- Revenue increased by 6.1% (2.3% in constant currency (1)) compared to the same period of the prior year to
$762.3 million ; - Adjusted EBITDA (1) was
$367.2 million , an increase of 5.1% (1.8% in constant currency (1)); - Profit for the period amounted to
$120.4 million , an increase of 3.2%; - Earnings per share on a diluted basis was
$2.44 , an increase of 7.5%; - Net capital expenditures (1) (2) amounted to
$197.0 million , an increase of 39.7% (33.4% in constant currency). Excluding network expansion projects (1), net capital expenditures amounted to$131.1 million , an increase of 8.4% (3.8% in constant currency); - Capital intensity (1) was 25.8% compared to 19.6% in the same period of the prior year. Excluding network expansion projects (1), capital intensity was 17.2% compared to 16.8% last year.
- Acquisition of property, plant and equipment amounted to
$234.6 million , an increase of 60.9%; - Free cash flow (1) amounted to
$105.1 million , a decrease of 20.4% (20.0% in constant currency (1)), due to intensified network expansion projects. Free cash flow, excluding network expansion projects (1) was$171.0 million , an increase of 12.4% (10.6% in constant currency); - Cash flows from operating activities decreased by 32.3% to
$194.2 million , mainly resulting from working capital items; - Purchased and cancelled 512,170
Cogeco Communications subordinate voting shares for a total consideration of$37.3 million ; - Fiscal 2023 financial guidelines were revised; and
- A quarterly eligible dividend of
$0.776 per share was declared, compared to$0.705 per share in the comparable quarter of fiscal 2022, an increase of 10%.
OPERATING RESULTS
For the first quarter of fiscal 2023:
- Revenue increased by 6.1% to reach
$762.3 million . On a constant currency basis, revenue increased by 2.3%, mainly explained as follows: - Canadian telecommunications' revenue increased by 4.8% as reported and in constant currency, mainly driven by the cumulative effect of high-speed Internet service additions over the past year, a higher value product mix and rate increases.
- American telecommunications' revenue increased by 7.4%. On a constant currency basis, revenue decreased by 0.1%. In constant currency, stable revenue resulted from a higher value product mix and rate increases, offset by a lower customer base in
Ohio . - Adjusted EBITDA increased by 5.1% to reach
$367.2 million . On a constant currency basis, adjusted EBITDA increased by 1.8%, mainly explained as follows: - Canadian telecommunications adjusted EBITDA increased by 5.7%, or 6.4% in constant currency, primarily due to revenue growth, partly offset by increased operating expenses.
- American telecommunications adjusted EBITDA increased by 3.8%. On a constant currency basis, adjusted EBITDA decreased by 3.4%, mainly resulting from unusually low spending in marketing and advertising and less staff last year in
Ohio while the assets were still operating under the previous owner's brand. - Profit for the period amounted to
$120.4 million , of which$111.5 million , or$2.44 per diluted share, was attributable to owners of the Corporation compared to$116.6 million ,$106.8 million , and$2.27 per diluted share, respectively, in the comparable period of fiscal 2022. The increases resulted mainly from higher adjusted EBITDA and lower acquisition, integration, restructuring and other costs, partly offset by increases in income tax expense, financial expense and depreciation and amortization expense. - Net capital expenditures, which account for construction subsidies, and capital intensity were
$197.0 million and 25.8%, respectively, compared to$141.0 million and 19.6% in the same period of the prior year, driven by increased network expansion activities inCanada andthe United States . Excluding network expansion projects, net capital expenditures and capital intensity were$131.1 million and 17.2%, respectively, compared to$121.0 million and 16.8% in the same period of the prior year. - Fibre-to-the-home network expansion projects continued in both
Canada andthe United States where about 20,000 and 17,000 homes passed were added during the quarter, respectively. - Acquisition of property, plant and equipment increased by 60.9% to
$234.6 million , mainly due to network expansion projects in both countries. - Free cash flow decreased by 20.4%, or 20.0% in constant currency, and amounted to
$105.1 million , mainly due to higher net capital expenditures driven by increased network expansion activity in both countries and higher financial expense, partly offset by lower acquisition, integration, restructuring and other costs, higher adjusted EBITDA and lower current income taxes. Free cash flow, excluding network expansion projects increased by 12.4%, or 10.6% in constant currency, and amounted to$171.0 million . - Cash flows from operating activities decreased by 32.3% to reach
$194.2 million , driven by a$64.4 million outflow in non-cash operating activities versus a$13.2 million inflow in the comparative period, resulting from the timing of trade and other payables, as well as increased interest and income taxes paid, partly offset by higher adjusted EBITDA and lower acquisition, integration, restructuring and other costs. Cogeco Communications purchased and cancelled 512,170 subordinate voting shares for a total consideration of$37.3 million , compared to 274,000 subordinate voting shares purchased and cancelled in the comparable quarter of fiscal 2022, for a total consideration of$29.5 million .- At its
January 12, 2023 meeting, the Board of Directors ofCogeco Communications declared a quarterly eligible dividend of$0.776 per share, an increase of 10% compared to$0.705 per share in the comparable quarter of fiscal 2022.
(1) | Adjusted EBITDA and net capital expenditures are total of segments measures. Capital intensity is a supplementary financial measure. Constant currency basis, net capital expenditures, excluding network expansion projects, free cash flow and free cash flow, excluding network expansion projects, are non-IFRS financial measures. Change in constant currency and capital intensity, excluding network expansion projects are non-IFRS ratios. These 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 information on these financial measures, please consult the "Non-IFRS and other financial measures" section of this press release. |
(2) | Net capital expenditures are presented net of government subsidies, including the utilization of those received in advance. |
"We have met our financial targets during the first quarter of fiscal 2023," stated Philippe Jetté, President and Chief Executive Officer of Cogeco Communications Inc.
"
"In
"Finally, we are delighted that our corporate governance practices have been recognized again this year by the Globe and Mail's Board Games as among the best within Canadian family-controlled dual class public corporations," Mr. Jetté concluded.
FISCAL 2023 REVISED FINANCIAL GUIDELINES
Compared to fiscal 2022, on a constant currency and consolidated basis, revenue and adjusted EBITDA are now expected to increase between 0.5% and 2.0%. The expected growth in revenue and adjusted EBITDA results mainly from expected growth in Internet service customers and a high value product mix. The expected increase in net capital expenditures compared to fiscal 2022 is primarily due to the continued net investments in network expansions which will increase the Corporation's footprint in
Revised projections | (1) | Original projections | (1) | Actual | |
(In millions of Canadian dollars, except percentages) | Fiscal 2023 (constant currency) | (2) | Fiscal 2023 (constant currency) | (2) | Fiscal 2022 |
$ | $ | $ | |||
Financial guidelines | |||||
Revenue | Increase of 0.5% to 2.0% | Increase of 2% to 4% | 2,901 | ||
Adjusted EBITDA | Increase of 0.5% to 2.0% | Increase of 1.5% to 3.5% | 1,393 | ||
Net capital expenditures | 689 | ||||
Net capital expenditures in connection with network expansion projects | 157 | ||||
Capital intensity | 24% to 26% | Approximately 26% | 23.8 % | ||
Capital intensity, excluding network expansion projects | 17% to 19% | Approximately 19% | 18.3 % | ||
Free cash flow | Decrease of 2% to 12% | (3) | Decrease of 2% to 12% | (3) | 424 |
Free cash flow, excluding network expansion projects | Decrease of 5% to an increase of 5% | (3) | Decrease of 5% to an increase of 5% | (3) | 582 |
(1) | Percentage of changes compared to fiscal 2022. |
(2) | Fiscal 2023 financial guidelines are based on a USD/CDN constant exchange rate of |
(3) | The assumed current income tax effective rate is approximately 11%. |
These financial guidelines, including the various assumptions underlying them, contain forward-looking statements concerning the business outlook for
OPERATING ENVIRONMENT
The current global economic and political instability has resulted in rising inflation and interest rates. While we are proactively working at minimizing their impact on the Corporation, we expect the combination of those elements to continue to put pressure on revenue, as some customers seek ways to reduce their monthly spending, and on the costs to deliver our services. At the same time, and partially as a reaction to a more challenging market, some telecommunications providers have adopted more aggressive strategies and price points in order to generate sales activity.
While the Corporation experienced sustained demand for its residential high-speed Internet product in the context of the COVID-19 pandemic restrictions, a softening of the market is being observed with the re-opening of the economy in the recent quarters and a return to the workplace. While we remain cautious in our management of the situation, our priority remains on ensuring the well-being of our employees, customers and business partners. Although we have conducted our operations normally during recent quarters, we will remain vigilant should the situation change in the future.
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.
FINANCIAL HIGHLIGHTS
Three months ended | 2022 | 2021 | (1) | Change | Change in constant currency | (2) (3) |
(In thousands of Canadian dollars, except percentages and per share data) | $ | $ | % | % | ||
Operations | ||||||
Revenue | 762,300 | 718,541 | 6.1 | 2.3 | ||
Adjusted EBITDA (3) | 367,223 | 349,287 | 5.1 | 1.8 | ||
Adjusted EBITDA margin (3) | 48.2 % | 48.6 % | ||||
Acquisition, integration, restructuring and other costs (4) | 2,677 | 18,635 | (85.6) | |||
Profit for the period | 120,375 | 116,610 | 3.2 | |||
Profit for the period attributable to owners of the Corporation | 111,504 | 106,837 | 4.4 | |||
Cash flow | ||||||
Cash flows from operating activities | 194,159 | 286,945 | (32.3) | |||
Free cash flow (3) | 105,128 | 132,111 | (20.4) | (20.0) | ||
Free cash flow, excluding network expansion projects (3) | 170,962 | 152,127 | 12.4 | 10.6 | ||
Acquisition of property, plant and equipment | 234,637 | 145,848 | 60.9 | |||
Net capital expenditures (1) (3) | 196,971 | 141,028 | 39.7 | 33.4 | ||
Net capital expenditures, excluding network expansion projects (3) | 131,137 | 121,012 | 8.4 | 3.8 | ||
Capital intensity (3) | 25.8 % | 19.6 % | ||||
Capital intensity, excluding network expansion projects (3) | 17.2 % | 16.8 % | ||||
Per share data (5) | ||||||
Earnings per share | ||||||
Basic | 2.45 | 2.29 | 7.0 | |||
Diluted | 2.44 | 2.27 | 7.5 | |||
Dividends | 0.776 | 0.705 | 10.1 | |||
As at | ||
(In thousands of Canadian dollars) | $ | $ |
Financial condition | ||
Cash and cash equivalents | 407,757 | 370,899 |
Total assets | 9,587,396 | 9,278,509 |
Long-term debt | ||
Current | 340,606 | 339,096 |
Non-current | 4,610,038 | 4,334,373 |
Net indebtedness (3) | 4,672,763 | 4,489,330 |
Equity attributable to owners of the Corporation | 2,844,925 | 2,751,080 |
(1) | Comparative figures have been restated following the application of the IFRS Interpretations Committee issued agenda decision Demand Deposits with Restrictions on Use arising from a Contract with a Third Party (IAS 7 Statement of Cash Flows) during the third quarter of fiscal 2022. Furthermore, the Corporation also changed the label of its "Acquisition of property, plant and equipment" key performance indicator measure to "Net capital expenditures" following this application. For further details, refer to the "Accounting policies" section of the first quarter of fiscal 2023 Management's Discussion and Analysis ("MD&A"). |
(2) | 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 |
(3) | Adjusted EBITDA and net capital expenditures are total of segments measures. Adjusted EBITDA margin and capital intensity are supplementary financial measures. Free cash flow, free cash flow, excluding network expansion projects and net capital expenditures, excluding network expansion projects are non-IFRS financial measures. Change in constant currency and capital intensity, excluding network expansion projects are non-IFRS ratios. Net indebtedness is a capital management measure. These 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 information on these financial measures, please consult the "Non-IFRS and other financial measures" section of this press release. |
(4) | For the three-month period ended |
(5) | 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
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
NON-IFRS AND OTHER FINANCIAL MEASURES
This press release includes references to non-IFRS and other financial measures used by
Reconciliations between non-IFRS and other financial measures to the most directly comparable IFRS financial measures are provided below. Certain additional disclosures for non-IFRS and other financial measures used in this press release have been incorporated by reference and can be found in the "Non-IFRS and other financial measures" section of the Corporation's MD&A for the three-month period ended
CONSTANT CURRENCY BASIS AND FOREIGN EXCHANGE IMPACT RECONCILIATION
Consolidated
Three months ended | ||||||||||||
Change | ||||||||||||
2022 | Foreign exchange impact | 2022 in constant currency | (1) | 2021 | Actual | In constant currency | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | ||||||
Revenue | 762,300 | (26,910) | 735,390 | 718,541 | 6.1 | 2.3 | ||||||
Operating expenses | 389,677 | (15,435) | 374,242 | 363,674 | 7.2 | 2.9 | ||||||
Management fees – Cogeco Inc. | 5,400 | — | 5,400 | 5,580 | (3.2) | (3.2) | ||||||
Adjusted EBITDA | 367,223 | (11,475) | 355,748 | 349,287 | 5.1 | 1.8 | ||||||
Free cash flow | 105,128 | 594 | 105,722 | 132,111 | (20.4) | (20.0) | ||||||
Net capital expenditures | 196,971 | (8,904) | 188,067 | 141,028 | 39.7 | 33.4 | ||||||
(1) | Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was |
Canadian telecommunications segment
Three months ended | ||||||||||||
Change | ||||||||||||
2022 | Foreign exchange impact | 2022 in constant currency | (1) | 2021 | Actual | In constant currency | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | ||||||
Revenue | 372,084 | — | 372,084 | 355,047 | 4.8 | 4.8 | ||||||
Operating expenses | 173,451 | (1,168) | 172,283 | 167,186 | 3.7 | 3.0 | ||||||
Adjusted EBITDA | 198,633 | 1,168 | 199,801 | 187,861 | 5.7 | 6.4 | ||||||
Net capital expenditures | 115,238 | (3,360) | 111,878 | 67,471 | 70.8 | 65.8 | ||||||
(1) | Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was |
American telecommunications segment
Three months ended | ||||||||||||
Change | ||||||||||||
2022 | Foreign exchange impact | 2022 in constant currency | (1) | 2021 | Actual | In constant currency | ||||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | ||||||
Revenue | 390,216 | (26,910) | 363,306 | 363,494 | 7.4 | (0.1) | ||||||
Operating expenses | 207,710 | (14,267) | 193,443 | 187,730 | 10.6 | 3.0 | ||||||
Adjusted EBITDA | 182,506 | (12,643) | 169,863 | 175,764 | 3.8 | (3.4) | ||||||
Net capital expenditures | 80,408 | (5,544) | 74,864 | 73,227 | 9.8 | 2.2 | ||||||
(1) | Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was |
FREE CASH FLOW RECONCILIATION
Three months ended | ||
2022 | 2021 | |
(In thousands of Canadian dollars) | $ | $ |
Cash flows from operating activities | 194,159 | 286,945 |
Amortization of deferred transaction costs and discounts on long-term debt (1) | 3,044 | 2,922 |
Changes in other non-cash operating activities | 64,416 | (13,174) |
Income taxes paid | 46,618 | 25,360 |
Current income taxes | (8,376) | (14,563) |
Interest paid | 60,498 | 31,599 |
Financial expense | (56,919) | (44,955) |
Net capital expenditures | (196,971) | (141,028) |
Repayment of lease liabilities | (1,341) | (995) |
Free cash flow | 105,128 | 132,111 |
(1) | Included within financial expense. |
NET CAPITAL EXPENDITURES RECONCILIATION
Three months ended | |||
2022 | 2021 | (1) | |
(In thousands of Canadian dollars) | $ | $ | |
Acquisition of property, plant and equipment | 234,637 | 145,848 | |
Subsidies received in advance recognized as a reduction of the cost of property, plant and equipment during the period | (37,666) | (4,820) | |
Net capital expenditures | 196,971 | 141,028 | |
(1) | Comparative figures have been restated. For further details, refer to the "Accounting policies" section of the fiscal 2023 first-quarter MD&A. |
ADJUSTED EBITDA RECONCILIATION
Three months ended | ||
2022 | 2021 | |
(In thousands of Canadian dollars) | $ | $ |
Profit for the period | 120,375 | 116,610 |
Income taxes | 31,953 | 17,450 |
Financial expense | 56,919 | 44,955 |
Depreciation and amortization | 155,299 | 151,637 |
Acquisition, integration, restructuring and other costs | 2,677 | 18,635 |
Adjusted EBITDA | 367,223 | 349,287 |
NET CAPITAL EXPENDITURES AND FREE CASH FLOW EXCLUDING NETWORK EXPANSION PROJECTS RECONCILIATIONS
Net capital expenditures
Three months ended | |||||||||||
Change | |||||||||||
2022 | Foreign exchange impact | 2022 in constant currency | (1) | 2021 | Actual | In constant currency | |||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Net capital expenditures | 196,971 | (8,904) | 188,067 | 141,028 | 39.7 | 33.4 | |||||
Net capital expenditures in connection with network expansion projects | 65,834 | (3,362) | 62,472 | 20,016 | — | — | |||||
Net capital expenditures, excluding network expansion projects | 131,137 | (5,542) | 125,595 | 121,012 | 8.4 | 3.8 | |||||
(1) | Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was |
Free cash flow
Three months ended | |||||||||||
Change | |||||||||||
2022 | Foreign exchange impact | 2022 in constant currency | (1) | 2021 | Actual | In constant currency | |||||
(In thousands of Canadian dollars, except percentages) | $ | $ | $ | $ | % | % | |||||
Free cash flow | 105,128 | 594 | 105,722 | 132,111 | (20.4) | (20.0) | |||||
Net capital expenditures in connection with network expansion projects | 65,834 | (3,362) | 62,472 | 20,016 | — | — | |||||
Free cash flow, excluding network expansion projects | 170,962 | (2,768) | 168,194 | 152,127 | 12.4 | 10.6 | |||||
(1) | Fiscal 2023 first-quarter in constant currency is translated at the average foreign exchange rate of fiscal 2022 first-quarter, which was |
ADDITIONAL INFORMATION
Additional information relating to the Corporation is available on the SEDAR website at www.sedar.com and on the Corporation's website at corpo.cogeco.com.
ABOUT
Rooted in the communities it serves,
Conference Call: | |
A live audio webcast of the analyst call will be available on | |
Please use the following dial-in number to have access to the conference call 5 to 10 minutes before the start of the conference: | |
Local - | |
Toll Free - | |
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 | |
The conference call will be followed by the Annual Shareholders' Meetings at | |
For information:
Investors
Patrice Ouimet
Senior Vice President and Chief Financial Officer
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
SOURCE
© Canada Newswire, source