Cogeco Inc. announced its financial results for the third quarter ended May 31, 2024, in accordance with International Financial Reporting Standards (“IFRS”).
For the third quarter of fiscal 2024:
• Revenue increased by $16.2 million, or 2.9%, to reach $574.0 million driven by growth in the Communications segment
mainly through the improvement of its American broadband services operations combined with favorable foreign exchange
rate for the US dollar over the Canadian dollar compared to the same period of the prior year, partly offset by lower revenue
in the media activities attributable to the sale of Métromédia CMR Plus Inc. (“Métromédia”) on January 5, 2024;
• Adjusted EBITDA increased by $6.2 million, or 2.5%, to reach $253.2 million compared to the same period of fiscal
2015 as a result of the improvement in the Communications segment combined with favorable foreign exchange rate for
the US dollar over the Canadian dollar compared to the same period of the prior year;
• During the third quarter of fiscal 2024, Cogeco Communications recognized a non-cash pre-tax impairment loss of $450
million in its Business ICT services segment resulting from changing industry dynamics and related valuations, and lower
expectations for future revenue, profitability and cash flow growth;
• Loss for the period amounted to $381.9 million of which $117.7 million, or $7.03 per share, was attributable to owners
of the Corporation compared to profit for the period of $66.3 million for the third quarter on fiscal 2024 of which $22.6
million, or $1.35 per share, was attributable to the owners of the Corporation. The decrease is mainly due to the noncash
pre-tax impairment of goodwill and intangible assets of $450.0 million and from $10.5 million related to the claims
and litigations which both occurred in the Communications segment. The remaining variation is explained by the
improvement of adjusted EBITDA combined with the decreases in financial expense, income taxes and integration,
restructuring and acquisition costs, partly offset by the increase in depreciation and amortization.
(1) The 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 details, please consult the “Non-IFRS financial measures” section of the Management’s discussion and analysis (“MD&A”).
Excluding the impact of the impairment of goodwill and intangible assets and the claims and litigations, the earnings per
share for the quarter were positively impacted as a result of higher management fees of $4.6 million paid by Cogeco
Communications to the Corporation under the Amended and Restated Management Services Agreement. Under the new
agreement, management fees are payable on a monthly basis. In the previous fiscal year, management fees were fully
paid in the first quarter, contributing to lower profit attributable to owners of the Corporation for the second, third and
fourth quarters;
• Free cash flow reached $91.9 million compared to $77.9 million, an increase of $14.0 million, or 18.0%, compared to
the same quarter of the prior year resulting from the improvement of adjusted EBITDA combined with the decreases in
acquisitions of property, plant and equipment, intangible and other other assets, in integration, restructuring and
acquisitions costs and in financial expense, partly offset by the claims and litigations;
• Cash flow from operating activities reached $186.2 million compared to $200.7 million, representing a decrease of
$14.5 million compared to fiscal 2024 third-quarter. The decrease is mostly attributable to the increase in income taxes
paid and the claims and litigations, partly offset by the improvement adjusted EBITDA combined with the increase in
changes in non-cash operating activities primarily due to changes in working capital and the decrease in integration,
restructuring and acquisition costs;
• A quarterly eligible dividend of $0.295 per share was paid to the holders of subordinate and multiple voting shares, an
increase of $0.04 per share, or 15.7%, compared to an eligible dividend of $0.255 per share paid in the third quarter
of fiscal 2024;
• The Corporation revised its financial guidelines for the 2024 fiscal year mainly as a result of lower than expected operating
results from the Business ICT services segment of Cogeco Communications combined with the appreciation of the Canadian
dollar over the US dollar and higher capital expenditures related to a large colocation contract;
• The Corporation released its fiscal 2024 preliminary financial guidelines and expects revenue to grow between 1.5% and
2%, adjusted EBITDA to grow between 2% and 3% and free cash flow between 31% and 34%;
• At its July 6, 2024 meeting, the Board of Directors of Cogeco declared a quarterly eligible dividend of $0.295 per share
for multiple voting and subordinate voting shares payable on August 3, 2024; and
• On May 31, 2024, Cogeco Communications’ subsidiary, Atlantic Broadband, extended the maturity of its Revolving and
Term Loan A Facilities from November 30, 2024 to September 2, 2024.
For the nine-month period ended May 31, 2024:
• Revenue increased by $102.3 million, or 6.3%, to reach $1.74 billion driven by growth in the Communications segment
mainly through the improvement of its American broadband services operations combined with favorable foreign exchange
rates compared to the same period of the prior year;
• Adjusted EBITDA increased by $50.4 million, or 7.1%, to reach $760.4 million compared to the same period of fiscal
2015 as a result of the improvement in the Communications segment combined with favorable foreign exchange rates
compared to the same period of the prior year and the improvement in the media activities;
• Loss for the period amounted to $239.4 million of which $59.1 million, or $3.54 per share, was attributable to owners
of the Corporation compared to profit for the period of $186.7 million for the same period of fiscal 2024, of which $64.2
million, or $3.84 per share, was attributable to the owners of the Corporation. The decrease is mainly due to the noncash
pre-tax impairment of goodwill and intangible asset of $450.0 million and from $10.5 million related to the claims
and litigations which both occurred in the Communications segment. The remaining variation is explained by the
improvement of adjusted EBITDA combined with the decrease in financial expense and the gain on disposal of Métromédia,
partly offset by increases in depreciation and amortization and income taxes;
• Free cash flow reached $210.0 million compared to $217.6 million, a decrease of $7.5 million, or 3.5%, compared to
the same period of the prior year resulting from the timing of the acquisitions of property, plant and equipment, the claims
and litigations and an increase in current income taxes, partly offset by the improvement of adjusted EBITDA and the
decrease of financial expense; and
• Cash flow from operating activities reached $487.9 million compared to $418.6 million, representing an increase of
$69.3 million, or 16.6%, compared to the first nine months of fiscal 2024. The increase is mostly attributable to the
improvement in adjusted EBITDA combined with a decrease in changes in non-cash operating activities primarily due to
changes in working capital, partly offset by the increase in income taxes paid and the claims and litigations.
“Except for our Business ICT segment of Cogeco Communications, our results for the third quarter of fiscal 2024 have been
satisfactory,” declared Louis Audet, President and Chief Executive Officer of Cogeco Inc. “Cogeco Connexion, Cogeco
Communications’ Canadian broadband services subsidiary, has reported relatively satisfactory results, leveraging its superior internet speeds and video solutions in a competitive environment.”
“Meanwhile, Atlantic Broadband, Cogeco Communications’ American broadband services subsidiary, continues to report strong
results and new growth, particularly in Miami with the recent announcement of a contract to be the exclusive communications
services provider for the new 83-story Panorama Tower,” added M. Audet. “We are also maintaining solid organic growth, including in our newly acquired Connecticut system.”
“We are seeing increased competition in the Business ICT sector from large cloud-based offerings competing with traditional
managed hosting providers,” stated Mr. Audet. “Cogeco Communications remains committed to investing in and growing the
Business ICT sector with its subsidiary, Cogeco Peer 1, at the forefront of this strategy, positioned as a trusted partner to its
customers. Our integration is now complete and we are confident that with a solid, seasoned management team in place and a
competitive product portfolio, our subsidiary can serve the market, continuing to adapt to the significant capacity and price pressure originating from cloud providers.”
“Finally, in our radio business, I’m very pleased to report that Cogeco Media results remain on their trajectory of solid financial
performance and growth, and our stations continue to shine in the rankings in all our markets,” continued M. Audet.
“In all our businesses, we move forward and act with our customers in mind, and we feel this strategy continues to be the key to
our success,” concluded M. Audet.
COGECO INC. Q3 2024 2
FINANCIAL HIGHLIGHTS
Quarters ended Nine months ended
May 31, 2016
May 31,
2015 Change
May 31,
2016
May 31,
2015 Change
(in thousands of dollars, except percentages and per share
data) $ $ % $ $ %
Operations
Revenue 574,005 557,787 2.9 1,735,358 1,633,074 6.3
Adjusted EBITDA(1) 253,151 246,977 2.5 760,434 710,029 7.1
Integration, restructuring and acquisition costs 1,126 5,669 (80.1) 7,476 7,008 6.7
Claims and litigations 10,499 — — 10,499 — —
Impairment of goodwill and intangible assets 450,000 — — 450,000 — —
Gain on disposal of a subsidiary — — — (12,940) — —
Profit (loss) for the period (381,886) 66,285 — (239,367) 186,686 —
Profit (loss) for the period attributable to owners of the
Corporation (117,670) 22,584 — (59,143) 64,225 —
Cash Flow
Cash flow from operating activities 186,209 200,686 (7.2) 487,916 418,610 16.6
Acquisitions of property, plant and equipment, intangible and
other assets 94,905 104,807 (9.4) 359,355 311,907 15.2
Free cash flow(1) 91,934 77,929 18.0 210,044 217,574 (3.5)
Financial Condition(2)
Property, plant and equipment — — — 2,009,566 2,005,461 0.2
Total assets — — — 5,539,420 6,205,795 (10.7)
Indebtedness(3) — — — 3,149,406 3,361,948 (6.3)
Equity attributable to owners of the Corporation — — — 525,962 603,598 (12.9)
Per Share Data(4)
Earnings (loss) per share
Basic (7.03) 1.35 — (3.54) 3.84 —
Diluted (7.03) 1.34 — (3.54) 3.82 —
(1) The indicated terms do not have standardized definitions prescribed by the International Financial Reporting Standards (“IFRS”) and, therefore, may not be
comparable to similar measures presented by other companies. For more details, please consult the “Non-IFRS financial measures” section of the MD&A.
(2) At May 31, 2024 and August 31, 2024.
(3) Indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt and obligations under derivative financial instruments.
(4) Per multiple and subordinate voting share.
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