

 
—

 
—

Total capital expenditures
$
79.9


$
69.7

 
$
38.3

 
$
32.7

 
$
62.3





Cincinnati Bell Inc.
 
 
Reconciliation of Net (Loss) Income Applicable to Common Shareholders (GAAP) to Net (Loss) Income Applicable to Common Shareholders, Excluding Special Items (Non-GAAP) and Adjusted Diluted Earnings Per Share (Non-GAAP)
(Unaudited)
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
Three Months Ended
 
 
 
December 31, 2018
 
December 31, 2017
 
 
 
 
 
 
 
Net (loss) income applicable to common shareholders (GAAP)
$
(32.6
)
 
$
(14.5
)
 
 
 
 
 
 
 
Special items:
 
 
 
 
 
Transaction and integration costs
4.3

 
4.1

 
 
Restructuring and severance related charges
3.4

 
3.5

 
 
Loss on extinguishment of debt, net
—

 
3.2

 
 
Pension settlement charges
0.1

 
4.0

 
 
Other income, net
—

 
(0.7
)
 
 
Income tax effect of special items *
(3.0
)
 
(2.7
)
 
Total special items
4.8

 
11.4

 
 
 
 
 
 
 
Net (loss) income applicable to common shareowners, excluding special items (Non-GAAP)
$
(27.8
)
 
$
(3.1
)
 
 
 
 
 
 
 
Weighted average diluted shares outstanding**
50.2

 
42.2

 
 
 
 
 
 
 
Diluted earnings per common share (GAAP)
$
(0.65
)
 
$
(0.34
)
 
 
 
 
 
 
 
Adjusted diluted (loss) earnings per common share (Non-GAAP)
$
(0.55
)
 
$
(0.07
)
 
 
 
 
 
 
 
*
Special items have been tax effected utilizing the normalized effective tax rate for the period, with the exception of transaction and integration costs, which are treated as a discrete item.
**
Weighted average diluted shares outstanding based on net (loss) income applicable to common shareowners, excluding special items (Non-GAAP).






Cincinnati Bell Inc.
 
 
Reconciliation of Net (Loss) Income Applicable to Common Shareholders (GAAP) to Net (Loss) Income Applicable to Common Shareholders, Excluding Special Items (Non-GAAP) and Adjusted Diluted Earnings Per Share (Non-GAAP)
(Unaudited)
 
 
(Dollars in millions, except per share amounts)
 
 
 
 
 
 
Twelve Months Ended
 
 
 
December 31, 2018
 
December 31, 2017
 
 
 
 
 
 
 
Net (loss) income applicable to common shareholders (GAAP)
$
(80.2
)
 
$
29.6

 
 
 
 
 
 
 
Special items:
 
 
 
 
 
Restructuring and severance related charges

8.3

 
32.7

 
 
Loss on extinguishment of debt
1.3

 
3.2

 
 
Transaction and integration costs
22.5

 
18.5

 
 
Gain on sale of Investment in CyrusOne
—

 
(117.7
)
 
 
Impairment of equity method investment
—

 
4.7

 
 
Pension settlement charges
0.1

 
4.0

 
 
Other income, net
—

 
(0.7
)
 
 
Income tax effect of special items *
(3.6
)
 
27.0

 
Total special items
28.6

 
(28.3
)
 
 
 
 
 
 
 
Net (loss) income applicable to common shareowners, excluding special items (Non-GAAP)
$
(51.6
)
 
$
1.3

 
 
 
 
 
 
 
Weighted average diluted shares outstanding**
46.3

 
42.4

 
 
 
 
 
 
 
Diluted earnings per common share (GAAP)
$
(1.73
)
 
$
0.70

 
 
 
 
 
 
 
Adjusted diluted (loss) earnings per common share (Non-GAAP)
$
(1.11
)
 
$
0.03

 
 
 
 
 
 
 
*
Special items have been tax effected utilizing the normalized effective tax rate for the period, with the exception of transaction and integration costs, which are treated as a discrete item.
**
Weighted average diluted shares outstanding based on net (loss) income applicable to common shareowners, excluding special items (Non-GAAP).





Cincinnati Bell Inc.
 
 
 
 
 
 
Reconciliation of Operating Income (GAAP) Guidance to Adjusted EBITDA (Non-GAAP) Guidance
 
 
(Unaudited)
 
 
 
 
(Dollars in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Low
 
High
 
2019 Operating Income (GAAP) Guidance Range
 
$
87

 
$
102

 
 
 
 
 
 
 
 
 
 
Add:
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
   Depreciation and amortization
 
295

 
290

 
   Restructuring and severance related charges
 
5

 
5

 
Transaction and integration costs
 
5

 
5

 
   Stock compensation expense
 
8

 
8

 
 
 
 
 
 
 
2019 Adjusted EBITDA (Non-GAAP) Guidance Range
 
$
400

 
$
410

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 



CONTACT:
    
Cincinnati Bell Inc.
Investor contact:
Kei Lawson, 513-565-0510

Media contact:
Josh Pichler, 513-565-0310




Cincinnati Bell Fourth Quarter and Full Year 2018 Results February 14, 2019

 
Safe Harbor This presentation 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 and other acquired companies 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. 2

 
Non-GAAP Financial Measures This presentation 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 within the Investor Relations section. 3

 
Call Participants Leigh Fox President and CEO, Cincinnati Bell Andy Kaiser CFO, Cincinnati Bell Tom Simpson COO, Cincinnati Bell 4

 
2018 Highlights Substantial Progress Towards Building Two Distinct, Complementary Lines of Business with Expanded Geographic Reach, Customer Diversification and Increased Runway for Growth Entertainment & Communications IT Services & Hardware • Accelerated leadership in fiber through enhanced scale and • Accelerated transition from a traditional hardware reseller diversification with the Hawaiian Telcom merger completion to a leading North American IT Services provider following the OnX integration 16K+ fiber route miles in Greater Cincinnati and Hawaii 20+ Offices 1,500+ IT Professionals 2,400+ Customers 58% of the addresses in Cincinnati with Consumer/SMB FTTP1 • Capitalizing on diversified product portfolio and expanded 51%• of the1,500 addresses IT Professionals on Oahu with Consumer/SMB FTTP customer base – chart represents percentage of top 200 • 2,000+ Customers customers engagement by practice: • Strong demand for Consumer/SMB Fiber in both markets % of Top 200 ― Cincinnati Fioptics revenue increased 10% year-over- Infrastructure 85% year Consulting 46% ― Hawaii FTTP internet subscribers increased approximately 4,700 since the close of the merger Communications 38% Cloud 28% • Integration with Hawaiian Telcom progressing as planned with synergy realization and operational improvement • Strong momentum in Communications and Consulting Key Financials • Achieved full year 2018 financial guidance 2018 Actuals 2018 Guidance • Generated positive Free Cash Flow for two consecutive years Revenue $1,378M $1,375M – $1,460M • Hawaiian Telcom contributed revenue of $175M and Adj. EBITDA $372M $363M – $379M Adjusted EBITDA of $47M during the 2H182 1. FTTP: fiber-to-the-premise 2. Merger closed on July 2, 2018 5

 
Fourth Quarter 2018 Highlights Key Financial Metrics Total Revenue Adjusted EBITDA ($ in millions) ($ in millions) $399 $8 $8 $108$14 $14 $20 $301 $154 $85 $128 $78 $85 $15 $132 $72 $73 $66 $91$67 $252 $66 $181 $174 $181$175 $174 -$6 -$7 $-3 -$3 4Q17 4Q18 4Q17 4Q18 Entertainment & Communications IT Services & Hardware Intersegment Entertainment & Communications IT Services & Hardware Corporate Entertainment & Communications IT Services & Hardware Hawaiian Telcom Cincinnati Fioptics Communications 4Q18 Results Revenue of Revenue of Adjusted 611,000 239,581 Revenue of EBITDA of $87M addresses $50M Hosted $88M UCaaS $24M +8% y/y +24% y/y +7% y/y Profiles(1) +2% q/q + 8% q/q 1. Beginning September 30, 2018, includes Hosted UCaaS Profiles for Hawaiian Telcom 6 Page 6

 
Entertainment & Communications Segment Results 4Q18 Segment Revenue Elements Legacy ($ in millions) 4Q18 Y/Y FY18 Y/Y Consumer/SMB 45% Fiber Revenue $252 44% $853 21% 43% Adj. EBITDA $91 36% $317 14% Strategic Revenue Adj. EBITDA Enterprise 36% -203 bps 37% -213 bps margin with breakdown Fiber for 2 segments 12% Highlights 4Q18 Revenue by Market • In Cincinnati— ($ in millions) Cincinnati Hawaii Total ⁻ Fioptics revenue totaled $87M in 4Q18, up 8% year-over- Consumer/SMB year $87 $22 $109 Fiber ⁻ Fioptics FTTP internet net activations totaled 21,900 for the year, more than offsetting legacy declines Enterprise Fiber 21 9 30 • In Hawaii— Legacy 64 49 113 ⁻ Consumer/SMB Fiber revenue increased 3% sequentially ⁻ Total internet subscribers of 114,600, consistent with 3Q18 Total $172 $80 $252 7 Page 7

 
Strong Demand for Fiber-to-the-Premise Consumer / SMB Fiber Consumer / SMB Fiber Highlights Subscribers (in thousands) Addresses (in thousands) Cincinnati 167 • Fioptics FTTP internet subs 74 increased 4,700 during the quarter 66 Penetration 43% $235 214$214 235 49 30 472 Hawaii 431 141 227 239 139 • Consumer / SMB Fiber FTTP 147 102106 140 108108 internet subs increased by 2,100 during the quarter 4Q17 4Q18 4Q17 4Q18 Penetration 31% (1) (2) Hawaii Hawaii • Fioptics is available to 611,000 addresses, or 75% of Greater Cincinnati CBB continues to win with • Consumer/SMB Fiber is available to approximately 241,000 homes and fiber in a competitive businesses in Hawaii, or approximately 49% of the state environment 1. FTTP: fiber-to-the-premise 2. FTTN: fiber-to-the-node 8 Page 8

 
IT Services & Hardware Segment Results(1) 4Q18 Segment Revenue Elements Infrastructure Cloud ($ in millions) 4Q18 Y/Y FY18 Y/Y Solutions 17% 21% Revenue $154 16% $551 43% Adj. EBITDA $20 34% $63 60% Communications Consulting Adj. EBITDA 32% 13% +169 bps 11% +120 bps 30% margin Highlights Revenue by Practice Elements(1) • Recurring services revenue accounts for 25% of gross sales – ($ in millions) 4Q18 Y/Y FY18 Y/Y resulting in improved Adjusted EBITDA margins Consulting $45 13% $165 85% • Continued momentum in Consulting and Communications Cloud 26 11% 98 21% practices Communications 50 24% 179 11% ― Billable resources for Consulting increased 17% during 2018 33 14% 109 n/m ― Strategic Communications revenue increased 26% year-over- Infrastructure Solutions year, excluding Hawaiian Telcom Total $154 16% $551 43% • Hawaiian Telcom revenue totaled $10M in 4Q18, generating Adjusted EBITDA of $1M 1. Includes OnX and Hawaiian Telcom results since close of mergers on October 2, 2017 and July 2, 2018, respectively 9 Page 9

 
Continued Momentum in Communications Communications Revenue Communications Metrics (q/q) During 2018– ($ in millions) (1) • Secured multi-year $179 NaaS engagements $161 $12 2,257564 Locations resulting in $2M of monthly recurring $98 SD-WAN revenue $106 803 locations ― Total Contract Value of more than $65M to be realized over the next 3 to 5 years) Hosted UCaaS (2) $69 239,581 $55 Profiles “Notable UCaaS Provider” FY17 FY18 (2018 Gartner UCaaS Magic Quadrant Report) Strategic Legacy Hawaiian Telcom Trusted provider of Voice services for more than 100 years 1. Hawaiian Telcom contributed approximately $12M of Communications Revenue subsequent to the merger 2. Includes Hosted UCaaS Profiles for Hawaiian Telcom totaling 24,000 10 Page 10

 
Free Cash Flow & Capital Structure ($ in millions) Free Cash Flow Capital Structure(3) YTD Y/Y 2018 Change Adjusted EBITDA (Non-GAAP) $372 $66 • Strong liquidity of $207M as of December 31, 2018 Interest Payments (128) (63) Pension and OPEB Payments (15) (3) • No significant maturities until 2024 Restructuring & Severance related payments (16) 13 (1) Transaction and Integration Costs (41) (25) • Gross Net Operating Loss carryforward of Income Tax Refund 14 1 approximately $670M Working Capital and Other 29 22 Cash Provided by Operating Activities (GAAP) $215 $11 Capital expenditures (221) (10) Restructuring & severance related payments 16 (13) $599 Preferred stock dividends (10) - OtherTransaction and Integration Costs - 41 - 25 Free Cash Flow (Non-GAAP) $41 $13 $625 $350 $177 Net Debt 4.6x $18 $22 $88 Net Leverage(2) 4.4x Net Leverage $1,914 Bonds Term Loan B AR Facility Credit Agreement $1,351 4Q17 4Q18 Proforma 1. Transaction and integration costs includes a $3.5M payment of accrued interest on Hawaiian Telcom’s debt that was repaid upon the completion of the merger and a $5.0M on contribution to Hawaiian Telcom's pension plan. The pension plan contribution was required by the Public Utilities Commission of the State of Hawaii in order to complete the merger between Cincinnati Bell Inc. and Hawaiian Telcom. 2. Calculated as 4Q18 net debt divided by the sum of 2018 Adjusted EBITDA plus Hawaiian Telcom year-to-date June 30, 2018 results (prior to close of merger) 3. Graph excludes other financing lease arrangements and capital leases 11 Page 11

 
Capital Expenditures ($ in millions) Capital Expenditures • Constructed fiber-to-the-premise FY 2018 FY 2019 Y/Y Actuals Guidance to 41,000 new addresses in Construction $39 -$15 $20 – $25 Cincinnati during 2018 Installation 48 -7 45 Other 12 -3 15 • 2019 Capex guidance reflects— Consumer/SMB Fiber $99 -$25 $80 – $85 ― Continued investments in Enterprise Fiber 15 -5 15 Total IT Services & Hardware building fiber-to-the-premise Maintenance 37 -5 40 $6 addresses in both Cincinnati Total E&C - Cincinnati $151 -$35 $135 – $140 $12 and Hawaii markets $35 - $40 ― Success-based capital for projects awarded in Total IT Services & Hardware $26 $1 $20 – $25 Enterprise Fiber and IT Services & Hardware Total Hawaiian Telcom $44 $44 $60 – $70 Total $221 $10 $215 – $235 12 Page 12

 
2019 Outlook Cincinnati Bell’s 2019 Guidance assumes: Company 2019 Guidance • Hawaiian Telcom expected to grow 5% – 10% on an Revenue $1,515M – $1,575M annual basis as compared to 2018 Adjusted EBITDA $400M – $410M • Conservative estimate of $15M – $20M decline in Adjusted EBITDA as compared to 2018 due to additional insourcing at one of our largest customers Hawaiian Telcom Contributions Selected 2019 Free Cash Flow Items included in the Company Targets Revenue $350M – $360M Capital Expenditures $215M – $235M Adjusted EBITDA $95M – $100M Interest payments $130M – $140M Capital Expenditures $60M – $70M Pension and OPEB payments $15M – $20M 13 Page 13

 
Appendix Contains Cincinnati BellSM confidential information. Not for external use or disclosure without permission.

 
Consolidated Results ($ in millions, except per share amounts) Three Months Ended December 31, 2018 2017 Revenue $ 399.0 $ 301.2 Costs and expenses Cost of services and products 199.3 151.0 Selling, general and administrative 93.2 72.8 Depreciation and amortization 74.4 52.9 Restructuring and severance related charges 3.4 3.5 Transaction and integration costs 4.3 4.1 Operating income 24.4 16.9 Interest expense 35.2 30.3 Loss on extinguishment of debt — 3.2 Other components of pension and postretirement benefit plans expense 3.0 7.2 Other expense (income), net 0.8 (2.1) Loss before income taxes (14.6) (21.7) Income tax expense (benefit) 15.4 (9.8) Net loss (30.0) (11.9) Preferred stock dividends 2.6 2.6 Net loss applicable to common shareowners $ (32.6) $ (14.5) Basic net loss earnings per common share $ (0.65) $ (0.34) Diluted net loss per common share $ (0.65) $ (0.34) Weighted average common shares outstanding (in millions) – Basic 50.2 42.2 – Diluted 50.2 42.2 15 Page 15

 
Consolidated Results ($ in millions, except per share amounts) Twelve Months Ended December 31, 2018 2017 Revenue $ 1,378.2 $ 1,065.7 Costs and expenses Cost of services and products 698.7 531.0 Selling, general and administrative 313.4 235.1 Depreciation and amortization 252.0 193.0 Restructuring and severance related charges 8.3 32.7 Transaction and integration costs 22.5 18.5 Operating income 83.3 55.4 Interest expense 131.5 85.2 Loss on extinguishment of debt 1.3 3.2 Other components of pension and postretirement benefit plans expense 12.5 16.6 Gain on sale of Investment in CyrusOne — (117.7) Other (income) expense, net (1.6) 1.4 (Loss) income before income taxes (60.4) 66.7 Income tax expense 9.4 26.7 Net (loss) income (69.8) 40.0 Preferred stock dividends 10.4 10.4 Net (loss) income applicable to common shareowners $ (80.2) $ 29.6 Basic net (loss) earnings per common share $ (1.73) $ 0.70 Diluted net (loss) earnings per common share $ (1.73) $ 0.70 Weighted average common shares outstanding (in millions) – Basic 46.3 42.2 – Diluted 46.3 42.4 16 Page 16

 

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