[February 14, 2012] Cincinnati Bell Posts Fourth Quarter and Full Year 2011 Results Tweet Feb 14, 2012 (Close-Up Media via COMTEX) -- Cincinnati Bell Inc. announced financial results for the full year and fourth quarter of 2011. In a release on February 9, the company noted earnings details: For the year, revenue was $1.5 billion, exceeding guidance of $1.4 billion. Operating income for 2011 decreased by $40 million to $260 million, down 13 percent from 2010, due largely to a $50 million goodwill impairment in the fourth quarter. As a result, 2011 net income decreased 34 percent to $19 million, and annual diluted earnings per share fell to 4 cents from 9 cents in 2010. Net income excluding special items1 for the year was $57 million, compared to $74 million in 2010, down due to increased interest expense. Adjusted earnings before interest, taxes, depreciation and amortization2 (Adjusted EBITDA) generated in 2011 totaled $545 million, up from $519 million in 2010 and above the original guidance of $530 million. In the fourth quarter of 2011, revenue was $365 million compared to $363 million in the same period of 2010, and operating income in the quarter amounted to $9 million, down from $65 million in the fourth quarter of 2010 due primarily to the goodwill impairment loss mentioned above. Adjusted EBITDA was $132 million, up 4 percent from the fourth quarter of 2010. Fourth quarter 2011 net income excluding special items was comparable to 2010 at $8 million, and diluted earnings per share excluding special items were also flat to 2010 at 3 cents. "We finished off 2011 with great results that reflected solid execution across all our businesses and that once again enabled us to exceed all the financial targets we established at the beginning of the year," said Jack Cassidy, president and CEO. "In terms of both revenue and Adjusted EBITDA, this has been the company's best year since 2003, and we are particularly pleased with the growth momentum of our data center business and the strong and stable performance of our legacy communications business." Fourth Quarter and Full-Year Performance Highlights -Data Center Colocation revenue of $49 million for the quarter represents a 21 percent increase from a year ago, while Adjusted EBITDA of $27 million reflects a 16 percent increase from the same period in 2010. During the fourth quarter, the company added 27,000 square feet of data center space and sold 43,000 square feet, increasing the segment's utilization3 to 88 percent. For the year, the company constructed 124,000 square feet of additional data center space, increasing total capacity to 763,000 square feet, and sold 110,000 square feet during this period. -Wireline revenue for the quarter was $180 million, reflecting only a one percent decrease from the fourth quarter of 2010, as increasing demand for the company's Fioptics suite of products continues to help mitigate the impact of access line losses. As a result, Wireline was able to achieve Adjusted EBITDA margins4 of 49 percent in both the full year and the fourth quarter of 2011, comparable to the full year in 2010. Financial and Operations Review "Our full year results continue to show that our strategy is the right one and is being well executed," said Kurt Freyberger, CFO. "Our communications business generated strong EBITDA and cash flow, and the reinvestment of this cash flow into data center opportunities created significant growth in the data center colocation business." Data Center Colocation Segment For the quarter, revenue of $49 million represents an increase of $9 million, or 21 percent, compared to the same period a year ago, and the segment's operating income was $10 million, an increase of 12 percent compared to 2010. Adjusted EBITDA of $27 million reflects a 16 percent increase over the same period in 2010. During the quarter, the company added 27,000 square feet of new data center space, increasing capacity to 763,000 square feet, and sold 43,000 square feet, resulting in quarter-end utilization of 88 percent. The segment's Adjusted EBITDA margin in the quarter was 56 percent, down slightly from 2010 as the company continues to incur marketing and operating costs in line with its plans to be the preferred global data center colocation provider to the Fortune 1000. For the full year, revenue of $185 million was 47 percent higher than 2010 due to the CyrusOne acquisition in mid-2010 and the new data center space sold in 2011. The segment completed construction on 124,000 square feet of additional data center space in 2011 and sold 110,000 square feet. Operating income totaled $46 million, an increase of 36 percent over 2010, while Adjusted EBITDA of $102 million was 45 percent higher than 2010. The Adjusted EBITDA margin for the full year was 55 percent, comparable to the 56 percent margin in 2010. Wireline Segment For the quarter, Wireline revenue was $180 million, down only one percent from the fourth quarter of 2010, and operating income of $48 million represents an 8 percent decrease from the same period in 2010. Adjusted EBITDA totaled $88 million, comparable to the fourth quarter of 2010 and one percent improved over the third quarter of 2011. The Adjusted EBITDA margin was 49 percent, a slight improvement from 48 percent in both the fourth quarter of 2010 and the prior quarter. The company continues to be successful in mitigating the negative impact on revenue and Adjusted EBITDA of ongoing access line losses through growth in entertainment, data and VoIP product lines and its cost reduction efforts. The segment passed 19,000 additional homes and businesses during the quarter with its Fioptics product suite, bringing the total number of units passed to 134,000. The company expects to pass approximately 40,000 additional units in 2012. Wireline added 2,000 new Fioptics entertainment subscribers during the fourth quarter, or 12,000 for the year, bringing the total base to 40,000 customers. High-speed internet subscribers using Fioptics increased by 12,000 in 2011, more than offsetting the decline in DSL of 11,000. Total high-speed internet subscribers were 257,000 at the end of 2011. For the year, Wireline revenue totaled $732 million, only a one percent decrease from 2010, while operating income and Adjusted EBITDA both decreased by 2 percent to $229 million and $355 million, respectively. Adjusted EBITDA margin for 2011 was 49 percent, comparable to 2010. Wireless Segment For the quarter, Wireless revenue of $68 million decreased by 2 percent from the same period in 2010 but remained flat compared to the third quarter of 2011. The Wireless segment continues to operate in a fiercely competitive environment and has seen total subscribers decrease by 10 percent during the full year of 2011. These conditions are expected to continue into the foreseeable future and, as a result, Wireless incurred a $50 million non-cash goodwill impairment loss during the fourth quarter, driving an operating loss of $40 million. Adjusted EBITDA in the quarter of $19 million, which excludes the impairment charge, reflects a 44 percent increase over the fourth quarter of 2010, and the Adjusted EBITDA margin improved to 28 percent from 19 percent in the same period of 2010. For the full year, Wireless revenue was $278 million, a 4 percent decrease from 2010, and operating income was $3 million, down $53 million primarily due to the goodwill impairment loss discussed above. Adjusted EBITDA totaled $88 million for the year compared to $91 million in 2010, while Adjusted EBITDA margin for 2011 improved to 32 percent from 31 percent in 2010. Total wireless subscribers decreased to 459,000 at the end of the fourth quarter, from 509,000 at the end of 2010 and 472,000 at the end of the third quarter of 2011. The segment added 3,000 postpaid smartphone subscribers during the quarter, bringing the total to 106,000 at the end of the fourth quarter. Postpaid smartphone subscribers now represent 34 percent of the total postpaid subscribers, up from 27 percent at the end of 2010. Postpaid average revenue per user (ARPU) in the fourth quarter was $50.32, comparable to the third quarter of 2011 but up from $48.87 in the fourth quarter of 2010. The growing penetration of smartphone subscribers has fueled data ARPU which increased 28 percent over the fourth quarter of 2010, fully offsetting the 5 percent decline in voice ARPU. Postpaid churn for the year increased slightly to 2.2 percent from 2.1 percent in 2010, while prepaid churn was 6.5 percent compared to 6.2 percent in 2010. Prepaid smartphone subscribers also increased to 19,000 at the end of the fourth quarter, up from 9,000 at the end of 2010 and 17,000 at the end of the third quarter of 2011. Prepaid ARPU in the fourth quarter of $28.58 is comparable to $28.48 in the third quarter of 2011, but is down from $29.38 in the fourth quarter of 2010. IT Services and Hardware Segment For the quarter, revenue was $76 million compared to $78 million in the fourth quarter of 2010, while Adjusted EBITDA of $5 million reflects a $2 million decrease from the fourth quarter of 2010. Adjusted EBITDA margin was 6 percent, down from 9 percent in the fourth quarter of 2010. For the full year, IT Services and Hardware revenue of $301 million was the highest generated by the segment in the last five years and represents an 18 percent increase over 2010. The segment's Adjusted EBITDA was $20 million, an increase of 40 percent over 2010, while the Adjusted EBITDA margin of 7 percent for the year was an improvement from 6 percent in 2010. With headquarters in Cincinnati, Ohio, Cincinnati Bell provides integrated communications solutions-including local, long distance, data, Internet, entertainment and wireless services - that keep residential and business customers in Greater Cincinnati and Dayton connected with each other and with the world. In addition, Cincinnati Bell provides data center colocation services to its enterprise customers through its facilities with fully redundant power and cooling solutions that are currently located in the Midwest, Texas, London and Singapore. More Information: cincinnatibell.com ((Comments on this story may be sent to [email protected])) [ Back To TMCnet.com's Homepage ]