- Revenue increased by 5.5% (5.7% in constant
currency(1)) compared to the same period of the prior
year to reach $618.9 million;
- Adjusted EBITDA(1) reached $311.1 million, an increase of 10.3% (10.5% in
constant currency);
- Free cash flow(1) reached $140.6 million, an increase of 36.7% (36.9% in
constant currency);
- Cogeco Communications is revising its fiscal 2021 financial
guidelines following the acquisition of DERYtelecom, the third
largest cable provider in the province of Québec; and
- A quarterly eligible dividend of $0.64 was declared.
MONTRÉAL, Jan. 14, 2021 /CNW/ -
Today, Cogeco Communications Inc. (TSX: CCA) ("Cogeco
Communications" or the "Corporation") announced its financial
results for the first quarter ended November 30, 2020, in
accordance with International Financial Reporting Standards
("IFRS").
OPERATING RESULTS
For the first quarter of fiscal 2021:
- Revenue increased by 5.5% to reach $618.9 million. On a constant currency basis,
revenue increased by 5.7%, mainly explained as follows:
-
- Canadian broadband services revenue increased by 2.2% as a
result of the cumulative effect of sustained demand for residential
high speed Internet since the beginning of the pandemic due to
customers spending more time at home for work, online education and
entertainment purposes, and rate increases implemented for certain
services, partly offset by a decline in video service customers;
and
- American broadband services revenue increased by 9.8% in
constant currency resulting mainly from strong residential Internet
service additions, rates increases, the impact of the Thames Valley
Communications acquisition completed on March 10, 2020 and increased political
advertising revenue related to the United
States' presidential election. Excluding revenue from Thames
Valley Communications, revenue in constant currency increased by
8.2%.
|
|
|
|
(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.
|
- Adjusted EBITDA increased by 10.3% to reach $311.1 million. On a constant currency basis,
adjusted EBITDA increased by 10.5%, mainly explained as
follows:
-
- Canadian broadband services adjusted EBITDA increased by 8.8%
in constant currency mainly due to an increase in revenue combined
with a decrease in operating expenses attributable primarily to
sales and marketing activity deferred to the second half of the
year in the context of the COVID-19 pandemic; and
- American broadband services adjusted EBITDA increased by 14.3%
in constant currency mainly due to an increase in revenue, the
impact of the Thames Valley Communications acquisition and the
timing of certain initiatives deferred to the second half of the
year. Excluding adjusted EBITDA from Thames Valley Communications,
adjusted EBITDA in constant currency increased by 12.8%.
- Profit for the period amounted to $114.9
million, of which $106.7
million, or $2.24 per share,
was attributable to owners of the Corporation compared to
$89.7 million, $84.2 million, and $1.71 per share, respectively, in the comparable
period of fiscal 2020. The increase resulted mainly from higher
adjusted EBITDA and lower financial expense, partly offset by the
increase in income taxes;
- Free cash flow increased by 36.7% to reach $140.6 million. On a constant currency basis,
free cash flow increased by 36.9% as a result of higher adjusted
EBITDA combined with decreases in acquisition of property, plant
and equipment due to the timing of certain initiatives, financial
expense and current income taxes;
- Cash flows from operating activities increased by 62.0% to
reach $241.7 million mainly due to
changes in non-cash operating activities primarily due to changes
in working capital, combined with higher adjusted EBITDA and the
decrease in financial expense paid, partly offset by the increase
in income taxes paid;
- On December 14, 2020, Cogeco
Connexion, completed the acquisition of DERYtelecom, the third
largest cable operator in the province of Québec, for a purchase
price of $403 million, subject to
customary post-closing adjustments; and
- At its January 14, 2021 meeting,
the Board of Directors of Cogeco Communications declared a
quarterly eligible dividend of $0.64
per share compared to $0.58 in the
comparable quarter of fiscal 2020.
"We are pleased with the overall performance of Cogeco
Communications for the first quarter of 2021," declared Philippe
Jetté, President and Chief Executive Officer of Cogeco
Communications Inc.
"Both our Canadian and American broadband segments showed strong
increases in EBITDA compared to the first quarter of last year,
largely explained by unique circumstances that were favourable to
our business," said Mr. Jetté. "In particular, the pandemic
continued to accelerate changes in customer behavior and highlight
the value of our fixed broadband product while allowing for the
deferral of certain operating activities to the second half of the
year. This resulted in a strong operating performance which,
combined with lower capital expenditures, allowed us to increase
free cash flow by 37% compared to the same period last year."
"We were also pleased to announce the completion of the
DERYtelecom acquisition, the third-largest cable operator in the
province of Québec, enabling us to significantly expand our
activities in more than 200 municipalities in Québec and adding
approximately 100,000 customers to Cogeco Connexion's client base,"
concluded Mr. Jetté.
COVID-19 PANDEMIC
The COVID-19 pandemic continued to impact our day-to-day
operations. Our priority remained on ensuring the well-being of our
employees, customers and business partners. During the quarter, we
continued to experience some of the trends from past quarters.
Those primarily relate to sustained demand for our residential high
speed Internet product and a reduction of certain expenses due to a
more stable customer base (fewer connections and disconnections).
In these unusual circumstances, we have also decided to delay
certain sales and marketing expenses to the second half of the year
in both countries. Although we are pleased with the financial
results to date under the circumstances, we remain cautious in our
management of this situation as uncertainties remain on the
potential human, operating and financial impact of the pandemic.
The Corporation's results discussed herein may not be indicative of
future operational trends and financial performance.
FISCAL 2021 REVISED FINANCIAL GUIDELINES
The Corporation revised its fiscal 2021 financial guidelines
giving effect to the impact from the acquisition of DERYtelecom
which was completed on December 14,
2020, and considering the strong fiscal 2021 first-quarter
financial results. On a constant currency basis and consolidated
basis, the Corporation expects mid to high single-digit percentage
growth in revenue and adjusted EBITDA, and low double-digit growth
in free cash flow for fiscal 2021. Capital intensity is expected to
be at approximately 20%. The acquisition of DERYtelecom is expected
to have a positive impact of approximately 3% on fiscal 2021
revenue and adjusted EBITDA.
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).
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
Analyst Conference
Call:
|
Friday, January
15, 2021 at 9:30 a.m. (Eastern 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/
|
|
|
|
The conference call
on Friday, January 15, will be followed by a live webcast of the
virtual Annual Shareholders' Meetings at 11:30 a.m. Information to
join the virtual Annual Shareholders' Meetings is available on the
Cogeco Inc. and Cogeco Communications Inc. websites. You will be
able to log into the virtual Annual Shareholders' Meetings at
https://web.lumiagm.com/494965290 starting at 10:30 a.m. on January
15, 2021. Note that the Annual Shareholders' Meetings are not
accessible via the Internet Explorer web browser.
|
FINANCIAL HIGHLIGHTS
|
|
|
|
|
|
|
|
|
Three months
ended
|
Years ended August
31,
|
November 30,
2020
|
November 30,
2019
|
Change
|
Change in
constant
currency(1)(2)
|
Foreign
exchange
impact (1)
|
(In thousands of
Canadian dollars, except percentages and per share
data)
|
$
|
$
|
%
|
%
|
$
|
Operations
|
|
|
|
|
|
Revenue
|
618,913
|
|
586,827
|
|
5.5
|
|
5.7
|
|
(1,171)
|
|
Adjusted EBITDA
(2)
|
311,093
|
|
282,105
|
|
10.3
|
|
10.5
|
|
(510)
|
|
Adjusted EBITDA
margin (2)
|
50.3
|
%
|
48.1
|
%
|
|
|
|
Integration,
restructuring and acquisition costs (3)
|
1,215
|
|
61
|
|
—
|
|
|
|
Profit for the
period
|
114,896
|
|
89,708
|
|
28.1
|
|
|
|
Profit for the period
attributable to owners of the Corporation
|
106,679
|
|
84,178
|
|
26.7
|
|
|
|
Cash
flow
|
|
|
|
|
|
Cash flows from
operating activities
|
241,725
|
|
149,192
|
|
62.0
|
|
|
|
Acquisition of
property, plant and equipment (4)
|
116,222
|
|
121,302
|
|
(4.2)
|
|
(3.9)
|
|
(391)
|
|
Free cash flow
(2)
|
140,616
|
|
102,844
|
|
36.7
|
|
36.9
|
|
(151)
|
|
Capital intensity
(2)
|
18.8
|
%
|
20.7
|
%
|
|
|
|
Financial
condition (5)
|
|
|
|
|
|
Cash and cash
equivalents
|
428,982
|
|
366,497
|
|
17.0
|
|
|
|
Total
assets
|
6,853,579
|
|
6,804,197
|
|
0.7
|
|
|
|
Indebtedness
(6)
|
3,148,868
|
|
3,179,926
|
|
(1.0)
|
|
|
|
Equity attributable
to owners of the Corporation
|
2,341,846
|
|
2,268,246
|
|
3.2
|
|
|
|
Per share data
(7)
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
|
Basic
|
2.24
|
|
1.71
|
|
31.0
|
|
|
|
Diluted
|
2.22
|
|
1.70
|
|
30.6
|
|
|
|
Dividends
|
0.64
|
|
0.58
|
|
10.3
|
|
|
|
|
|
|
|
|
|
|
|
(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,
2019, the average foreign exchange rate used for translation was
1.3223 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, including reconciliation to the most
comparable IFRS financial measures.
|
|
|
(3)
|
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, 2020, acquisition of property, plant
and equipment in constant currency amounted to $116.6
million.
|
|
|
(5)
|
At November 30,
2020 and August 31, 2020.
|
|
|
(6)
|
Indebtedness is
defined as the total of bank indebtedness and principal on
long-term debt.
|
|
|
(7)
|
Per multiple and
subordinate voting share.
|
|
|
12. NON-IFRS FINANCIAL MEASURES
This section describes non-IFRS financial measures used by
Cogeco Communications throughout this MD&A. These financial
measures are reviewed in assessing the performance of the
Corporation and used in the decision-making process with regards to
our business units. Reconciliations between "free cash flow",
"adjusted EBITDA", "adjusted EBITDA margin" and "capital intensity"
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 MD&A 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
(1)
|
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
(1):
- 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;
- Defined benefit
plans expense, net of contributions;
deduct:
- Integration,
restructuring and acquisition costs;
- Financial expense
(2);
- Current income
taxes;
- Acquisition of
property, plant and equipment (3); 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 (3)
divided
by:
- Revenue
|
No comparable
IFRS financial
measure
|
|
|
|
|
|
|
(1)
|
During the second
quarter of fiscal 2020, the Corporation modified the calculation
method of its free cash flow in order to reflect how the
Corporation analyzes and makes projections of its free cash flow.
This modification has no impact on the result under the current and
former calculation, and therefore free cash flow for the comparable
periods were not affected by this change.
|
(2)
|
Excludes the non-cash
gain on debt modification.
|
(3)
|
Excludes the
acquisition of right-of-use assets and the purchases of spectrum
licenses.
|
12.1 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,
2020
|
|
November 30,
2019
|
(In thousands of
Canadian dollars, except percentages)
|
$
|
|
$
|
Profit for the
period
|
114,896
|
|
|
89,708
|
|
Income
taxes
|
35,522
|
|
|
29,931
|
|
Financial
expense
|
35,210
|
|
|
39,270
|
|
Depreciation and
amortization
|
124,250
|
|
|
123,135
|
|
Integration,
restructuring and acquisition costs
|
1,215
|
|
|
61
|
|
Adjusted
EBITDA
|
311,093
|
|
|
282,105
|
|
Revenue
|
618,913
|
|
|
586,827
|
|
Adjusted EBITDA
margin
|
50.3
|
%
|
|
48.1
|
%
|
|
|
|
|
12.2 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,
2020
|
|
November 30,
2019
|
(In thousands of
Canadian dollars)
|
$
|
|
$
|
Cash flows from
operating activities
|
241,725
|
|
|
149,192
|
|
Amortization of
deferred transaction costs and discounts on long-term
debt
|
2,278
|
|
|
2,537
|
|
Changes in non-cash
operating activities
|
5,362
|
|
|
81,213
|
|
Income taxes
paid
|
41,781
|
|
|
16,152
|
|
Current income
taxes
|
(19,862)
|
|
|
(23,597)
|
|
Financial expense
paid
|
21,852
|
|
|
39,115
|
|
Financial
expense
|
(35,210)
|
|
|
(39,270)
|
|
Acquisition of
property, plant and equipment
|
(116,222)
|
|
|
(121,302)
|
|
Repayment of lease
liabilities
|
(1,088)
|
|
|
(1,196)
|
|
Free cash
flow
|
140,616
|
|
|
102,844
|
|
12.3 CAPITAL INTENSITY RECONCILIATION
The calculation of capital intensity is as follows:
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
November
30,
2020
|
|
November 30,
2019
|
(In thousands of
Canadian dollars, except percentages)
|
$
|
|
$
|
Acquisition of
property, plant and equipment
|
116,222
|
|
|
121,302
|
|
Revenue
|
618,913
|
|
|
586,827
|
|
Capital
intensity
|
18.8
|
%
|
|
20.7
|
%
|
SOURCE Cogeco Communications Inc.