- In the context of its network expansion strategy, Cogeco added 30,922 homes passed in
Canada andthe United States , totalling 101,000 homes passed over the past nine months; - The acquisition of oxio expanded
Cogeco Connexion's value proposition by adding a second brand to serve the telecommunication needs of Canadians; - Revenue grew by 1.7% compared to the same period of the prior year to
$767.6 million ; - Adjusted EBITDA(1) of
$355.5 million increased 0.6% over last year; - Profit for the period amounted to
$33.3 million , a decrease of 69.3%, while the loss for the period attributable to owners of the Corporation amounted to$34.5 million , a decrease of$72.0 million compared to a profit last year, due to non-cash impairment charges of$88 million related to the radio operations. Adjusted profit attributable to owners of the Corporation(1)(3) remained comparable to last year; - Loss per share on a diluted basis was
$2.22 , a decrease compared to earnings per share of$2.37 last year, due to the non-cash impairment charges related to the radio operations. Adjusted diluted earnings per share(1)(3) rose by 1.3% to$2.43 ; - Net capital expenditures(1)(2) amounted to
$170.3 million , a 7.0% reduction versus last year. Acquisition of property, plant and equipment amounted to$190.1 million , a decrease of 4.1%; - Free cash flow(1) of
$107.4 million decreased by 1.4%, while cash flows from operating activities decreased by 20.4% to$283.2 million ; and - Declared a quarterly eligible dividend of
$0.731 per share, representing a 17.0% increase over last year.
"This quarter, we continued to demonstrate our strong and consistent execution in our fibre network expansion projects while remaining focused on delivering high quality product offerings and distinctive customer service," said Philippe Jetté, President and Chief Executive Officer of Cogeco.
"We are pleased with the performance of our Canadian telecommunications business again this quarter, where Internet customer additions are being driven by solid growth across our traditional and newly served footprints, as well as from our recently acquired oxio brand," continued Mr. Jetté.
"Although our
"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 | 767,603 | 754,777 | 1.7 | (1.4) | |||
Adjusted EBITDA (1) | 355,459 | 353,473 | 0.6 | (2.2) | |||
Profit for the period | 33,314 | 108,456 | (69.3) | ||||
(Loss) profit for the period attributable to owners of the Corporation | (34,473) | 37,493 | — | ||||
Adjusted profit attributable to owners of the Corporation (1) (3) | 37,921 | 38,009 | (0.2) | ||||
Cash flows from operating activities | 283,180 | 355,681 | (20.4) | ||||
Free cash flow (1) | 107,379 | 108,954 | (1.4) | (1.1) | |||
Free cash flow, excluding network expansion projects (1) | 139,210 | 147,613 | (5.7) | (6.1) | |||
Acquisition of property, plant and equipment | 190,121 | 198,271 | (4.1) | ||||
Net capital expenditures (1) | 170,258 | 183,107 | (7.0) | (10.7) | |||
Net capital expenditures, excluding network expansion projects (1) | 138,427 | 144,448 | (4.2) | (8.2) | |||
Diluted (loss) earnings per share | (2.22) | 2.37 | — | ||||
Adjusted diluted earnings per share (1) (3) | 2.43 | 2.40 | 1.3 | ||||
Operating results
For the third quarter of fiscal 2023:
- Revenue increased by 1.7% to reach
$767.6 million . On a constant currency basis, revenue decreased by 1.4%, driven by declines in the American telecommunications segment and in the media activities, partly offset by growth in the Canadian telecommunications segment, which is further explained as follows: - Canadian telecommunications' revenue increased by 3.2%, mainly driven by the cumulative effect of high-speed Internet service additions over the past year, higher revenue per customer and the oxio acquisition completed on
March 3, 2023 . - American telecommunications' revenue decreased by 5.7% on a constant currency basis (increase of 0.5% as reported), mainly due to a lower customer base in
Ohio and an overall decline in video and phone service customers, offset in part by a higher revenue per customer and a better product mix. - Revenue in the media activities decreased by 3.2%.
- Adjusted EBITDA increased by 0.6% to reach
$355.5 million . On a constant currency basis, adjusted EBITDA decreased by 2.2%, due to a decline in the American telecommunications segment, while the Canadian telecommunications segment remained stable, as further explained below: - Canadian telecommunications adjusted EBITDA remained stable as its revenue growth was offset by higher operating expenses to drive customer growth.
- American telecommunications adjusted EBITDA decreased by 2.8%, or 3.6% in constant currency, mainly resulting from lower revenue partly offset by reduced operating expenses.
- Profit for the period amounted to
$33.3 million , while the loss for the period attributable to owners of the Corporation amounted to$34.5 million , or$2.22 per diluted share, compared to a profit of$108.5 million ,$37.5 million , and$2.37 per diluted share, respectively, in the comparable period of fiscal 2022. The decreases in profit for the period and profit attributable to owners of the Corporation resulted mainly from non-cash impairment charges of$88 million related to the radio operations, higher financial expense and acquisition, integration, restructuring and other costs, partly offset by lower depreciation and amortization expense, income taxes and the appreciation of the US dollar. - Adjusted profit attributable to owners of the Corporation(3), was
$37.9 million , or$2.43 per diluted share(3), compared to$38.0 million , or$2.40 per diluted share, last year. - Net capital expenditures, which account for network expansion subsidies, were
$170.3 million , a decrease of 7.0% compared to$183.1 million in the same period of the prior year. In constant currency, net capital expenditures were$163.5 million , a decrease of 10.7% compared to last year, mainly due to lower capital expenditures following reduced spending, mostly in the Canadian telecommunications segment. - Excluding network expansion projects, net capital expenditures were
$138.4 million , a decrease of 4.2% compared to$144.4 million in the same period of the prior year. In constant currency, net capital expenditures excluding network expansion projects(1) were$132.6 million , a decrease of 8.2% compared to last year. - Fibre-to-the-home network expansion projects continued in both
Canada andthe United States , with unprecedented homes passed additions of more than 171,000 during fiscal 2022 and the first nine months of the current fiscal year. These fibre-to-the-home network expansion projects are increasing the Corporation's footprint in the provinces ofQuébec andOntario and in several areas adjacent toBreezeline's network inthe United States . - Acquisition of property, plant and equipment decreased by 4.1% to
$190.1 million , mainly due to reduced capital spending, mostly in the Canadian telecommunications segment. - Free cash flow decreased by 1.4%, or 1.1% in constant currency, and amounted to
$107.4 million , mainly due to higher financial expense, higher acquisition, integration, restructuring and other costs and lower adjusted EBITDA, partly offset by lower net capital expenditures and current income taxes. - Free cash flow, excluding network expansion projects decreased by 5.7%, or 6.1% in constant currency, and amounted to
$139.2 million . - Cash flows from operating activities decreased by 20.4% to reach
$283.2 million , driven by a net inflow in non-cash operating activities of$20.7 million compared to$51.2 million in the comparative period, resulting mostly from the timing of trade and other payables, as well as an increase in income taxes and interest paid. - Spectrum licences were acquired in the 2500 MHz and 3500 MHz bands in
Québec in relation to our plan to offer mobility services within our operating footprint. - Cogeco reiterates its fiscal 2023 financial guidelines as issued on
January 12, 2023 . Furthermore, onJune 8, 2023 , Cogeco announced that it will provide its fiscal 2024 financial guidelines when it reports its financial results for the fourth quarter of fiscal 2023, which is consistent with industry practice. - At its
July 13, 2023 meeting, the Board of Directors of Cogeco declared a quarterly eligible dividend of$0.731 per share, an increase of 17% compared to$0.625 per share in the comparable quarter of fiscal 2022.
(1) | Adjusted EBITDA and net capital expenditures are total of segments 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 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 are presented net of government subsidies, including the utilization of those received in advance. |
(3) | Excludes the impact of non-cash impairment charges, and acquisition, integration, restructuring and other costs, net of tax and non-controlling interest. |
Financial highlights
Three and nine months ended | 2023 | 2022 | Change | Change in constant | (1) (2) | 2023 | 2022 | Change | Change in constant | (1) (2) |
(In thousands of Canadian dollars, except percentages and per share data) | $ | $ | % | % | $ | $ | % | % | ||
Operations | ||||||||||
Revenue | 767,603 | 754,777 | 1.7 | (1.4) | 2,314,484 | 2,248,101 | 3.0 | (0.2) | ||
Adjusted EBITDA (2) | 355,459 | 353,473 | 0.6 | (2.2) | 1,081,004 | 1,057,078 | 2.3 | (0.7) | ||
Acquisition, integration, restructuring and other costs (3) | 11,377 | 2,286 | — | 21,006 | 22,372 | (6.1) | ||||
Impairment of goodwill and intangible assets | 88,000 | — | — | 88,000 | — | — | ||||
Profit for the period | 33,314 | 108,456 | (69.3) | 259,714 | 346,376 | (25.0) | ||||
(Loss) profit for the period attributable to owners of the Corporation | (34,473) | 37,493 | — | 41,396 | 112,675 | (63.3) | ||||
Adjusted profit attributable to owners of the Corporation (2) | 37,921 | 38,009 | (0.2) | 116,292 | 117,225 | (0.8) | ||||
Cash flow | ||||||||||
Cash flows from operating activities | 283,180 | 355,681 | (20.4) | 683,844 | 931,791 | (26.6) | ||||
Free cash flow (2) | 107,379 | 108,954 | (1.4) | (1.1) | 335,193 | 398,477 | (15.9) | (15.3) | ||
Free cash flow, excluding network expansion projects (2) | 139,210 | 147,613 | (5.7) | (6.1) | 475,100 | 494,134 | (3.9) | (4.5) | ||
Acquisition of property, plant and equipment | 190,121 | 198,271 | (4.1) | 598,803 | 502,753 | 19.1 | ||||
Net capital expenditures (2) | 170,258 | 183,107 | (7.0) | (10.7) | 524,432 | 467,091 | 12.3 | 7.3 | ||
Net capital expenditures, excluding network expansion projects (2) | 138,427 | 144,448 | (4.2) | (8.2) | 384,525 | 371,434 | 3.5 | (1.3) | ||
Per share data (4) | ||||||||||
(Loss) earnings per share | ||||||||||
Basic | (2.22) | 2.38 | — | 2.65 | 7.11 | (62.7) | ||||
Diluted | (2.22) | 2.37 | — | 2.64 | 7.07 | (62.7) | ||||
Adjusted diluted (2) | 2.43 | 2.40 | 1.3 | 7.41 | 7.35 | 0.8 | ||||
Dividends | 0.731 | 0.625 | 17.0 | 2.193 | 1.875 | 17.0 | ||||
As at | ||
(In thousands of Canadian dollars) | $ | $ |
Financial condition | ||
Cash and cash equivalents | 365,665 | 379,001 |
Total assets | 9,877,551 | 9,468,025 |
Long-term debt | ||
Current | 43,064 | 340,468 |
Non-current | 5,105,833 | 4,398,142 |
Net indebtedness (2) | 4,905,659 | 4,545,809 |
Equity attributable to owners of the Corporation | 907,222 | 919,843 |
(1) | Key performance indicators presented on a constant currency basis are obtained by translating financial results from the current periods denominated in US dollars at the foreign exchange rate of the comparable periods of the prior year. For the three and nine-month periods ended |
(2) | Adjusted EBITDA and net capital expenditures are total of segments 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 and adjusted diluted earnings per share are non-IFRS ratios. Net indebtedness is a capital management measure. 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 and nine-month periods ended |
(4) | Per multiple and subordinate voting share. |
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 and nine-month periods ended
This press release includes references to non-IFRS and other financial measures used by Cogeco. These financial measures are reviewed in assessing the performance of Cogeco and used in the decision-making process with regard to its business units.
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 and nine-month periods ended
Financial measures presented on a constant currency basis for the three and nine-month periods ended
Consolidated
Three months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Revenue | 767,603 | (23,039) | 744,564 | 754,777 | 1.7 | (1.4) | |||||
Operating expenses | 412,144 | (13,134) | 399,010 | 401,304 | 2.7 | (0.6) | |||||
Adjusted EBITDA | 355,459 | (9,905) | 345,554 | 353,473 | 0.6 | (2.2) | |||||
Free cash flow | 107,379 | 370 | 107,749 | 108,954 | (1.4) | (1.1) | |||||
Net capital expenditures | 170,258 | (6,761) | 163,497 | 183,107 | (7.0) | (10.7) | |||||
Nine months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant currency | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Revenue | 2,314,484 | (71,231) | 2,243,253 | 2,248,101 | 3.0 | (0.2) | |||||
Operating expenses | 1,233,480 | (40,429) | 1,193,051 | 1,191,023 | 3.6 | 0.2 | |||||
Adjusted EBITDA | 1,081,004 | (30,802) | 1,050,202 | 1,057,078 | 2.3 | (0.7) | |||||
Free cash flow | 335,193 | 2,353 | 337,546 | 398,477 | (15.9) | (15.3) | |||||
Net capital expenditures | 524,432 | (23,439) | 500,993 | 467,091 | 12.3 | 7.3 | |||||
Canadian telecommunications segment
Three months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant currency | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Revenue | 373,743 | — | 373,743 | 362,072 | 3.2 | 3.2 | |||||
Operating expenses | 177,794 | (722) | 177,072 | 166,082 | 7.1 | 6.6 | |||||
Adjusted EBITDA | 195,949 | 722 | 196,671 | 195,990 | — | 0.3 | |||||
Net capital expenditures | 84,415 | (1,566) | 82,849 | 100,730 | (16.2) | (17.8) | |||||
Nine months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant currency | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Revenue | 1,114,161 | — | 1,114,161 | 1,079,442 | 3.2 | 3.2 | |||||
Operating expenses | 521,534 | (2,058) | 519,476 | 502,575 | 3.8 | 3.4 | |||||
Adjusted EBITDA | 592,627 | 2,058 | 594,685 | 576,867 | 2.7 | 3.1 | |||||
Net capital expenditures | 281,036 | (8,477) | 272,559 | 235,964 | 19.1 | 15.5 | |||||
American telecommunications segment
Three months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Revenue | 368,042 | (23,039) | 345,003 | 366,046 | 0.5 | (5.7) | |||||
Operating expenses | 197,273 | (12,412) | 184,861 | 199,977 | (1.4) | (7.6) | |||||
Adjusted EBITDA | 170,769 | (10,627) | 160,142 | 166,069 | 2.8 | (3.6) | |||||
Net capital expenditures | 82,923 | (5,195) | 77,728 | 81,424 | 1.8 | (4.5) | |||||
Nine months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Revenue | 1,126,570 | (71,231) | 1,055,339 | 1,095,766 | 2.8 | (3.7) | |||||
Operating expenses | 607,237 | (38,371) | 568,866 | 584,143 | 4.0 | (2.6) | |||||
Adjusted EBITDA | 519,333 | (32,860) | 486,473 | 511,623 | 1.5 | (4.9) | |||||
Net capital expenditures | 236,422 | (14,962) | 221,460 | 227,829 | 3.8 | (2.8) | |||||
Adjusted profit attributable to owners of the Corporation
Three months ended | Nine months ended | |||
2023 | 2022 | 2023 | 2022 | |
(In thousands of Canadian dollars) | $ | $ | $ | $ |
(Loss) profit for the period attributable to owners of the Corporation | (34,473) | 37,493 | 41,396 | 112,675 |
Impairment of goodwill and intangible assets | 88,000 | — | 88,000 | — |
Acquisition, integration, restructuring and other costs | 11,377 | 2,286 | 21,006 | 22,372 |
Tax impact for the above items | (21,386) | (594) | (23,938) | (5,750) |
Non-controlling interest impact for the above items | (5,597) | (1,176) | (10,172) | (12,072) |
Adjusted profit attributable to owners of the Corporation | 37,921 | 38,009 | 116,292 | 117,225 |
Free cash flow reconciliation
Three months ended | Nine months ended | |||
2023 | 2022 | 2023 | 2022 | |
(In thousands of Canadian dollars) | $ | $ | $ | $ |
Cash flows from operating activities | 283,180 | 355,681 | 683,844 | 931,791 |
Amortization of deferred transaction costs and discounts on long-term debt (1) | 3,353 | 2,944 | 9,460 | 8,896 |
Changes in other non-cash operating activities | (20,729) | (51,178) | 115,392 | (45,472) |
Income taxes paid | 19,166 | 291 | 89,778 | 31,764 |
Current income taxes | (5,828) | (17,651) | (26,450) | (43,349) |
Interest paid | 64,507 | 49,379 | 176,777 | 123,060 |
Financial expense | (64,300) | (45,810) | (183,812) | (136,904) |
Net capital expenditures | (170,258) | (183,107) | (524,432) | (467,091) |
Repayment of lease liabilities | (1,712) | (1,595) | (5,364) | (4,218) |
Free cash flow | 107,379 | 108,954 | 335,193 | 398,477 |
(1) | Included within financial expense. |
Net capital expenditures reconciliation
Three months ended | Nine months ended | |||
2023 | 2022 | 2023 | 2022 | |
(In thousands of Canadian dollars) | $ | $ | $ | $ |
Acquisition of property, plant and equipment | 190,121 | 198,271 | 598,803 | 502,753 |
Subsidies received in advance recognized as a reduction of the cost of property, plant and equipment during the period | (19,863) | (15,164) | (74,371) | (35,662) |
Net capital expenditures | 170,258 | 183,107 | 524,432 | 467,091 |
Adjusted EBITDA reconciliation
Three months ended | Nine months ended | |||
2023 | 2022 | 2023 | 2022 | |
(In thousands of Canadian dollars) | $ | $ | $ | $ |
Profit for the period | 33,314 | 108,456 | 259,714 | 346,376 |
Income taxes | 2,271 | 29,369 | 60,552 | 79,934 |
Financial expense | 64,300 | 45,810 | 183,812 | 136,904 |
Impairment of goodwill and intangible assets | 88,000 | — | 88,000 | — |
Depreciation and amortization | 156,197 | 167,552 | 467,920 | 471,492 |
Acquisition, integration, restructuring and other costs | 11,377 | 2,286 | 21,006 | 22,372 |
Adjusted EBITDA | 355,459 | 353,473 | 1,081,004 | 1,057,078 |
Net capital expenditures
Three months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant currency | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Net capital expenditures | 170,258 | (6,761) | 163,497 | 183,107 | (7.0) | (10.7) | |||||
Net capital expenditures in connection with network expansion projects | 31,831 | (976) | 30,855 | 38,659 | (17.7) | (20.2) | |||||
Net capital expenditures, excluding network expansion projects | 138,427 | (5,785) | 132,642 | 144,448 | (4.2) | (8.2) | |||||
Nine months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant currency | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Net capital expenditures | 524,432 | (23,439) | 500,993 | 467,091 | 12.3 | 7.3 | |||||
Net capital expenditures in connection with network expansion projects | 139,907 | (5,660) | 134,247 | 95,657 | 46.3 | 40.3 | |||||
Net capital expenditures, excluding network expansion projects | 384,525 | (17,779) | 366,746 | 371,434 | 3.5 | (1.3) | |||||
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 | 107,379 | 370 | 107,749 | 108,954 | (1.4) | (1.1) | |||||
Net capital expenditures in connection with network expansion projects | 31,831 | (976) | 30,855 | 38,659 | (17.7) | (20.2) | |||||
Free cash flow, excluding network expansion projects | 139,210 | (606) | 138,604 | 147,613 | (5.7) | (6.1) | |||||
Nine months ended | |||||||||||
Change | |||||||||||
2023 | Foreign | 2023 in constant | 2022 | Actual | In constant | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Free cash flow | 335,193 | 2,353 | 337,546 | 398,477 | (15.9) | (15.3) | |||||
Net capital expenditures in connection with network expansion projects | 139,907 | (5,660) | 134,247 | 95,657 | 46.3 | 40.3 | |||||
Free cash flow, excluding network expansion projects | 475,100 | (3,307) | 471,793 | 494,134 | (3.9) | (4.5) | |||||
Additional information relating to the Corporation is available on the SEDAR website at www.sedar.com and on the Corporation's website at corpo.cogeco.com.
Rooted in the communities it serves,
For information:
Investors
Senior Vice President and Chief Financial Officer
Tel.: 514-764-4700
patrice.ouimet@cogeco.com
Media
Marie-Hélène Labrie
Senior Vice President and Chief Public Affairs, Communications and Strategy Officer
Tel.: 514-764-4700
marie-helene.labrie@cogeco.com
Conference Call: | ||
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Please use the following dial-in number to have access to the conference call 10 minutes before the start of the conference: | ||
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SOURCE
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