Cogeco Communications Releases its Financial Results for the Second Quarter of Fiscal 2025

Published: 2025-04-09 17:22:11 ET CCA.TO

MONTRÉAL, April 9, 2025 /CNW/ - Today, Cogeco Communications Inc. (TSX: CCA) ("Cogeco Communications" or the "Corporation") announced its financial results for the second quarter ended February 28, 2025.

"Our results for the second quarter of fiscal 2025 demonstrate that our new operating model, focused on increasing our agility and competitiveness, is gaining traction," stated Frédéric Perron, President and CEO. "We are particularly pleased with the progress we are making on our transformation initiatives, leading to increased customer satisfaction, while alleviating industry revenue headwinds with ongoing cost reductions.

"Our Internet subscriber growth in Canada remained strong, driven by both our Cogeco and oxio brands. We continued to see modest sequential improvements in Internet subscriber metrics in the U.S., began scaling up our U.S. wireless sales, and kept our Canadian wireless launch preparation on schedule.

"Our three-year transformation centered on synergies, digitization, advanced analytics, wireless, and network expansion is beginning to bear fruit. We thank our employees for their hard work and dedication, and our customers and stakeholders for their ongoing support."

Consolidated Financial Highlights

Three months ended

February 28, 2025

February 29, 2024

(1)

Change

Change in

constant currency

(2)

(In thousands of Canadian dollars, except % and per share data) (unaudited)

Revenue

732,426

730,501

0.3

(2.7)

Adjusted EBITDA (2)

356,499

347,112

2.7

(0.1)

Adjusted EBITDA margin (2)

48.7 %

47.5 %

Profit for the period

79,637

96,562

(17.5)

Profit for the period attributable to owners of the Corporation

74,674

93,681

(20.3)

Adjusted profit attributable to owners of the Corporation (2)(3)

80,693

94,054

(14.2)

Cash flows from operating activities

253,212

285,434

(11.3)

Free cash flow (1)(2)

116,603

101,799

14.5

12.8

Free cash flow, excluding network expansion projects (1)(2)

132,176

126,189

4.7

3.3

Acquisition of property, plant and equipment

159,371

180,247

(11.6)

Net capital expenditures (2)(4)

157,895

170,769

(7.5)

(10.7)

Net capital expenditures, excluding network expansion projects (2)

142,322

146,379

(2.8)

(6.4)

Capital intensity (2)

21.6 %

23.4 %

Capital intensity, excluding network expansion projects (2)

19.4 %

20.0 %

Diluted earnings per share

1.76

2.20

(20.0)

Adjusted diluted earnings per share (2)(3)

1.90

2.21

(14.0)

Operating results

For the second quarter of fiscal 2025 ended on February 28, 2025:

___________________________

(1)

(2)

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 Accounting Standards measures. Change in constant currency, capital intensity, excluding network expansion projects and adjusted diluted earnings per share are non-IFRS Accounting Standards ratios. These indicated terms do not have standardized definitions prescribed by IFRS® Accounting Standards, as issued by the International Accounting Standards Board ("IFRS Accounting Standards") 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 Accounting Standards and other financial measures" section of this press release.

(3)

Excludes the impact of acquisition, integration, restructuring and other costs, net of tax and non-controlling interest.

(4)

Net capital expenditures exclude non-cash acquisitions of right-of-use assets and the purchases, and related borrowing costs, of spectrum licences, and are presented net of government subsidies, including the utilization of those received in advance.

Financial highlights

Change in

constant currency

Change in

constant currency

Three and six months ended

February 28, 2025

February 29, 2024

(1)

Change

(2) (3)

February 28, 2025

February 29, 2024

(1)

Change

(2) (3)

(In thousands of Canadian dollars, except % and per share data)

Operations

Revenue

732,426

730,501

0.3

(2.7)

1,471,121

1,478,190

(0.5)

(2.1)

Adjusted EBITDA (3)

356,499

347,112

2.7

(0.1)

721,714

706,072

2.2

0.6

Adjusted EBITDA margin (3)

48.7 %

47.5 %

49.1 %

47.8 %

Acquisition, integration, restructuring and other costs (gains) (4)

8,035

885

—

(1,923)

3,501

—

Profit for the period

79,637

96,562

(17.5)

186,797

192,314

(2.9)

Profit for the period attributable to owners of the Corporation

74,674

93,681

(20.3)

175,262

183,174

(4.3)

Adjusted profit attributable to owners of the Corporation (3)(5)

80,693

94,054

(14.2)

171,367

197,780

(13.4)

Cash flow

Cash flows from operating activities

253,212

285,434

(11.3)

472,077

522,416

(9.6)

Free cash flow (1)(3)

116,603

101,799

14.5

12.8

265,461

239,647

10.8

10.0

Free cash flow, excluding network expansion projects (1)(3)

132,176

126,189

4.7

3.3

302,833

295,697

2.4

1.7

Acquisition of property, plant and equipment

159,371

180,247

(11.6)

312,614

333,796

(6.3)

Net capital expenditures (3)(6)

157,895

170,769

(7.5)

(10.7)

308,540

317,196

(2.7)

(4.6)

Net capital expenditures, excluding network expansion projects (3)

142,322

146,379

(2.8)

(6.4)

271,168

261,146

3.8

1.6

Capital intensity (3)

21.6 %

23.4 %

21.0 %

21.5 %

Capital intensity, excluding network expansion projects (3)

19.4 %

20.0 %

18.4 %

17.7 %

Per share data (7)

Earnings per share

Basic

1.77

2.21

(19.9)

4.17

4.23

(1.4)

Diluted

1.76

2.20

(20.0)

4.13

4.21

(1.9)

Adjusted diluted (3)(5)

1.90

2.21

(14.0)

4.04

4.55

(11.2)

Dividends per share

0.922

0.854

8.0

1.844

1.708

8.0

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its calculation of free cash flow and free cash flow, excluding network expansion projects, to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Proceeds from sale and leaseback and other disposals of property, plant and equipment amounted to $0.9 million and $20.5 million for the three and six-month periods ended February 28, 2025, respectively ($1.6 million and $1.9 million, respectively, for the same periods of fiscal 2024). Comparative figures were restated to conform to the current presentation. For further details, please refer to the "Non-IFRS Accounting Standards and other financial measures" section of this press release.

(2)

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 rates of the comparable periods of the prior year. For the three and six-month periods ended February 29, 2024, the average foreign exchange rates used for translation were 1.3452 USD/CDN and 1.3553 USD/CDN, respectively.

(3)

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 Accounting Standards measures. Change in constant currency, capital intensity, excluding network expansion projects and adjusted diluted earnings per share are non-IFRS Accounting Standards ratios. These indicated terms do not have standardized definitions prescribed by IFRS Accounting Standards 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 Accounting Standards and other financial measures" section of this press release.

(4)

For the three-month period ended February 28, 2025, acquisition, integration, restructuring and other costs were mainly related to restructuring costs incurred, mostly in connection with additional costs related to the new organizational structure announced in May 2024 and other cost optimization initiatives, as well as costs associated with the configuration and customization related to cloud computing and other arrangements. For the six-month period ended February 28, 2025, acquisition, integration, restructuring and other costs (gains) were mostly related to a $13.8 million non-cash gain recognized during the first quarter of fiscal 2025 in connection with a sale and leaseback transaction of a building in Ontario, offset in part by restructuring costs incurred and costs associated with the configuration and customization related to cloud computing and other arrangements. For the three and six-month periods ended February 29, 2024, acquisition, integration, restructuring and other costs were mostly related to costs associated with the configuration and customization related to cloud computing and other arrangements, partly offset by a $4.2 million reversal of a charge, recognized during the second quarter following the Copyright Board decision issued in January 2024 on the redetermination of the 2014-2018 royalty rates.

(5)

Excludes the impact of acquisition, integration, restructuring and other costs (gains), and gains/losses on debt modification and/or extinguishment, all net of tax and non-controlling interest.

(6)

(7)

Per multiple and subordinate voting share.

As at

February 28, 2025

August 31, 2024

(In thousands of Canadian dollars)

Financial condition

Cash and cash equivalents

141,073

76,335

Total assets

10,152,322

9,675,009

Long-term debt

Current

353,486

361,808

Non-current

4,688,512

4,448,261

Net indebtedness (1)

4,971,544

4,803,629

Equity attributable to owners of the Corporation

3,176,747

2,979,691

(1)

Net indebtedness is a capital management measure. For more information on this financial measure, please consult the "Non-IFRS Accounting Standards and other financial measures" section of the Corporation's MD&A for the three and six-month periods ended February 28, 2025, available on SEDAR+ at www.sedarplus.ca.

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 Cogeco Communications Inc.'s ("Cogeco Communications" or the "Corporation") future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee"; "ensure" or other similar expressions concerning matters that are not historical facts. Particularly, statements relating to the Corporation's financial guidelines, future operating results and economic performance, objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, purchase price allocation, tax rates, weighted average cost of capital, performance and business prospects and opportunities, which Cogeco Communications believes are reasonable as of the current date. Refer in particular to the "Corporate objectives and strategy" and "Fiscal 2025 financial guidelines" sections of the Corporation's fiscal 2024 annual Management's Discussion and Analysis ("MD&A") for a discussion of certain key economic, market and operational assumptions we have made in preparing forward-looking statements. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what Cogeco Communications currently expects. These factors include risks such as general market conditions, competitive risks (including changing competitive and technology ecosystems and disruptive competitive strategies adopted by our competitors), business risks, regulatory risks, tax risks, technology risks (including cybersecurity), financial risks (including variations in currency and interest rates), economic conditions (including inflation pressuring revenue, trade tariffs, reduced consumer spending and increasing costs), talent management risks (including the highly competitive market for a limited pool of digitally skilled employees), human-caused and natural threats to the Corporation's network (including increased frequency of extreme weather events with the potential to disrupt operations), infrastructure and systems, sustainability and sustainability reporting risks, ethical behavior risks, ownership risks, litigation risks and public health and safety, many of which are beyond the Corporation's control. For more exhaustive information on these risks and uncertainties, the reader should refer to the "Uncertainties and main risk factors" section of the Corporation's fiscal 2024 annual MD&A and of the fiscal 2025 second-quarter MD&A. These factors are not intended to represent a complete list of the factors that could affect Cogeco Communications and future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information contained in this press release and the forward-looking statements contained in this press release represent Cogeco Communications' expectations as of the date of this press release (or as of the date they are otherwise stated to be made) and are subject to change after such date. While management may elect to do so, the Corporation is under no obligation (and expressly disclaims any such obligation) and does not undertake to update or alter this information at any particular time, whether as a result of new information, future events or otherwise, except as required by law.

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 six-month periods ended February 28, 2025, the Corporation's condensed interim consolidated financial statements and the notes thereto for the same periods prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board ("IFRS Accounting Standards") and the Corporation's fiscal 2024 Annual Report.

Non-IFRS Accounting Standards and other financial measures

This press release includes references to non-IFRS Accounting Standards and other financial measures used by Cogeco Communications. These financial measures are reviewed in assessing the performance of Cogeco Communications and used in the decision-making process with regard to its business units.

Reconciliations between non-IFRS Accounting Standards and other financial measures to the most directly comparable IFRS Accounting Standards measures are provided below. Certain additional disclosures for non-IFRS Accounting Standards and other financial measures used in this press release have been incorporated by reference and can be found in the "Non-IFRS Accounting Standards and other financial measures" section of the Corporation's MD&A for the three and six-month periods ended February 28, 2025, available on SEDAR+ at www.sedarplus.ca. The following non-IFRS Accounting Standards measures are used as a component of Cogeco Communications' non-IFRS Accounting Standards ratios.

Specified non-IFRS Accounting Standards measures

Used in the component of the following non-IFRS Accounting Standards 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 and six-month periods ended February 28, 2025 are translated at the average foreign exchange rate of the comparable periods of the prior year, which were 1.3452 USD/CDN and 1.3553 USD/CDN, respectively.

Constant currency basis and foreign exchange impact reconciliation

Consolidated

Three months ended

February 28, 2025

February 29, 2024

(1)

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreignexchangeimpact

constant currency

Actual

constant currency

Revenue

732,426

(21,406)

711,020

730,501

0.3

(2.7)

Operating expenses

371,006

(11,558)

359,448

378,151

(1.9)

(4.9)

Management fees – Cogeco Inc.

4,921

—

4,921

5,238

(6.1)

Adjusted EBITDA

356,499

(9,848)

346,651

347,112

2.7

(0.1)

Free cash flow (1)

116,603

(1,760)

114,843

101,799

14.5

12.8

Net capital expenditures

157,895

(5,343)

152,552

170,769

(7.5)

(10.7)

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its free cash flow calculation to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Comparative figures were restated to conform to the current presentation.

Six months ended

February 28, 2025

February 29, 2024

(1)

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchangeimpact

constant currency

Actual

constant currency

Revenue

1,471,121

(24,129)

1,446,992

1,478,190

(0.5)

(2.1)

Operating expenses

739,564

(12,998)

726,566

761,642

(2.9)

(4.6)

Management fees – Cogeco Inc.

9,843

—

9,843

10,476

(6.0)

Adjusted EBITDA

721,714

(11,131)

710,583

706,072

2.2

0.6

Free cash flow (1)

265,461

(1,964)

263,497

239,647

10.8

10.0

Net capital expenditures

308,540

(6,030)

302,510

317,196

(2.7)

(4.6)

(1)

Canadian telecommunications segment

Three months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchange impact

constant currency

Actual

constant currency

Revenue

370,211

—

370,211

373,479

(0.9)

Operating expenses

177,719

(634)

177,085

174,720

1.7

1.4

Adjusted EBITDA

192,492

634

193,126

198,759

(3.2)

(2.8)

Net capital expenditures

74,108

(580)

73,528

106,345

(30.3)

(30.9)

Six months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchangeimpact

constant currency

Actual

constant currency

Revenue

747,477

—

747,477

749,927

(0.3)

Operating expenses

355,507

(731)

354,776

354,814

0.2

—

Adjusted EBITDA

391,970

731

392,701

395,113

(0.8)

(0.6)

Net capital expenditures

148,269

(700)

147,569

194,181

(23.6)

(24.0)

American telecommunications segment

Three months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchange impact

constant currency

Actual

constant currency

Revenue

362,215

(21,406)

340,809

357,022

1.5

(4.5)

Operating expenses

184,506

(10,911)

173,595

190,672

(3.2)

(9.0)

Adjusted EBITDA

177,709

(10,495)

167,214

166,350

6.8

0.5

Net capital expenditures

80,402

(4,756)

75,646

62,855

27.9

20.4

Six months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchange impact

constant currency

Actual

constant currency

Revenue

723,644

(24,129)

699,515

728,263

(0.6)

(3.9)

Operating expenses

367,123

(12,255)

354,868

383,743

(4.3)

(7.5)

Adjusted EBITDA

356,521

(11,874)

344,647

344,520

3.5

—

Net capital expenditures

154,129

(5,319)

148,810

118,708

29.8

25.4

Adjusted profit attributable to owners of the Corporation

Three months ended

Six months ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(In thousands of Canadian dollars)

Profit for the period attributable to owners of the Corporation

74,674

93,681

175,262

183,174

Acquisition, integration, restructuring and other costs (gains)

8,035

885

(1,923)

3,501

Loss on debt extinguishment (1)

—

16,880

Tax impact for the above items

(1,861)

(219)

(1,580)

(5,380)

Non-controlling interest impact for the above items

(155)

(293)

(392)

(395)

Adjusted profit attributable to owners of the Corporation

80,693

94,054

171,367

197,780

(1)

Included within financial expense.

Free cash flow and free cash flow, excluding network expansion projects reconciliations

Three months ended

Six months ended

February 28, 2025

February 29, 2024

(1)

February 28, 2025

February 29, 2024

(1)

(In thousands of Canadian dollars)

Cash flows from operating activities

253,212

285,434

472,077

522,416

Changes in other non-cash operating activities

24,343

2,253

98,517

55,188

Income taxes paid (received)

7,443

(7,628)

14,082

(4,725)

Current income taxes

(9,670)

(9,189)

(24,298)

(16,417)

Interest paid

62,195

68,288

123,666

132,260

Financial expense

(63,003)

(68,163)

(128,492)

(151,457)

Loss on debt extinguishment (2)

—

16,880

Amortization of deferred transaction costs and discounts on long-term debt (2)

2,228

2,007

3,692

4,681

Net capital expenditures (3)

(157,895)

(170,769)

(308,540)

(317,196)

Proceeds from sale and leaseback and other disposals of property, plant and equipment (1)

931

1,644

20,544

1,899

Repayment of lease liabilities

(3,181)

(2,078)

(5,787)

(3,882)

Free cash flow (1)

116,603

101,799

265,461

239,647

Net capital expenditures in connection with network expansion projects

15,573

24,390

37,372

56,050

Free cash flow, excluding network expansion projects (1)

132,176

126,189

302,833

295,697

(1)

(2)

Included within financial expense.

(3)

Net capital expenditures reconciliation

Three months ended

Six months ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(In thousands of Canadian dollars)

Acquisition of property, plant and equipment

159,371

180,247

312,614

333,796

Subsidies received in advance recognized as a reduction of the cost of property, plant and equipment during the period

(1,476)

(9,478)

(4,074)

(16,600)

Net capital expenditures

157,895

170,769

308,540

317,196

Adjusted EBITDA reconciliation

Three months ended

Six months ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(In thousands of Canadian dollars)

Profit for the period

79,637

96,562

186,797

192,314

Income taxes

22,904

17,820

49,529

35,918

Financial expense

63,003

68,163

128,492

151,457

Depreciation and amortization

182,920

163,682

358,819

322,882

Acquisition, integration, restructuring and other costs (gains)

8,035

885

(1,923)

3,501

Adjusted EBITDA

356,499

347,112

721,714

706,072

Net capital expenditures and free cash flow, excluding network expansion projects reconciliations

Net capital expenditures

Three months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchange impact

constant currency

Actual

constant currency

Net capital expenditures

157,895

(5,343)

152,552

170,769

(7.5)

(10.7)

Net capital expenditures in connection with network expansion projects

15,573

(73)

15,500

24,390

(36.2)

(36.4)

Net capital expenditures, excluding network expansion projects

142,322

(5,270)

137,052

146,379

(2.8)

(6.4)

Six months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchangeimpact

constant currency

Actual

constant currency

Net capital expenditures

308,540

(6,030)

302,510

317,196

(2.7)

(4.6)

Net capital expenditures in connection with network expansion projects

37,372

(89)

37,283

56,050

(33.3)

(33.5)

Net capital expenditures, excluding network expansion projects

271,168

(5,941)

265,227

261,146

3.8

1.6

Free cash flow

Three months ended

February 28, 2025

February 29, 2024

(1)

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchangeimpact

constant currency

Actual

constantcurrency

Free cash flow (1)

116,603

(1,760)

114,843

101,799

14.5

12.8

Net capital expenditures in connection with network expansion projects

15,573

(73)

15,500

24,390

(36.2)

(36.4)

Free cash flow, excluding network expansion projects (1)

132,176

(1,833)

130,343

126,189

4.7

3.3

(1)

Six months ended

February 28, 2025

February 29, 2024

(1)

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign exchangeimpact

constant currency

Actual

constant currency

Free cash flow (1)

265,461

(1,964)

263,497

239,647

10.8

10.0

Net capital expenditures in connection with network expansion projects

37,372

(89)

37,283

56,050

(33.3)

(33.5)

Free cash flow, excluding network expansion projects (1)

302,833

(2,053)

300,780

295,697

2.4

1.7

(1)

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 Cogeco Communications Inc.

Cogeco Communications Inc. is a leading telecommunications provider committed to bringing people together through powerful communications and entertainment experiences. We provide world-class Internet, video and wireline phone services to 1.6 million residential and business subscribers in Canada and thirteen states in the United States. We also offer wireless services in most of our U.S. operating territory. Our services are marketed under the Cogeco and oxio brands in Canada, and under the Breezeline brand in the U.S. We take pride in our strong presence in the communities we serve and in our commitment to a sustainable future. Cogeco Communications Inc.'s subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CCA).

For information:InvestorsTroy CrandallHead, Investor RelationsCogeco Communications Inc.Tel.: 514 [email protected]

MediaClaudja JosephDirector, CommunicationsCogeco Communications Inc.Tel.: 514 [email protected]

Conference Call:

Thursday, April 10, 2025 at 11:00 a.m. (Eastern Daylight Time)

A live audio webcast of the analyst call will be available on both the Investor Relations and the Events and Presentations pages of Cogeco Communications' website. Financial analysts will be able to access the live conference call and ask questions. Media representatives may attend as listeners only. A recording of the conference call will be available on Cogeco Communications' website for a three-month period.

Please use the following dial-in number to access the conference call 10 minutes before the start of the conference:

Local - Toronto: 1 289 514-5100

Toll Free - North America: 1 800 717-1738

To join this conference call, participants are required to provide the operator with the name of the company hosting the call, that is, Cogeco Inc. or Cogeco Communications Inc.

SOURCE Cogeco Communications Inc.