Cogeco Communications repurchased$116.5 million worth of its shares following CDPQ's acquisition of the entirety of Rogers' holdings in bothCogeco andCogeco Communications . As a result of this transaction, CDPQ has become an anchor investor inCogeco Communications ;Cogeco Communications further advanced its wireless ambitions by securing spectrum licences inQuébec andOntario in the 3800 MHz spectrum auction, for a total purchase price of$190.3 million . With this acquisition,Cogeco Communications has spectrum covering 100% of its Canadian broadband network footprint as well as valuable spectrum in the greaterToronto ,Montréal, Québec City andOttawa regions;Cogeco Connexion reported another quarter of strong Internet subscriber performance, with 10,765 net customer additions, driven by a mix of new customers added under our digital oxio brand, in fibre-to-the-home network expansions and in other operating areas;- Revenue declined by 1.9% compared to the same period last year to
$747.7 million , as revenue growth atCogeco Connexion was offset by lower revenue atBreezeline ; - Adjusted EBITDA(1) of
$359.0 million decreased by 2.3% over last year, in line with our expectations; - Profit for the period amounted to
$95.8 million , a decrease of 20.5%, mainly due to higher financial expenses including a pre-tax$16.9 million non-cash loss on debt extinguishment following aUS$1.6 billion refinancing; - Free cash flow(1) amounted to
$137.6 million , an increase of 30.9%, due to lower net capital expenditures, while cash flows from operating activities increased by 22.1% to$237.0 million . Free cash flow, excluding network expansion projects(1) was$169.3 million , stable compared to last year; Cogeco Communications maintains its fiscal 2024 financial guidelines as issued onNovember 1, 2023 ; and- A quarterly dividend of
$0.854 per share was declared, representing a 10.1% increase over the prior year.
"The first months of fiscal 2024 were transformational and historic moments for our company. We recently announced that
"Our Canadian telecommunications business chalked up another quarter of strong Internet subscriber performance, thanks to gains across each of our oxio, expansion and legacy footprints," continued Mr. Jetté. "We continue to be impressed by the oxio brand's growing adoption by consumers."
"In the
"At
Consolidated Financial Highlights
Three months ended | 2023 | 2022 | Change | Change in constant | (1) | ||
(In thousands of Canadian dollars, except % and per share data) (unaudited) | $ | $ | % | % | |||
Revenue | 747,689 | 762,300 | (1.9) | (2.5) | |||
Adjusted EBITDA (1) | 358,960 | 367,223 | (2.3) | (2.8) | |||
Adjusted EBITDA margin (1) | 48.0 % | 48.2 % | |||||
Profit for the period | 95,752 | 120,375 | (20.5) | ||||
Profit for the period attributable to owners of the Corporation | 89,493 | 111,504 | (19.7) | ||||
Adjusted profit attributable to owners of the Corporation (1) (3) | 103,726 | 113,471 | (8.6) | ||||
Cash flows from operating activities | 236,982 | 194,159 | 22.1 | ||||
Free cash flow (1) | 137,593 | 105,128 | 30.9 | 30.7 | |||
Free cash flow, excluding network expansion projects (1) | 169,253 | 170,962 | (1.0) | (1.2) | |||
Acquisition of property, plant and equipment | 153,549 | 234,637 | (34.6) | ||||
Net capital expenditures (1) (2) | 146,427 | 196,971 | (25.7) | (26.2) | |||
Net capital expenditures, excluding network expansion projects (1) | 114,767 | 131,137 | (12.5) | (13.2) | |||
Capital intensity (1) | 19.6 % | 25.8 % | |||||
Capital intensity, excluding network expansion projects (1) | 15.3 % | 17.2 % | |||||
Diluted earnings per share | 2.01 | 2.44 | (17.6) | ||||
Adjusted diluted earnings per share (1) (3) | 2.33 | 2.48 | (6.0) | ||||
Operating results
For the first quarter of fiscal 2024 ended on
- Revenue decreased by 1.9% to
$747.7 million . On a constant currency basis(1), revenue decreased by 2.5%, driven by a lower customer base in the American telecommunications segment, which offset revenue growth in the Canadian telecommunications segment, as explained below.- Canadian telecommunications' revenue increased by 1.2%, mainly driven by the oxio acquisition completed on
March 3, 2023 as well as the cumulative effect of high-speed Internet service additions over the past year. - American telecommunications' revenue decreased by 4.9%, or 6.0% in constant currency, mainly due to a lower customer base over the past year with an increasing proportion of customers only subscribing to Internet services, as well as the timing of price increases introduced in the fiscal 2023 first-quarter which gave rise to a difficult comparison between both periods. The revenue decrease was offset in part by a higher revenue per customer and a better product mix resulting from customers subscribing to increasingly fast Internet speeds.
- Canadian telecommunications' revenue increased by 1.2%, mainly driven by the oxio acquisition completed on
- Adjusted EBITDA decreased by 2.3% to
$359.0 million . On a constant currency basis, adjusted EBITDA decreased by 2.8%, due to a decline in both the American telecommunications and Canadian telecommunications segments, as further explained below, in addition to higher corporate costs, primarily due to the timing of certain operating expenses including in relation to its plan to offer mobile services inCanada .- American telecommunications adjusted EBITDA decreased by 2.4%, or 3.6% in constant currency, mainly due to lower revenue, partly offset by a better product mix and cost reduction initiatives.
- Canadian telecommunications adjusted EBITDA decreased by 1.1%, mainly due to revenue growth being offset by higher operating expenses.
- Profit for the period amounted to
$95.8 million , of which$89.5 million , or$2.01 per diluted share, was attributable to owners of the Corporation compared to$120.4 million ,$111.5 million , and$2.44 per diluted share, respectively, in the comparable period of fiscal 2023. The decreases in profit for the period and profit attributable to owners of the Corporation resulted mainly from higher financial expense, mostly due to a pre-tax$16.9 million non-cash loss on debt extinguishment recognized following aUS$1.6 billion refinancing inSeptember 2023 , lower adjusted EBITDA and higher depreciation and amortization expense, partly offset by lower income tax expense.- Adjusted profit attributable to owners of the Corporation(3) was
$103.7 million , or$2.33 per diluted share(3), compared to$113.5 million , or$2.48 per diluted share, last year.
- Adjusted profit attributable to owners of the Corporation(3) was
- Net capital expenditures were
$146.4 million , a decrease of 25.7% compared to$197.0 million in the same period of the prior year. In constant currency, net capital expenditures(1) were$145.4 million , a decrease of 26.2% compared to last year, mostly due to lower spending in both the Canadian and American telecommunications segments following the completion, or near completion, as well as the timing of several fibre-to-the-home network expansion projects.- Excluding network expansion projects, net capital expenditures were
$114.8 million , a decrease of 12.5% compared to$131.1 million in the same period of the prior year. In constant currency, net capital expenditures, excluding network expansion projects(1) were$113.9 million , a decrease of 13.2% compared to last year. - Fibre-to-the-home network expansion projects continued in both
Canada andthe United States , with homes passed additions of more than 13,000 during the first quarter of fiscal 2024. - Capital intensity was 19.6% compared to 25.8% last year. Excluding network expansion projects, capital intensity was 15.3% compared to 17.2% in the same period of the prior year.
- Excluding network expansion projects, net capital expenditures were
- Acquisition of property, plant and equipment decreased by 34.6% to
$153.5 million , due to reduced capital spending in both countries. - Free cash flow increased by 30.9%, or 30.7% in constant currency, and amounted to
$137.6 million , or$137.4 million in constant currency, mainly due to lower net capital expenditures. Free cash flow, excluding network expansion projects amounted to$169.3 million , or$168.9 million in constant currency, and remained stable compared to the same period of the prior year. - Cash flows from operating activities increased by 22.1% to
$237.0 million , resulting mostly from lower income taxes paid, and to a lesser extent, the timing of trade accounts receivable, offset in part by lower adjusted EBITDA and higher interest paid. - On
November 30, 2023 ,Cogeco Communications , through its wholly-owned subsidiaryElite General Partnership , secured 99 spectrum licences in urban and rural markets, including the greaterToronto ,Montréal, Québec City andOttawa areas, for a total purchase price of$190.3 million . - On
December 13, 2023 ,Cogeco Communications completed the repurchase, for cancellation, of the 2,266,537 shares sold by Cogeco, for an amount of$116.5 million , following the purchase by CDPQ of the entirety of Rogers' holdings in bothCogeco andCogeco Communications . Cogeco Communications maintains its fiscal 2024 financial guidelines as issued onNovember 1, 2023 .- At its
January 10, 2024 meeting, the Board of Directors ofCogeco Communications declared a quarterly eligible dividend of$0.854 per share, an increase of 10.1% compared to$0.776 per share in the comparable quarter of fiscal 2023.
__________ | |
(1) | Adjusted EBITDA and net capital expenditures are total of segments measures. Adjusted EBITDA margin and capital intensity are supplementary financial measures. Constant currency basis, adjusted profit attributable to owners of the Corporation, net capital expenditures, excluding network expansion projects, free cash flow and free cash flow, excluding network expansion projects are non-IFRS financial measures. Change in constant currency, capital intensity, excluding network expansion projects and adjusted diluted earnings per share are non-IFRS ratios. These indicated terms do not have standardized definitions prescribed by International Financial Reporting Standards ("IFRS") and, therefore, may not be comparable to similar measures presented by other companies. For more information on these financial measures, please consult the "Non-IFRS and other financial measures" section of this press release. |
(2) | Net capital expenditures exclude non-cash acquisitions of right-of-use assets and the purchases of spectrum licences, and are presented net of government subsidies, including the utilization of those received in advance. |
(3) | Excludes the impact of acquisition, integration, restructuring and other costs, and gains/losses on debt modification and/or extinguishment, net of tax and non-controlling interest. |
Financial highlights
Three months ended | 2023 | 2022 | Change | Change in constant | (1) | |
(In thousands of Canadian dollars, except % and per share data) | $ | $ | % | % | ||
Operations | ||||||
Revenue | 747,689 | 762,300 | (1.9) | (2.5) | ||
Adjusted EBITDA (2) | 358,960 | 367,223 | (2.3) | (2.8) | ||
Adjusted EBITDA margin (2) | 48.0 % | 48.2 % | ||||
Acquisition, integration, restructuring and other costs (3) | 2,616 | 2,677 | (2.3) | |||
Profit for the period | 95,752 | 120,375 | (20.5) | |||
Profit for the period attributable to owners of the Corporation | 89,493 | 111,504 | (19.7) | |||
Adjusted profit attributable to owners of the Corporation (2)(4) | 103,726 | 113,471 | (8.6) | |||
Cash flow | ||||||
Cash flows from operating activities | 236,982 | 194,159 | 22.1 | |||
Free cash flow (2) | 137,593 | 105,128 | 30.9 | 30.7 | ||
Free cash flow, excluding network expansion projects (2) | 169,253 | 170,962 | (1.0) | (1.2) | ||
Acquisition of property, plant and equipment | 153,549 | 234,637 | (34.6) | |||
Net capital expenditures (2)(5) | 146,427 | 196,971 | (25.7) | (26.2) | ||
Net capital expenditures, excluding network expansion projects (2) | 114,767 | 131,137 | (12.5) | (13.2) | ||
Capital intensity (2) | 19.6 % | 25.8 % | ||||
Capital intensity, excluding network expansion projects (2) | 15.3 % | 17.2 % | ||||
Per share data (6) | ||||||
Earnings per share | ||||||
Basic | 2.02 | 2.45 | (17.6) | |||
Diluted | 2.01 | 2.44 | (17.6) | |||
Adjusted diluted (2)(4) | 2.33 | 2.48 | (6.0) | |||
Dividends per share | 0.854 | 0.776 | 10.1 | |||
(1) | Key performance indicators presented on a constant currency basis are obtained by translating financial results from the current period denominated in US dollars at the foreign exchange rate of the comparable period of the prior year. For the three-month period ended |
(2) | Adjusted EBITDA and net capital expenditures are total of segments measures. Adjusted EBITDA margin and capital intensity are supplementary financial measures. Adjusted profit attributable to owners of the Corporation, free cash flow, free cash flow, excluding network expansion projects and net capital expenditures, excluding network expansion projects are non-IFRS financial measures. Change in constant currency, capital intensity, excluding network expansion projects and adjusted diluted earnings per share are non-IFRS ratios. These indicated terms do not have standardized definitions prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more information on these financial measures, please consult the "Non-IFRS and other financial measures" section of this press release. |
(3) | For the three-month periods ended |
(4) | Excludes the impact of acquisition, integration, restructuring and other costs, and gains/losses on debt modification and/or extinguishment, net of tax and non-controlling interest. |
(5) | Net capital expenditures exclude non-cash acquisitions of right-of-use assets and the purchases of spectrum licences, and are presented net of government subsidies, including the utilization of those received in advance. |
(6) | Per multiple and subordinate voting share. |
As at | ||
(In thousands of Canadian dollars) | $ | $ |
Financial condition | ||
Cash and cash equivalents | 84,562 | 362,921 |
Total assets | 9,501,497 | 9,768,370 |
Long-term debt | ||
Current | 65,939 | 41,765 |
Non-current | 4,672,739 | 4,979,241 |
Net indebtedness (1) | 4,747,734 | 4,749,214 |
Equity attributable to owners of the Corporation | 3,003,833 | 2,957,797 |
(1) | Net indebtedness is a capital management measure. For more information on this financial measure, please consult the "Non-IFRS and other financial measures" section of the Corporation's MD&A for the three-month period ended |
Forward-looking statements
Certain statements contained in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to
All amounts are stated in Canadian dollars unless otherwise indicated. This press release should be read in conjunction with the Corporation's MD&A for the three-month period ended
Non-IFRS and other financial measures
This press release includes references to non-IFRS and other financial measures used by
Reconciliations between non-IFRS and other financial measures to the most directly comparable IFRS financial measures are provided below. Certain additional disclosures for non-IFRS and other financial measures used in this press release have been incorporated by reference and can be found in the "Non-IFRS and other financial measures" section of the Corporation's MD&A for the three-month period ended
Specified non-IFRS financial measures | Used in the component of the following non-IFRS ratios |
Adjusted profit attributable to owners of the Corporation | Adjusted diluted earnings per share |
Constant currency basis | Change in constant currency |
Net capital expenditures, excluding network expansion projects | Capital intensity, excluding network expansion projects |
Financial measures presented on a constant currency basis for the three-month period ended
Constant currency basis and foreign exchange impact reconciliation
Consolidated
Three months ended | ||||||||||||
Change | ||||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant | |||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | ||||||
Revenue | 747,689 | (4,462) | 743,227 | 762,300 | (1.9) | (2.5) | ||||||
Operating expenses | 383,491 | (2,507) | 380,984 | 389,677 | (1.6) | (2.2) | ||||||
Management fees – Cogeco Inc. | 5,238 | — | 5,238 | 5,400 | (3.0) | (3.0) | ||||||
Adjusted EBITDA | 358,960 | (1,955) | 357,005 | 367,223 | (2.3) | (2.8) | ||||||
Free cash flow | 137,593 | (176) | 137,417 | 105,128 | 30.9 | 30.7 | ||||||
Net capital expenditures | 146,427 | (1,060) | 145,367 | 196,971 | (25.7) | (26.2) | ||||||
Canadian telecommunications segment
Three months ended | ||||||||||||
Change | ||||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant | |||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | ||||||
Revenue | 376,448 | — | 376,448 | 372,084 | 1.2 | 1.2 | ||||||
Operating expenses | 180,094 | (191) | 179,903 | 173,451 | 3.8 | 3.7 | ||||||
Adjusted EBITDA | 196,354 | 191 | 196,545 | 198,633 | (1.1) | (1.1) | ||||||
Net capital expenditures | 87,836 | (388) | 87,448 | 115,238 | (23.8) | (24.1) | ||||||
American telecommunications segment
Three months ended | ||||||||||||
Change | ||||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant | |||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | ||||||
Revenue | 371,241 | (4,462) | 366,779 | 390,216 | (4.9) | (6.0) | ||||||
Operating expenses | 193,071 | (2,316) | 190,755 | 207,710 | (7.0) | (8.2) | ||||||
Adjusted EBITDA | 178,170 | (2,146) | 176,024 | 182,506 | (2.4) | (3.6) | ||||||
Net capital expenditures | 55,853 | (672) | 55,181 | 80,408 | (30.5) | (31.4) | ||||||
Adjusted profit attributable to owners of the Corporation
Three months ended | ||
2023 | 2022 | |
(In thousands of Canadian dollars) | $ | $ |
Profit for the period attributable to owners of the Corporation | 89,493 | 111,504 |
Acquisition, integration, restructuring and other costs | 2,616 | 2,677 |
Loss on debt extinguishment (1) | 16,880 | — |
Tax impact for the above items | (5,161) | (710) |
Non-controlling interest impact for the above items | (102) | — |
Adjusted profit attributable to owners of the Corporation | 103,726 | 113,471 |
(1) | Included within financial expense. |
Free cash flow reconciliation
Three months ended | ||
2023 | 2022 | |
(In thousands of Canadian dollars) | $ | $ |
Cash flows from operating activities | 236,982 | 194,159 |
Amortization of deferred transaction costs and discounts on long-term debt (1) | 2,674 | 3,044 |
Loss on debt extinguishment (1) | 16,880 | — |
Changes in other non-cash operating activities | 52,935 | 64,416 |
Income taxes paid | 2,903 | 46,618 |
Current income taxes | (7,228) | (8,376) |
Interest paid | 63,972 | 60,498 |
Financial expense | (83,294) | (56,919) |
Net capital expenditures (2) | (146,427) | (196,971) |
Repayment of lease liabilities | (1,804) | (1,341) |
Free cash flow | 137,593 | 105,128 |
(1) | Included within financial expense. |
(2) | Net capital expenditures exclude non-cash acquisitions of right-of-use assets and the purchases of spectrum licences, and are presented net of government subsidies, including the utilization of those received in advance. |
Net capital expenditures reconciliation
Three months ended | ||
2023 | 2022 | |
(In thousands of Canadian dollars) | $ | $ |
Acquisition of property, plant and equipment | 153,549 | 234,637 |
Subsidies received in advance recognized as a reduction of the cost of property, plant and equipment during | (7,122) | (37,666) |
Net capital expenditures | 146,427 | 196,971 |
Adjusted EBITDA reconciliation
Three months ended | ||
2023 | 2022 | |
(In thousands of Canadian dollars) | $ | $ |
Profit for the period | 95,752 | 120,375 |
Income taxes | 18,098 | 31,953 |
Financial expense | 83,294 | 56,919 |
Depreciation and amortization | 159,200 | 155,299 |
Acquisition, integration, restructuring and other costs | 2,616 | 2,677 |
Adjusted EBITDA | 358,960 | 367,223 |
Net capital expenditures and free cash flow excluding network expansion projects reconciliations
Net capital expenditures
Three months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Net capital expenditures | 146,427 | (1,060) | 145,367 | 196,971 | (25.7) | (26.2) | |||||
Net capital expenditures in connection with network expansion projects | 31,660 | (162) | 31,498 | 65,834 | (51.9) | (52.2) | |||||
Net capital expenditures, excluding network expansion projects | 114,767 | (898) | 113,869 | 131,137 | (12.5) | (13.2) | |||||
Free cash flow
Three months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Free cash flow | 137,593 | (176) | 137,417 | 105,128 | 30.9 | 30.7 | |||||
Net capital expenditures in connection with network expansion projects | 31,660 | (162) | 31,498 | 65,834 | (51.9) | (52.2) | |||||
Free cash flow, excluding network expansion projects | 169,253 | (338) | 168,915 | 170,962 | (1.0) | (1.2) | |||||
Additional information
Additional information relating to the Corporation is available on SEDAR+ at www.sedarplus.ca and on the Corporation's website at corpo.cogeco.com.
About
Rooted in the communities it serves,
For information:
Investors
Senior Vice President and Chief Financial Officer
Tel.: 514-764-4600
patrice.ouimet@cogeco.com
Head, Investor Relations
Tel.: 514-764-4700
troy.crandall@cogeco.com
Media
Youann Blouin
Director,
Tel.: 514-297-2853
youann.blouin@cogeco.com
Conference Call: | |
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SOURCE
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