Company Announcements

Cogeco Communications Releases its Financial Results for the First Quarter of Fiscal 2022

  • Revenue increased by 16.1% (19.0% in constant currency (1)) compared to the same period of the prior year to reach $718.5 million;

  • Adjusted EBITDA (1) reached $349.3 million, an increase of 12.3% (14.9% in constant currency (1)) compared to the same period of the prior year;

  • Profit for the period amounted to $116.6 million, an increase of 1.5%;

  • Free cash flow (1) amounted to $132.1 million, a decrease of 6.0% (5.2% in constant currency (1)) compared to the same period of the prior year;

  • Cash flows from operating activities increased by 18.7% to reach $286.9 million; and

  • Atlantic Broadband has announced it is changing its name to Breezeline.

MONTRÉAL, Jan. 13, 2022 /CNW Telbec/ - Today, Cogeco Communications Inc. (TSX: CCA) ("Cogeco Communications" or the "Corporation") announced its financial results for the first quarter ended November 30, 2021, in accordance with International Financial Reporting Standards ("IFRS").

OPERATING RESULTS

For the first quarter of fiscal 2022:

  • Revenue increased by 16.1% to reach $718.5 million compared to the previous year. On a constant currency basis, revenue increased by 19.0%, mainly explained as follows:

    • American broadband services revenue increased by 31.0% in constant currency mostly resulting from the Ohio broadband systems acquisition completed on September 1, 2021, and from a higher Internet service customer base and a higher value product mix.

    • Canadian broadband services revenue increased by 8.2% mainly as a result of the DERYtelecom acquisition completed on December 14, 2020.

  • Adjusted EBITDA increased by 12.3% to reach $349.3 million compared to the previous year. On a constant currency basis, adjusted EBITDA increased by 14.9%, mainly explained as follows:

    • American broadband services adjusted EBITDA increased by 33.0% in constant currency mainly resulting from the impact of the Ohio broadband systems acquisition and a higher margin driven by the organic revenue growth, partly offset by costs in connection with the rebranding of Atlantic Broadband to Breezeline and overall higher marketing and advertising activities and other costs which were unusually low last year in the context of the COVID-19 pandemic restriction

    • Canadian broadband services adjusted EBITDA increased by 0.7% in constant currency mainly resulting from the impact of the DERYtelecom acquisition, partly offset by higher marketing and advertising activities and other costs which were unusually low last year in the context of the COVID-19 pandemic restrictions.

  • Profit for the period amounted to $116.6 million, of which $106.8 million, or $2.29 per share, was attributable to owners of the Corporation compared to $114.9 million, $106.7 million, and $2.24 per share, respectively, in the comparable period of fiscal 2021. The increases resulted mainly from higher adjusted EBITDA and lower income tax expense, partly offset by the increases in depreciation and amortization expense, integration, restructuring and acquisition costs and financial expense.

  • Free cash flow decreased by 6.0% (5.2% in constant currency) to reach $132.1 million compared to the previous year, mainly as a result of higher capital expenditures, and to a lesser extent, due to higher integration, restructuring and acquisition costs resulting from the acquisition of the Ohio broadband systems, and higher financial expense, partly offset by higher adjusted EBITDA and lower current income taxes.

  • Cash flows from operating activities increased by 18.7% to reach $286.9 million compared to the previous year, mainly from higher adjusted EBITDA, improved working capital elements, and lower income taxes paid, partly offset by higher interest paid.

  • Cogeco Communications purchased and cancelled 274,000 subordinate voting shares for a total consideration of $29.5 million.

  • On September 1, 2021, Breezeline (formerly Atlantic Broadband) completed the acquisition of the Ohio broadband systems for a purchase price of $1.418 billion (US$1.125 billion), subject to customary post-closing adjustments.

  • Cogeco Communications maintains its fiscal 2022 financial guidelines as issued on November 11, 2021.

  • At its January 13, 2022 meeting, the Board of Directors of Cogeco Communications declared a quarterly eligible dividend of $0.705 per share compared to $0.64 per share in the comparable quarter of fiscal 2021.

  • On December 17, 2021, Cogeco Communications amended and extended its $750 million Term Revolving Facility to January 24, 2027. As part of the amendments, Cogeco Communications has transitioned its revolving facility into a Sustainability-linked loan ("SLL") structure, underscoring its strong leadership and dedication to sustainability and the organization's Environmental, social and governance (ESG) goals.


(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 this press release, including reconciliation to the most comparable IFRS financial measures.

"For this first quarter of fiscal 2022, we are satisfied with Cogeco Communications' performance, which is in line with expectations," declared Philippe Jetté, President and Chief Executive Officer of Cogeco Communications Inc.

"Results for the first quarter at our Canadian broadband business unit were in line with expectations," said Mr. Jetté. "Over the past months, Cogeco Connexion has also made good progress in its preparation for the deployment of its network expansion projects in underserved and unserved areas in partnership with governments."

"In the United States, our broadband business unit had a good first quarter," continued Mr. Jetté. "The integration of our recently acquired Ohio broadband systems is advancing well, according to plan. The team is also progressing well with its major fiber network expansion initiative. More recently, we announced a full rebrand including a new name, Breezeline. The rebrand represents a pledge to an every day customer experience which goes above and beyond expectations."

"Finally, we were proud to recently publish our first Climate Action Plan outlining the key steps the Corporation is taking in support of urgent climate action, as well as our processes and strategies to assess and manage climate-related risks and opportunities. We are also very pleased to have been awarded the prestigious "A" rating by the internationally recognized organization CDP for our leadership in environmental transparency," concluded Mr. Jetté.

COVID-19 PANDEMIC

While the impact of the COVID-19 pandemic on the Corporation is generally stabilizing, we remain cautious in our management of the situation which can evolve quickly. Our priority remains on ensuring the well-being of our employees, customers and business partners.

The pandemic has generally highlighted the value of the services we offer, especially our high-speed Internet services, as customers have been spending more time at home for work, education and entertainment purposes. During the first year of the pandemic we have generally witnessed strong demand for either obtaining or upgrading speeds of high-speed Internet, along with reduced operating costs due to a stable customer base and not being able to use all usual sales channels. However, operations have generally been conducted in a normal fashion during the past two quarters.

The pandemic has also accelerated the willingness of various governments to provide high-speed Internet in underserved and unserved areas. This has led to additional funding to partially pay for network expansions in such areas. The Corporation has partnered with governments in both Canada and the United States in such endeavor and expects to do more in the years to come.

The Corporation's results discussed herein may not be indicative of future operational trends and financial performance. Please refer to the "Forward-looking statements" section.

ENVIRONMENTAL, SOCIAL AND GOVERNANCE (ESG)

On December 7, 2021, Cogeco published its first Task Force on Climate RelatedFinancial Disclosures ("TCFD") report as part of its Climate Action Plan which can be found on the corpo.cogeco.com website. On November 3, 2021, Cogeco announced that it was one of 45 companies globally that received His Royal Highness The Prince of Wales' Terra Carta Seal in recognition of its commitment to creating a sustainable future. This seal was awarded to companies whose ambitions are aligned with those of the Terra Carta, a recovery plan for Nature, People and Planet, launched in January 2021.


FINANCIAL HIGHLIGHTS









Three months ended November 30,



2021


2020


Change

Change in

constant
currency

(1)
(2)

Foreign
exchange
impact

(1)

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

$


$


%

%


$


Operations










Revenue

718,541


618,913


16.1

19.0


(17,686)


Adjusted EBITDA (2)

349,287


311,093


12.3

14.9


(8,032)


Adjusted EBITDA margin (2)

48.6

%

50.3

%






Integration, restructuring and acquisition costs (3)

18,635


1,215






Profit for the period

116,610


114,896


1.5





Profit for the period attributable to owners of the Corporation

106,837


106,679


0.1





Cash flow










Cash flows from operating activities

286,945


241,725


18.7





Acquisition of property, plant and equipment (4)

141,028


116,222


21.3

25.2


(4,452)


Free cash flow (2)

132,111


140,616


(6.0)

(5.2)


(1,191)


Capital intensity (2)

19.6

%

18.8

%






Financial condition (5)










Cash and cash equivalents

408,985


365,520


11.9





Total assets

8,931,252


7,351,692


21.5





Indebtedness (2) (6)

4,757,919


3,319,708


43.3





Equity attributable to owners of the Corporation

2,480,625


2,415,144


2.7





Per share data (7)










Earnings per share










Basic

2.29


2.24


2.2





Diluted

2.27


2.22


2.3





Dividends

0.705


0.64


10.2





(1)

Key performance indicators presented on a constant currency basis are obtained by translating financial results from the current period denominated in US dollars at the foreign exchange rate of the comparable period of the prior year. For the three-month period ended November 30, 2020, the average foreign exchange rate used for translation was 1.3170 USD/CDN.

(2)

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 this press release, including reconciliation to the most comparable IFRS financial measures.

(3)

For the three-month period ended November 30, 2021, integration, restructuring and acquisition costs resulted mostly from costs incurred in connection with the acquisition, completed on September 1, 2021, and ongoing integration of the Ohio broadband systems. For the three-month period ended November 30, 2020, integration, restructuring and acquisition costs resulted mostly from due diligence costs and legal fees related to the acquisition of DERYtelecom, which was completed on December 14, 2020.

(4)

For the three-month period ended November 30, 2021, acquisition of property, plant and equipment in constant currency amounted to $145.5 million.

(5)

At November 30, 2021 and August 31, 2021.

(6)

Indebtedness is defined as the total of bank indebtedness and principal on long-term debt.

(7)

Per multiple and subordinate voting share.

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 regarding 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 strategies" and "Fiscal 2022 financial guidelines" sections of the Corporation's 2021 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 competitive risks, business risks (including potential disruption to our supply chain), regulatory risks, technology risks (including cybersecurity risk), financial risks (including variations in currency and interest rates), economic conditions, human-caused and natural threats to our network, infrastructure and systems, community acceptance risks, ethical behavior risks, ownership risks, litigation risks and public health crisis and emergencies such as the current COVID-19 pandemic, 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" sections of the Corporation's 2021 Annual MD&A and of the current 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 which 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-month period ended November 30, 2021, the Corporation's condensed interim consolidated financial statements and the notes thereto for the same period prepared in accordance with International Financial Reporting Standards ("IFRS") and the Corporation's 2021 Annual Report.

NON-IFRS FINANCIAL MEASURES  

This section describes non-IFRS financial measures used by Cogeco Communications throughout this press release. These financial measures are reviewed in assessing the performance of the Corporation and used in the decision-making process with regard to its business units. Reconciliations between "adjusted EBITDA", "adjusted EBITDA margin", "free cash flow", "capital intensity", "indebtedness" and "net indebtedness" and the most comparable IFRS financial measures are also provided. These financial measures do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies.

This press release also makes reference to key performance indicators on a constant currency basis, including revenue, "adjusted EBITDA", acquisition of property, plant and equipment and "free cash flow". Measures on a constant currency basis are considered non-IFRS financial measures and do not have any standardized meaning prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies.





Non-IFRS
financial
measures

Application

Calculation

Most
comparable
IFRS financial measures

Adjusted EBITDA

and

adjusted EBITDA margin

Adjusted EBITDA and adjusted EBITDA margin are
key measures commonly reported and used in the
telecommunications industry, as they allow
comparisons between companies that have different
capital structures and are more current measures since
they exclude the impact of historical investments in
assets. Adjusted EBITDA is one of the key metrics
employed by the financial community to value a
business and its financial strength.

 

Adjusted EBITDA for Cogeco Communications'
business units is equal to the segment profit (loss)
reported in Note 4 of the condensed interim
consolidated financial statements.

Adjusted EBITDA:

- Profit for the period

add:

- Income taxes;

- Financial expense;

- Depreciation and amortization; and

- Integration, restructuring and acquisition costs.

Profit for the period

 

 

 



Adjusted EBITDA margin:

- Adjusted EBITDA

divided by:

- Revenue.

No comparable IFRS financial measure

Free cash flow

Management and investors use free cash flow to
measure Cogeco Communications' ability to repay
debt, distribute capital to its shareholders and finance
its growth.

Free cash flow:

- Adjusted EBITDA

add:

- Amortization of deferred transaction costs and discounts on long-term debt;

- Share-based payment;

- Loss (gain) on disposals and write-offs of property, plant and equipment; and

- Defined benefit plans expense, net of contributions;

deduct:

- Integration, restructuring and acquisition costs;

- Financial expense;

- Current income taxes;

- Acquisition of property, plant and equipment (1); and

- Repayment of lease liabilities

 

Cash flows from operating activities

Constant currency
basis

Revenue, operating expenses, adjusted EBITDA,
acquisition of property, plant and equipment and free
cash flow are measures presented on a constant
currency basis to enable an improved understanding of
the Corporation's underlying financial performance,
undistorted by the effects of changes in foreign
exchange rates.

Constant currency basis is 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.

 

 

No comparable
IFRS financial measure

 

Capital intensity

Capital intensity is used by Cogeco Communications'
management and investors to assess the Corporation's
investment in capital expenditures in order to support a certain level of revenue.

Capital intensity:

- Acquisition of property, plant and equipment (1)

divided by:

- Revenue.

No comparable
IFRS financial measure

(1) Excludes the non-cash acquisition of right-of-use assets and the purchases of spectrum licences.






Non-IFRS
financial
measures

Application

Calculation

Most
comparable
IFRS financial
measures

Indebtedness and
net indebtedness

Indebtedness and net indebtedness are measures used
by management and investors to assess Cogeco
Communications' financial leverage, as they represent
the debt and the debt net of the available cash and
cash equivalents, respectively.

Indebtedness:

add:

- Principal on long-term debt; and

- Bank indebtedness.

 

Long-term debt,
including the
current portion



Net indebtedness:

- Indebtedness

deduct:

- Cash and cash equivalents.






ADJUSTED EBITDA AND ADJUSTED EBITDA MARGIN RECONCILIATION

The reconciliation of adjusted EBITDA to the most comparable IFRS financial measure and the calculation of adjusted EBITDA margin are as follows:






Three months ended November 30,



2021


2020


(In thousands of Canadian dollars, except percentages)

$


$


Profit for the period

116,610


114,896


Income taxes

17,450


35,522


Financial expense

44,955


35,210


Depreciation and amortization

151,637


124,250


Integration, restructuring and acquisition costs

18,635


1,215


Adjusted EBITDA

349,287


311,093


Revenue

718,541


618,913


Adjusted EBITDA margin

48.6

%

50.3

%

FREE CASH FLOW RECONCILIATION

The reconciliation of free cash flow to the most comparable IFRS financial measure is as follows:




Three months ended November 30,


2021

2020

(In thousands of Canadian dollars)

$

$

Cash flows from operating activities

286,945

241,725

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

2,922

2,278

Changes in other non-cash operating activities

(13,174)

5,362

Income taxes paid

25,360

41,781

Current income taxes

(14,563)

(19,862)

Interest paid

31,599

21,852

Financial expense

(44,955)

(35,210)

Acquisition of property, plant and equipment

(141,028)

(116,222)

Repayment of lease liabilities

(995)

(1,088)

Free cash flow

132,111

140,616

CAPITAL INTENSITY RECONCILIATION

The calculation of capital intensity is as follows:






Three months ended November 30,



2021


2020


(In thousands of Canadian dollars, except percentages)

$


$


Acquisition of property, plant and equipment

141,028


116,222


Revenue

718,541


618,913


Capital intensity

19.6

%

18.8

%

INDEBTEDNESS AND NET INDEBTEDNESS RECONCILIATION

The reconciliation of indebtedness and net indebtedness to the most comparable IFRS financial measure is as follows:





At November 30,
2021

At August 31, 2021

(In thousands of Canadian dollars)

$

$

Long-term debt, including the current portion

4,682,821

3,272,216

Discounts, transaction costs and other

61,198

43,032

Bank indebtedness

13,900

4,460

Indebtedness

4,757,919

3,319,708

Cash and cash equivalents

(408,985)

(365,520)

Net indebtedness

4,348,934

2,954,188


ABOUT COGECO COMMUNICATIONS INC.

Rooted in the communities it serves, Cogeco Communications Inc. (TSX: CCA) is a growing competitive force in the North American telecommunications sector with a legacy of over 60 years. Through its business units Cogeco Connexion and Breezeline (formerly Atlantic Broadband), Cogeco Communications provides broadband services (Internet, television and phone) to 1.6 million residential and business customers in Quebec and Ontario in Canada as well as in twelve states in the United States. To learn more about Cogeco Communications' growth strategy and its commitment to support its communities, promote inclusive growth and fight climate change, please visit us online at corpo.cogeco.com.

For information:

Investors
Patrice Ouimet
Senior Vice President and Chief Financial Officer
Cogeco Communications Inc.
Tel.: 514-764-4700
patrice.ouimet@cogeco.com

Media
Marie-Hélène Labrie
Senior Vice President and Chief Public Affairs, Communications and Strategy Officer
Cogeco Communications Inc.
Tel.: 514-764-4700
marie-helene.labrie@cogeco.com

Conference Call:

Friday, January 14, 2022 at 9:30 a.m. (Eastern Time)


A live audio webcast will be available on Cogeco Communications' website at
https://corpo.cogeco.com/cca/en/investors/investor-relations/. The webcast will be available on Cogeco
Communications' website for a three-month period. Members of the financial community will be able to access
the conference call and ask questions. Media representatives may attend as listeners only.


Please use the following dial-in number to have access to the conference call 5 to 10 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 required to provide the operator with the name of the company
hosting the call, that is, Cogeco Inc. or Cogeco Communications Inc.


The conference call on Friday, January 14, will be followed by a live webcast of the virtual Annual and Special
Shareholders' Meetings at 11:30 a.m. Information to join the virtual Annual and Special Shareholders' Meetings
is available on the Cogeco Inc. and Cogeco Communications Inc. websites. You will be able to log into the
virtual Annual and Special Shareholders' Meetings at https://web.lumiagm.com/477874767 starting at 10:30 a.m.
on January 14, 2022. Note that the Annual and Special Shareholders' Meetings are not accessible via the Internet
Explorer web browser.

 

SOURCE Cogeco Communications Inc.