CBB - Earnings call transcript Q3 2019

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Operator

Good day everyone and welcome to CBB's Third Quarter 2019 Earnings Call. Today's conference is being recorded.

At this time, I would like to turn the conference over to Josh Duckworth. Please go ahead.

Josh Duckworth

Good morning and welcome to Cincinnati Bell's third quarter 2019 earnings call.

detail are Financial Chief will Officer, quarter's and today Fox; Officer, recap call quarter highlights Chief third and Andy provide the President Executive and Leigh this financial On performance. our on Kaiser, who

Chief remarks, and join the session. our during Officer, will Following the Simpson, Operating prepared question-and-answer Tom Leigh Andy

and press Harbor forward-looking are made today's pursuant or made call are contains financial and that measures Please measures. and Remarks uncertainties release our to on indicated suggested not outcomes historical by measures two. or Reconciliations of the any of recent statements website. on certain non-GAAP these available statements. cause Safe provision potential company's the GAAP on today's that also facts presented slide are for comparable actual non-GAAP risks most such directly results presentation are SEC considered our those on the differ materially to to available from the forward-looking a see filings description website also may The

I am pleased Leigh President Officer, Executive that, Cincinnati introduce Chief Fox. and Bell's to With

Leigh Fox

you, good morning everyone. Thank Josh and

As X% release revenue financial strategic performance indicates, growing quarter delivered our with strong today's another of year-over-year. business

Street results last and were quarter and with on guidance. Wall in call, our line mentioned deliver Third on we will as expectations, quarter's we confident are full year

reselling a focused recurring hardware I'm the provider, team's by longer non-recurring term unit to ability cloud impressed to to turning service performance. Services continue advance IT a Now, on business our a on to contracts. services model trusted

certification networks, centers, broad provider services, recognized in to we expertises Cisco cloud our service managed as and networks. first our across in of As five growing were expertise area, next-generation data enterprise all evidence achieve IT collaboration, master level demonstrating the this

communications our Our within practice. is resonated innovative approach

we United a XXX deal quarter, has primarily throughout States. added locations spread the by restaurant UCaaS profiles, fast-growing XX,XXX than an with driven the impressive that During recent more

for profiles North partners now more across than X,XXX manage America. In XXX,XXX total, we business

revenue implemented. new Additionally, once fully we agreements $XXX,XXX signed add that will recurring monthly service new in

Turning increased excluding to second insourcing during continues XXXX. practice, be to after completed initiatives, year-over-year the Cloud which revenue cloud GE's demand quarter our robust. of XX%

software across has of As mentioned XX-plus the skilled public quarter, each cloud with certifications the cloud practice highly engineers platforms. last

As recurring migrate solutions, us our from as our expertise trusted able transactional to demonstrate process, legacy Through opportunities. a we clients this relationship look they beyond to with to monthly move interaction and customers advisor. are

span Moving a combined our Communications our strong. Entertainment to and in fiber route Hawaii. remain miles Greater throughout results fiber, fiber business, over operating networks and our of XX,XXX investment After decade Cincinnati

carriers. in services other in In in Hawaii our to XX% and provider the the wholesale of and business, preferred XX% network we wireless of services wireless towers cell Cincinnati approximately a provide sites for remain approximately

next-generation provider For operating commercial business traditional as brand customers, a led has our territory. to outside network success-based build recognizable our of

have As the to investment. to adjacent we fiber recently which our won services expand build highest evidence, superior fiber neighborhoods large additional opportunity metropolitan in with on consumer provide return areas, commercial

Cincinnati and in consistently the of capacity speed to with high a put, the we Island with delivers Oahu. is customer's Simply barrier footprint, highest Within of and XX% provide high Fiber-to-the-premise addresses pipe that home. our asset broadband unlimited entry on reaches fiber-to-the-premise a existing to addresses of bandwidth. XX% the fastest generational

consolidated third over the results call With that, and discuss for quarter. who I will to now our segment Andy will turn the

Andy Kaiser

of generating adjusted five everyone. totaled EBITDA $XXX third good $XXX Thanks Consolidated summarizes performance. Lee and quarter morning million. million, the company's revenues Slide

drove lower transitioning contributing in revenue $XXX away the $XX million top markets. of and totaled Customers favor programming Turning performance with to our slide linear Entertainment over Hawaii million. both video for the $XXX margin million from solutions quarter Revenue Communications on six. decreases and in Cincinnati

year-over-year. X% up EBITDA ago consistent up million, EBITDA from remains of XX% the $XX million, and adjusted year. a $XX Cincinnati was XXXX. in and track of with Hawaii on $XX EBITDA million generated contributed X% grow between XX% year prior adjusted Adjusted to

slide quarter, and Moving demand Cincinnati the up seven, of subscribers, year which of ago combination from totaled include the the customers, the internet from offset declines third fiber-to-the-node at internet fiber-to-the-premise X% a Fioptics end fiber-to-the-premise our for XXX,XXX; as to fiber-to-the-node. product

$XX, added ARPU with Cincinnati customers XX%. increased we internet quarter, X% in year, the decreased During from basis Fiber-to-the-premise prior points XX now to X,XXX totaling reaching internet while penetration churn the X.X%. fiber-to-the-premise

Hawaiian year up Consumer/SMB added XX%, with Internet X,XXX Internet we've penetration year, XX% of close increased In from merger the rates the ARPU now market, prior a ago. from the reaching totaling the fiber-to-the-premise subscribers $X since $XX.

for our Slide from GE's EBITDA decision the results generating year after up Revenue and quarter. X% adjusted respectively, X% Services from impact highlights million, excluding $XXX IT in-source $XX a segment of and Hardware cloud the ago, services. million, certain totaled eight to

strength communications legacy SD-WAN SD-WAN our XX,XXX the NaaS, profiles UCaaS during XX% of within added Turning growing and we've continues and Year-to-date, with Leigh revenue NaaS to the earlier, by increased hosted X,XXX more to than also practice as UCaaS, We've offerings strategic nine, year-over-year. the slide locations outperform year. decline mentioned each.

$XX summary for to the on Moving invested we've slide $XXX expenditures Hawaiian capital million including XX, million of year-to-date, Telcom.

to $XX Cincinnati and costs expand totaled Hawaii. installation both Year-to-date, we nine months in in million invested $XX fiber-to-the-premise Hawaii. construction Cincinnati and of our Fiber Consumer/SMB footprint million in first the costs $XX During million XXXX, in

NOL free at maintain we We remain and the XX, XXXX. liquidity and slide first with $XX remaining months with totaled that on structure $XXX We capital million of nine flow on strong net carryforward execute million enable of of us our strategic to cash $XXX objectives. billion was a our confident the for quarter approximately debt million. $X.X ended consistent presented X.X As gross Liquidity leverage times.

we revenue previously As our financial adjusted year deliver full on are to track EBITDA slide guidance. noted XX, on communicated and against

million to We $XXX million. $XXX XXXX of full be year also continue to range expenditures within to expect capital the

Leigh turn remarks. I call will back now to the for closing

Leigh Fox

the while competing company's and against building distinct year-to-date the deliver towards continues growing two am results financial to Thanks assets, progress performance superior This operating larger and businesses. companies. build strong proud company achieved Andy. I of

have also gives that We and both back a company environmentally. socially and culture built

have local XX,XXX volunteered we numerous financially over Year-to-date, employees our hours. have service charities supported and

On of XXX,XXX enough the electronics, equating us environmental reduce more helped year. one pounds savings, to X,XXX side, per vendor powered energy program than homes

positioned the evaluate allocation stakeholder for entered to continue growth to and alternatives we on look us have remain final of peer remain to EBITDA drive us We disciplined initiatives applying we maximize to XXXX profitable group value. year, focused for As quarter confident approach our a growth differentiated next to in capital strategic that we XXXX. our and and ahead

call turn operator I the the for will open now to to over Q&A.

Operator

Thank Instructions] you sir. [Operator

David take we'll question And first from our with America. of Bank Barden

Unidentified Analyst

Thanks Hawaii, the impacting cord question. pace Dave. you How I Cincinnati kind fiber for view national Hey the guys, Josh it's in do Two the of change cutting in of could. the trends in and taking if versus adoption the for and demographic average?

And DSL sub-losses then the positively? do like When will in still gains. Hawaii, secondly, flip that you are it Thanks. looks think fiber offsetting

Leigh Fox

Thanks the Josh. let on I Andy question that, would then say, question. answer on the answer and I'll the second first I'll trend,

shift, what's in Hawaii. as happened think see and internationally, demographic-based definitely cord Cincinnati in cutting. We a see you I the mentioned, to here we NaaS,

What of top has like the -- that watching on over impact the that has Disney+. launch are things adaption. We the

home. a with on tax TV, television Apple it's going trend, is and availability building as continue more side, is have a a and cutting fiber-to-the-premise view linear -- -- and focus best highest you happening very more that at think what's the When network and with we us. and your positive the bandwidth and look there sole I do to you and growing for the have dense to pipe think I fiber offering

only that us think gives overtime. I advantage

of and and more people lot supply demand, I think I talk think we're to once I on usage side, in that better consumer there and supply shift that I will than demand spot. built we around say from a I happens think is a of have standpoint

And key great supplier symmetric we asset that increase spot at truly really mentioned demand become like an feel and the bandwidth. inflection for supply will the only and the suppliers, as if one so where the we for demand as bandwidth. studies built of as only think I we're not generational all in Look we in a a example we meets script,

question? don't why you the So, answer second

Andy Kaiser

Sure.

Hawaii, that. do on in As past, calls discussed is to the multiple opportunity big driving continue in the really we've and we penetration fiber-to-the-prem

look drive you -- have clearly at we're when currently upwards that sit XX%, in So, to we but we is opportunity sitting lot XX%. where of Cincinnati, which towards a

throughout driving of as doors So, open penetration it XXXX XX% remainder and a further as new combination as of the well. in XXXX well will that XXXX the we be from will

positive turn of fiber-to-the-node take those all the two fairly of decline, in you XXXX. well combination we when against as as should DSL decline clip So, in kind steady

Unidentified Analyst

it, questions that's guys. for helpful. Thanks the Got taking

Leigh Fox

Thank you.

Operator

with question, we'll our Investors. GAMCO Dluzhevskiy for And next Sergey take

Sergey Dluzhevskiy

morning Good guys.

kind First portfolio. question of the is on

IT the you service not medium and business So, getting if possibly or -- you to beyond see real Communications that value to you get that to estate and short look term? where whether for at your beyond the Services or for monetize could core road, the your used that credit obviously, Do over could are strategy, might not down credit non-core assets business. central you or whether Entertainment be not Anything anything it's else? portfolio

Leigh Fox

us, is mentioned I mean for this one real Sergey, Yes, Leigh. you Yes. big absolutely. one estate.

really now, estate consolidation, projects few in going have strong We especially Hawaii. right real on

a consolidate you -- the estate foremost, substantial. first of is network electronics, also and you to electricity in whenever and cost is as imagine, real can you available consolidate expensive. you As Hawaii, And savings

in So, going are to we owner with real and Hawaii. have projects on a few what Network CO quite in a consolidation, estate real Hawaii. estate, do consolidation we

be there a opportunity where So, absolutely but an necessarily we we have I'm probably that's sure mix, are I so delving long-term. There's into we'll some, that. think always to there, want is not

electricity in but a of little bang -- cost much prevalent as for buck, real you your cost constantly looking don't It's assets. as at less is get estate, we're Cincinnati of the just

probably those, we've that's looking around that. But is I'm estate. the real and Services the liquid beyond two not, we helpful. up, those We're as intentionally -- are will IT in Hopefully, constantly -- got mean one. at be most other probably mentioned our IT are the but business, ENC, Services, main building biggest the so companies two companies. They're always asset We I real the our estate our past. that, other optionality

Sergey Dluzhevskiy

related Right. bigger also I Thank question just And guess mentioned. what you you. to a

been under to the market stock valuation into So, be the depressed. pressure and public continues has obviously

what as value persists see So, in to in the your options could believe the and addition unlocking value far of look fiber-centric execution, do you eliminating between in effective and valuations business public alternatives disconnects those be business market. largely or intrinsic at you your so operational you that that

Leigh Fox

Yes, I mean that's a great question.

kind and be a and suffer of least say we think it, I time. markets. the fact a we that. last from maturities, debt our turn. We're of sector to from plenty that obviously didn't overhang about And just I'll I the at focused the around in several one credit of things But -- months, sheet okay very kind we be the is, doesn't lot balance standpoint, honest this have -- of a

have had -- environment, a the going when lot high good has place a the this value we into of as several options, the getting And on would in over goal. pressure. this to a would debt in in long-term that down do path going I what's our the I I see of doing in threes. leverage to leverage lot a be be a unlock downward think next are of and the resulted given that's of think has We sector, industry, lot perception our in you And refinance we your that years think

it our manage feel or And solutions, we've we closely. so solution cash still we for got like very a

investing have, as intentional aware, in been and cash. fiber very well our you're own We investing about

hold what teams over several all is consistently quarters. to we've see that think been you the from last I very able the leverage

very we're do see focused it So, we path. on and a

watching of is When have is look, just our markets options take to the advantage we time execute when anything. now And that the to don't right and -- full really we're we right. going do we're

long doing. that to they up, [Indiscernible], keep cash can of -- continues as control to We're go believer that's up we of what thing that. plenty do And right? stocks I'm a again, back exactly executing have go down, We executing. team as we're The the we so they and they one go

now, I execution. So, right but we're forward, a focused good see on path

Sergey Dluzhevskiy

What portfolio? leverage. optimal you like your where mentioned So is asset your be company you the would size the to Ideally, and of your nature leverage the that of given for assets?

Leigh Fox

sector. fine and in the mean, I've think the in lot what fours happen. is what needs narrative I Look, industry. to candid issues And in read be is our on happen was what arose the threes the is recently to I sector a And a we're and until investment. capital-incentive look, fine. needs certain to very

to invest because to to do next-generation in that. done like the do companies need to fiber invest and We've You we that. Others that, ours in networks. continue need need

is example. an high leverage. because that because leverage We've we Our in got have -- but to high assets we fact, as great reinvested fiber due

Now going over -- I in you're in time great again, that's leverage. going really and I'm the threes, really from do a to I'm sort of of dictate the need trends watching what to you're But we to standpoint think if the place.

debt and is structure the seen capital from I the under our -- and as you've us manageable in think structure. fours absolutely

isn't of markets kind it tone I dictated -- it the and will we're and closely. be tone dictates right by it's the but the the of think good watching now very threes fantastic, just

Sergey Dluzhevskiy

Hawaii. question last about my is And

So, basically terms in of integrating and performance. driving assets you're mean making operational those progress I

are into two as would in Hawaii? you So, emphasis look particularly you XXXX? XXXX, top operational top priorities or on What putting three your what be for

Leigh Fox

want you to-- Tom,

Tom Simpson

IT Yes. in is penetration consumer consumer priorities starting Hawaii still pushing really two Hi some central Tom. launch, of launched on offices the the as services real we and stack It's this all full push market The consolidate fiber sales. and inside and in bundle we're consolidation top continuing penetration that business where and voice TV which up starting MyWay We're the estate business sales we're is Sergey, business focus. and sales in that this push really to the front is and really the quarter. the we of skinnier integrated

Sergey Dluzhevskiy

Thank you.

Leigh Fox

Sergey. Thanks

Andy Kaiser

Sergey. Thanks

Operator

question our comes And next Levi from UBS. Batya with

Batya Levi

questions. of Couple you. Thank

forward. be how leverage about in Have that some to the threes, this we the may when the should in overbuilds market? terms projects doing were suggest peak? the fiber think you contemplating you in down? see going does some are we Given of seen What also going optimal But build to incremental plan? And in coming the CapEx start opportunity

the environment, increases or connect on maybe any in churn, Thank question in KPIs charter provide color seeing the the another implemented? bit on October? is you operations. price given And you. there And more Can change a that little you're competitive the

Leigh Fox

Batya. Thanks

won't a now I say that to very a On the is steady think saw the side, to that in years our ago. think be I build steady way building about -- would I saw state. few about sort aggressively. way is peak think the we would right state. of what would say We definitely consider you CapEx the I that what XXXX

we Now -- to say going less opportunities end our -- out a in to I as that investment, where example, lot then investing, you're you not look our though edge Cincinnati, in going would we an you're seeing at we're but are see as overbuild. and investment of

outside right deals won of territories Cincinnati. in some We've

us when that spur you first, and fiber in and it then fiber and off to to On consumer allowed fiber. also And has the build you advantage markets fiber the order, that take do neighborhoods. business us business building up win line, the side, to that the allowed build those you of

we the on What engineer we is we doors. about found consumer saved build roughly the go saved doors. We've XX% to those on when

business. that's that's as wins a also. These also part exciting me, own us of incremental We're those for our We doors. not look to at us great cannibalizing incremental right? So truly strategy, and are for

other So, is way. I type the We're guess, traction solutions. being the territory. best At we least, we're sought gaining are on seeing business after,

the reputation area being sought in is we're Our good after.

capital We're territory. Hawaii, build. of government that trending but we're it's be but out to a be to look, In slow would spend the us build see Cincinnati, on of very think category, going going The would a build. in kind you'll overbuilt it's steady to I in forward, same going Hawaii. less in use subsidy and slowly be to impact be of going say our I very majority that look, would So, got positive

and in leverage It our most of won't being doing. of out managing come any we to element us as this build And So, you -- important ratio. we're what the cash kind really see managing moving that's flow see that down environment aggressive this does and forward.

So, study steady execution with build.

Batya Levi

right. All

Leigh Fox

want You metrics the Andy? question, to answer

Andy Kaiser

on I nature we're changes Spectrum's given the competitive in very, very KPIs, recent Batya, Yes. been the not Batya, on on apologize. announcement -- any last churn. the of since focused seeing most pricing. reducing year We've

be believe that stated talking more we important focused than shouldn't much us you is ARPU I about remember We is consumer As on retention. ARPU what us as these vanity on metrics call you much side. to going keeping going we and think after because probably are customers the what I after management,

I John to they could me or could we make get I Cincinnati, run ask cost Komeiji subs money overnight. It's ask because they you in have the want Jason our subs Praeter that us cash, don't just and churn could they get Tom, not out, them. want, hey, really any and investors from you Hawaii, who subs really

we're little really want we numbers not the churn what saying into subs won't, in on what to and keep, churn really time We've seeing yet movement that's is numbers. So, but want announcement, pricing. we are charter's since improvement diving that the seen focused our the from the what and I no there's you're announcement and in been our very think on

Tom Simpson

that. that continued I result And Batya, anticipate of we would Leigh I a improvement. what to just as continue said, would to would add see,

from our of and away continue out we those base. the DSL more and in more you to as come As shift see fiber-to-the-node it numbers

superior and for a demand see it's left then we this that more subs bandwidth. and that are with more product fiber-to-the-prem over-and-over, said We -- we

the it. managing the seeing that that they not that would I product as they that because fiber we'll continue stronger leave. need were pricing metrics trend way that We're year-over-year them point, anticipate to to to event see Leigh's Folks we're making ensure the in way And are continues. we them to their and churn see

Batya Levi

Got it. Thank you.

Operator

from Credit take we'll [ph] with Suisse. Myers a And question Jay

Unidentified Analyst

for dig more. to maybe guys. into a Hi, I taking good morning churn the Thanks bit wanted question. that aspect little

and improvement noted in highlighted Hawaii in quarter and just bit obviously, was We saw So, I price impacts a kind of there step year-on-year then Maybe you you Hawaii. color up churn the that some there in seeing? of an you're a Cincinnati a during last both on basis. XQ on one in additional Thank little this quarter. remember event Cincinnati you.

Leigh Fox

churn. time we price push the we're ago, we've obviously, we any impact very some So, closely kind on managing been margins a promo the managing way and closely through year, that on -- mentioned it moments a through we looking expire to are of that a very which And this that moment can big going sub-level we are increase, at drive look coming taking that anticipate that the churn. basis. the see contribution But moment, is

price So, a while in happen, don't do is consistent subscriber we'll push continue basis manage go-forward overall we with logical on that when the that And taking the a XXXX. a to look so push be contribution will at we've and how way and done increases, we increases based out. the in ensuring through price margin

base, with back us to have, stay So, subscribers, not we're again, managing intentionally, goes and ensuring long-term. that very we the video do that that customers how chasing the

Unidentified Analyst

Great. Thank you.

Operator

Brogadir from question with Odeon Ben a take Capital. we'll And

Ben Brogadir

question. the taking for thanks Hey,

into to number, a to $XXX kind regarding down know $XXX this get threes. my state being question you million. steady deleveraging your you at the CapEx But referenced on initiative. of want million Just you the said, is based question I

EBITDA given $XXX of OPEB guys the a and over payments year little and are the generating payments. interest kind You million and pension, for

simple paint there provide you. debt your kind with to the Just cash is around can I cash flow I'm simple you just around deleveraging plan really the less math wondering Is down give just growth, of and items? of pay a much EBITDA year kind mean free and flow of if math It you non-core that? of picture. kind associated EBITDA Thank M&A cash how you flow doesn't on wondering it last kind threes? pure EBITDA of items. deleveraging could

Leigh Fox

Yes.

great So, question.

it's about of that we pretty it; said You EBITDA, ultimately. do. honest and go in growth a down M&A debt We've everything of been combination towards M&A proceeds paying

but down We very have to the combination credit it's the of get we Ultimately, need be, a we two two threes. you just it sell and down get threes. assets those companies. closely, watching We're things, if in the markets,

Ben Brogadir

Maybe Understood. more could I slip one real quick as in well.

comp? early fall, a that multiple as sale to based that multiple CBTS. of kind of them kind was like kind evaluation, of the Obviously, highlight you any nine what they times a Presidio or comparable been Wondering to with to Given on if discussions of advantage that completed valuation buyout. take late go CBTS do new there's you. guys summer of around Thank

Leigh Fox

strategic Yes. discussions. There's been

Ben Brogadir

guys. Thank much it. time your you very for Appreciate

Leigh Fox

Thanks.

Operator

And back there this Leigh Fox no time. at would further questions to to over remarks. conference turn I like are the closing any for

Leigh Fox

Have Just today. joining in speaking a quarter. We your to the forward and day. everyone want appreciate next look we great Cincinnati call interest thank Bell to for

Operator

and appreciate ladies I participation today's that does gentlemen, conference. today. And your conclude

now may disconnect. You

Cincinnati Bell (BDWGP) 7 Nov 192019 Q3 Earnings call transcript