Cogeco Cable Inc. reports strong fiscal 2013 financial results - highlights
PRESS RELEASE
For immediate release
Cogeco Cable Inc. reports strong fiscal 2013 financial results
• Solid revenue and operating income before depreciation and amortization
(1)
increases in the fourth
quarter and in fiscal year 2013, meeting revised financial guidelines
• On target financial results from our recent acquisitions Atlantic Broadband and Peer 1 Network
Enterprises Inc. ("PEER 1");
and
• Quarterly dividend increase of 15.4%.
Montréal, October 30, 2013 – Today, Cogeco Cable Inc. (TSX: CCA) (“Cogeco Cable” or the “Corporation”) announced its
financial results for the fourth quarter and fiscal year 2013, ended August 31, 2013, in accordance with International Financial
Reporting Standards (“IFRS”).
For the fourth quarter and fiscal 2013, which include nine months operating results of Atlantic Broadband and seven months
operating results of PEER 1:
• Fourth quarter revenue increased by 44.8% to reach $470.4 million and by 32.5% for fiscal 2013 to close at $1.7 billion
compared to the same periods of the prior year;
• Operating income before depreciation and amortization increased by 38.3% to $222.5 million when compared to the
fourth quarter of fiscal 2012, and by 32.5% to $780.5 million compared to the prior year. Operating income before
depreciation and amortization increased for both periods mainly due to the acquisitions of Atlantic Broadband and
PEER 1 (the "recent acquisitions") as well as the improvement in the financial results of the Canadian cable services
segment;
•
Operating margin
(1)
decreased to 47.3% from 49.5% in the quarter and remained the same at 46.1% in fiscal 2013
when compared to the same periods of the prior year as a result of lower margins from the business activities of
PEER 1;
• Profit for the period from continuing operations amounted to $43.9 million in the fourth quarter compared to $45.7
million for the same period of the previous fiscal year. The decrease is mostly attributable to additional depreciation
and amortization and financial expense both related to the recent acquisitions. It is partly offset by the operating income
before depreciation and amortization improvement stemming from the Canadian cable services segment as well as
the recent acquisitions combined with lower income tax expenses resulting from the recent acquisitions tax structure.
For fiscal 2013, profit for the year from continuing operations amounted to $185.1 million compared to $169.5 million
for fiscal 2012. Profit progression for the year is mostly attributable to the improvement in the operating income before
depreciation and amortization generated by the Canadian cable services segment as well as the recent acquisitions,
partly offset by additional depreciation and amortization, financial expense and acquisition costs all related to these
acquisitions;
• Profit for the period amounted to $43.9 million in the fourth quarter when compared to $45.7 million for the same period
of the previous fiscal year due to the factors previously described. For the year ended August 31, 2013, profit for the
year amounted to $185.1 million when compared to $225.0 million for the same period of fiscal 2012. The decline for
the year is attributable to the factors previously described and also due to last year's profit of $55.4 million from the
sale of the Portuguese subsidiary, Cabovisão - Televisão por Cabo, S.A. (“Cabovisão”), reported as discontinued
operations in 2012;
(1) The 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 details, please consult the “Non-IFRS financial measures” section of the Management’s
discuss ion and analysis (“ MD &A ”) .
• Free cash flow
(1)
reached $53.6 million for the fourth quarter compared to $2.6 million in the comparable quarter of
the prior year. The increase for the period is mostly attributable to the improvement of operating income before
depreciation and amortization as well as the decrease in acquisition of property, plant and equipment and current
income taxes, partly offset by the increase in financial expense. Fiscal 2013 free cash flow amounted to $149.8 million,
compared to $66.3 million in the same period of fiscal 2012. The increase for the year is mostly attributable to the
improvement of operating income before depreciation and amortization and the decrease in current income taxes,
partly
offset
by the increase in financial expense, the recent acquisition
costs
and the increase in acquisition of property,
plant and equipment;
• A quarterly dividend of $0.26 per share was paid to the holders of subordinate and multiple voting shares, an increase
of $0.01 per share, or 4%, compared to a dividend of $0.25 per share paid in the fourth quarter of fiscal 2012. Dividends
paid in fiscal 2013 totaled $1.04 per share compared to $1.00 per share in fiscal 2012;
• Fiscal 2013 fourth-quarter primary service units (“PSU”)
(2)
decreased by 15,237 and increased by 5,546 for fiscal 2013.
At August 31, 2013, consolidated PSU amounted to 2,465,780 of which 1,980,122 come from the Canadian cable
services segment and 485,658 from the American cable services segment;
• On October 30 2013, Cogeco Cable declared an eligible dividend of $0.30 per share, an increase of 15.4% when
compared to the $0.26 dividend per share paid in the fourth quarter of fiscal 2013;
• On June 27, 2013, Cogeco Cable completed, pursuant to a private placement, the issuance of US$215 million Senior
Secured Notes bearing interest at 4.30% payable semi-annually and maturing on June 16, 2025. The net proceeds
from this offering along with drawings under the Corporation's credit facilities were used to repay, on July 29, 2013,
all the outstanding amo unt of $300 million Senior Secured Debentures Series 1, due on June 9, 2014;
• On July 22, 2013, the Corporation entered into interest rate swap agreements to fix the interest rate on US$200 million
of its LIBOR based loans. These agreements have the effect of converting the floating US LIBOR base rate at an
average fixed rate of 0.39625% under its Term Revolving Facility until July 25, 2015; and
• On July 5, 2013, Cogeco Cable reduced its Term Revolving Facility from $750 million to $600 million and its Revolving
Facility of its Secured Credit Facilities from $240 million to $190 mil lion .
“Given the very competitive nature of our market, we are pleased with our strong fourth quarter and fiscal 2013 financial results,”
stated Louis Audet, President and Chief Executive Officer of Cogeco Cable Inc. “I am also satisfied to report that our two recent
acquisitions, Atlantic Broadband and PEER 1, have delivered results in line with our expectations. With respect to our refinancing
program, it has been completed during a period of historically low interest rates. With an average cost of indebtedness of 4.1%,
as of August 31, 2013, and average maturities of 6.4 years, our focus going forward will be to reduce our leverage ratio
(Indebtedness on EBITDA
(3)
) to 3 times by August 31, 2015. Continuing on our steady dividend growth history, the Board of
Directors declared a dividend increase of [15.4%] or [$0.04] per share,” cont in ued M r. Audet.
“In August 2013, we announced the consolidation of our Canadian cable services operations under one business unit, Cogeco
Cable Canada. This restructuring, which we will pursue in fiscal year 2014, will allow us to optimize efficiency in that very important
business segment. With this restructuring and the continuation of the full integration of our two recent acquisitions, I am very
confident that Cogeco Cable will continue on its growth path and deliver on its 2014 proj ect i ons,” con cluded Louis Audet.
Fiscal 2014 Financial Guidelines
Cogeco Cable revised its fiscal 2014 financial guidelines, as issued on July 10, 2013, as a result of certain adjustments related
to the preliminary allocation of the purchase price of Atlantic Broadband and PEER 1. Please consult the “Fiscal 2014 financial
guidelines” se ctio n of the Corporation’s 2013 Annual Report for further details.
(1) The indicated terms do not have standard 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.
(2) Repr ese nts t h e sum of Television, High Spee d Inte rn et ("H S I") and Telephony service customers.
(3) The ter m E BITDA refers to Operating income before depreciation and amortization (see point 1 for more detai l s ).
FINANCIAL HIGHLIGHTS
Quarte rs end ed Years ended
per share data)
2013 2012 Change 2013 2012 Change
Operations
$ $ % $ $ %
Revenue 470,386 324,768 44.8 1,692,466 1,277,698 32.5
Operating income before depreciation and amortization
(1)
222,489 160,825 38.3 780,523 589,052 32.5
Operating margin
(1)
47.3% 49.5%
— 46.1% 46.1% —
Operating income 103,681 94,709 9.5 376,239 312,180 20.5
Profit for the period from continuing operations 43,917 45,705 (3.9) 185,083 169,517 9.2
Profit for the period from discontinued operations — —
— — 55,446
—
Profit for the period 43,917 45,705 (3.9) 185,083 224,963 (17.7)
Cash Flow
Cash flow from op era ti ng acti viti es 228,230 203,343 12.2 545,010 450,386 21.0
Cash flow from op era ti on s
(1)
161,695 126,946 27.4 558,037 441,686 26.3
Acquisitions of property, plant and equipment, intangible and
other asse ts
(2)
108,095 124,392 (13.1) 408,202 375,368 8.7
Free cash flow
(1)
53,600 2,554 — 149,835 66,318 —
Capital intensity
(1)
23.0% 38.3% — 24.1% 29.4% —
Financial Condition
Property, plant and equipment — — — 1,854,155 1,322,093 40.2
Total assets — — — 5,253,097 2,908,079 80.6
Indebtedness
(3)
— — — 2,944,182 1,069,112 –
Shareh olde r' s eq uity — — — 1,344,092 1,188,431 13.1
Primary service units (“PSU”) gr o wt h (decline)
(4)
(15,237) 7,564 — 5,546 73,645 (92.5)
Per Share Data
(5)
Earnings per share
From continuing and discontinued operations
Basic 0.90 0.94 (4.3) 3.80 4.62 (17.7)
Diluted 0.90 0.93 (3.2) 3.78 4.60 (17.8)
From continuing operations
Basic 0.90 0.94 (4.3) 3.80 3.48 9.2
Diluted 0.90 0.93 (3.2) 3.78 3.46 9.2
From discontinued operations
Basic — — — — 1.14 —
Diluted — — — — 1.13 —
(1) The 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 details, please consult the “Non-IFRS financial measures” section of the
Management’s discussion and analysis (“MD&A”).
(2) Fiscal 20 13 fourt h-quarter and fiscal 2013 acquisitions of property, pl a nt an d e qui pm e nt, intangible and othe r a ss et s includ e assets ac qui re d u nd er f i na nce
lease of $0.9 million that are excluded from the statements of cas h flo ws .
(3) Indebtedness is defined as the total
of
bank indebtedness, principal on long-term debt, balance due on a business combination and obligations under derivative
financial instruments.
(4)
Represents the sum of Television, High Speed I nte rn et (“HSI”) an d Telephony service customers.
(5) Per multiple and subordinate voting share.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking
information may relate to Cogeco Cable’s future outlook and anticipated events, business, operations, financial performance, financial condition
or results and, in some cases, can be identified by terminology s uch as "may"; "will"; "should"; " expect"; "pl an"; "anticipat e"; "believe"; "intend";
"estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters t hat are not historical facts. In
particular, statements regarding the Corporation’s future operating results and economic performance and its objectives and strategies are
forward-
looking
statements.
These statements are based on certain
factors
and assumptions including expected growth, results
of
operations, performance
and business prospects and opportunities, which Cogeco Cable believes are reasonable as of the current date. While management considers
these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. The Corporation
cautions the reader that the economic downturn experienced over the past few years makes forward-looking information and the underlying
assumptions subject to greater uncertainty and that, consequently, they may not materialize, or the results may significantly differ from the
Corporation’s expectations. It is impossible for Cogeco Cable to predict with certainty the impact that the current economic uncertainties may
have on future results. Forward-looking information is also subject to certain factors, including
risks and uncertainties (described in the
“Uncertainties and main risk
factors”
section of the Corporation's 2013 annual Management's Discussion and Analysis ("MD&A")) that could cause
actual results to differ materially from what Cogeco Cable currently expects. These factors include risks pertaining to markets and competition,
technology, regulatory developments, operating costs, information syst ems, disasters or other contingencies, financial risks related to capital
requirements, human resourc es, control ling s hareholder and holding s truct ure, many of which are beyond the Corporati on ’s control. Therefore,
future events and results may vary signific antly from what management currently foresees. The reader should not plac e undue i mportance on
forward-looking information and should not rely upon this information as of any other date. While management may elect to, the Corporation is
under no obligation and does not undertake to updat e or alter this information at any particular time, except as may be required by law.
All amounts are stated in Canadian dollars unless otherwise indicated. This press release should be read in conjunction with the MD&A included
in the Corporation’s 2013 Annual Report, the Corporation's consolidated financial statements and the notes thereto, prepared in accordance with
the International Financ i al Reporting Standards (“IFRS”) for the year ended August 31, 2013.
ADDITIONAL INFORMATION
Additional information relating to the Corporation, including its 2013 Annual Report and Annual Information Form, is available on SEDAR
at www.sedar.com.
The Corporation's 2013 Annual Report can also be found on: www.cogeco.ca/cable/corporate/cca/investors/annual_report_en_2013.html
A copy of this press release with a more detailed summary of results can be found at
http://www.cogeco.ca/cable/corporate/files/press_releases_en/2013/CCA_Q4-2013_detailed_103013.pdf
ABOUT COGECO CABLE
Cogeco Cable is a telecommunications corporation and is the11
th
largest hybrid fibre coaxial cable operator in North America operating in
Canada through its subsidiary Cogeco Cable Canada in Quebec and Ontario, and in the United
States of
America through its subsidiary Atlantic
Broadband in Western Pennsylvania, South Florida, Maryland/Delaware and South Carolina. Its two-way broadband cable networks provide to
its residential and small business customers Analogue and Digital Television, High Speed Internet and Telephony services. Through its
subsidiary Cogeco Enterprise Services, the holding company of Cogeco Data Services and Peer 1 Network Enterprises, Cogeco Cable
provides its commercial customers a suite of IT hosting, information and communications technology services (data centre, colocation,
managed hosting, cloud infrastruc ture and connectivity), with 20 data centres, extensive fibre networks in Montreal and Toronto as well as
points-of-presence in North America and Europe. Cogeco Cable's subordinate voting shares are listed on the Toronto Stock Exchange (TSX:
CCA). For more information
about Cogeco Cable and its subsidiaries visit www.cogec o. ca, cogecodata.com, atlant ic bb.c om, peer1.c om and
peer1hosting.co.uk.
- 30 -
Source: Cogeco Cable Inc.
Pierre Gagné
Senior Vice President and Chief Financial Officer
Tel.: 514-764-4700
Informati o n: Media
René Guimond
Vice-President, Public Affairs and Communications
Tel.: 514-764-4700
Analyst Conference Call: Thursday, October 31, 2013 at 11:00 a.m. (Eastern Daylight Time)
Media representati ves may attend as listeners only.
Please use the following dial-in num ber to have access to the conference call by dialing five minutes
before the start of the conference:
Canada/United Stat es Access Num ber: 1 866-321-6651
International Acces s Number: + 1 416-642-5212
Confirmati on Code: 7376711
By Internet at www.cogeco.ca/investors
A rebroadcast of the conference call will be available until November 7, 2013, by dialing:
Canada and United States access number: 1 888-203-1112
Internati onal access number: + 1 647-436-0148
Confirmati on code: 7376711