Cogeco Communications releases its results for the third quarter of fiscal 2019
- Revenue increased by 3.6% (1.7% in constant currency) compared to the same period of the prior year to reach $587.3 million;
- Adjusted EBITDA(1) reached $283.9 million, an increase of 6.0% (4.3% in constant currency);
- Free cash flow(1) reached $137.0 million, an increase of 33.8% (33.4% in constant currency);
- On April 30, 2019, Cogeco Communications completed the sale of its subsidiary Cogeco Peer 1 to affiliates of Digital Colony, which resulted in a gain of sale of $82.4 million; and
- A quarterly eligible dividend of $0.525 per share was declared.
Montréal, July 10, 2019 – Today, Cogeco Communications Inc. (TSX: CCA) ("Cogeco Communications" or the "Corporation") announced its financial results for the third quarter ended May 31, 2019, in accordance with International Financial Reporting Standards ("IFRS").
Following Cogeco Communications' announcement on February 27, 2019 of the agreement to sell Cogeco Peer 1 Inc., its Business information and communications technology ("Business ICT") services subsidiary, the operating and financial results from this subsidiary for the current and comparable periods are presented as discontinued operations separate from the Corporation's continuing operations.
For the third quarter of fiscal 2019:
- Revenue increased by 3.6% compared to the same period of the prior year to reach $587.3 million mainly driven by the growth of 10.0% in the American broadband services segment. On a constant currency basis, revenue increased by 1.7%, mainly explained as follows:
- American broadband services revenue increased by 5.4% in constant currency resulting from rate increases implemented in August 2018, the continued growth in Internet and telephony services customers as well as the acquisition of the south Florida fibre network previously owned by FiberLight, LLC (the "FiberLight acquisition") on October 3, 2018. The increase was partly offset by a decrease in video service customers;
- Canadian broadband services revenue decreased by 1.0% mainly as a result of decreases in video and telephony services customers during the fourth quarter of fiscal 2018 and the first quarter of fiscal 2019 following the transition to a new customer management system which is now complete, partly offset by rate increases and higher net pricing from consumer sales.
- Adjusted EBITDA increased by 6.0% to reach $283.9 million. On a constant currency basis, adjusted EBITDA increased by 4.3%, mainly as a result of the following:
- American broadband services adjusted EBITDA increased by 4.4% in constant currency mainly as a result of strong organic growth combined with the impact of the FiberLight acquisition; and
- Canadian broadband services adjusted EBITDA increased by 3.6% in constant currency mainly as a result of a reduction in operating expenses.
- Profit for the period from continuing operations amounted to $99.6 million, of which $96.6 million, or $1.96 per share, was attributable to owners of the Corporation compared, respectively, to $70.5 million, $67.2 million, or $1.36 per share, in the comparable period of fiscal 2018. The increase resulted mainly from higher adjusted EBITDA combined with the decrease in financial expense, partly offset by increases in income taxes and in depreciation and amortization;
- On April 30, 2019, Cogeco Communications completed the sale of its subsidiary Cogeco Peer 1 Inc., its Business ICT services subsidiary, to affiliates of Digital Colony for a net cash consideration of $720 million resulting in a gain on sale of $82.4 million. For the third quarter of fiscal 2019, profit for the period from discontinued operations amounted to $82.5 million mainly due to the gain of disposal of a subsidiary compared to a loss for the period of $5.4 million for the same period of the prior year;
- Profit for the period amounted to $182.0 million, of which $179.1 million, or $3.62 per share, was attributable to owners of the Corporation compared, respectively, to $65.2 million, $61.8 million, or $1.25 per share, in the comparable period of fiscal 2018. The variation is mainly due to a gain of $82.4 million resulting from the sale of Cogeco Peer 1 combined with higher adjusted EBITDA;
- Free cash flow, from continuing operations, increased by 33.8% to reach $137.0 million. On a constant currency basis, free cash flow increased by 33.4% as a result of higher adjusted EBITDA combined with decrease in financial expense;
- Cash flow from operating activities increased by 58.9% to reach $265.6 million mainly due to higher adjusted EBITDA and decreases in income taxes paid and financial expense paid, partly offset by the increase in changes in non-cash operating activities primarily due to changes in working capital;
- The Corporation released its fiscal 2020 preliminary financial guidelines. On a constant currency basis, the Corporation expects fiscal 2020 revenue to grow between 2% and 4%, adjusted EBITDA between 2.5% and 4.5%, acquisition of property, plant and equipment should reach between $460 million and $480 million and free cash flow is expected to grow between 5% and 11%; and
- At its July 10, 2019 meeting, the Board of Directors of Cogeco Communications declared a quarterly eligible dividend of $0.525 compared to $0.475 per share in the comparable quarter of fiscal 2018.
“Once again we are very satisfied with our overall quarterly performance as the results of the third quarter of fiscal 2019 are in line with expectations,” declared Philippe Jetté, President and Chief Executive Officer of Cogeco Communications Inc.
“We reported strong growth in adjusted EBITDA resulting from our ongoing operational improvement initiatives at Cogeco Connexion,” stated Mr. Jetté.
“At Atlantic Broadband, we continue to see solid organic growth,” added Mr. Jetté. “We are seeing the benefits of our amplified marketing activities with a significant increase in our primary service units, demonstrating our American broadband services segment’s position as a growth driver for Cogeco Communications.”
“On April 30 we completed the sale of Cogeco Peer 1, our Business information and communications technology subsidiary, to affiliates of Digital Colony. This transaction resulted in a gain and allows the Corporation to focus on the growth of our broadband business,” concluded Mr. Jetté.
(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 MD&A.
ABOUT COGECO COMMUNICATIONS
Cogeco Communications Inc. is a communications corporation. It is the 8th largest cable operator in North America, operating in Canada under the Cogeco Connexion name in Québec and Ontario, and along the East Coast of the United States under the Atlantic Broadband brand (in 11 states from Maine to Florida). The Corporation provides residential and business customers with Internet, video and telephony services through its two-way broadband fibre networks. Cogeco Communications Inc.’s subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CCA).
- 30 -
Cogeco Communications Inc.
Senior Vice President and Chief Financial Officer
Senior Vice-President, Public Affairs and Communications
Analyst Conference Call:
Thursday, July 11, 2019 at 11:00 a.m. (Eastern Daylight Time)
Media representatives may attend as listeners only.
Please use the following dial-in number to have access to the conference call by dialing five minutes before the start of the conference:
Canada/United States Access Number: 1-877-291-4570
International Access Number: + 1-647-788-4919
In order to join this conference, participants are only required to provide the operator with the company name, that is, Cogeco Inc. or Cogeco Communications Inc.
By Internet at http://corpo.cogeco.com/cca/en/investors/investor-relations