Mr. Frederic Perron reports

COGECO RELEASES ITS FINANCIAL RESULTS FOR THE SECOND QUARTER OF FISCAL 2024

Cogeco Inc. has released its financial results for the second quarter ended Feb. 29, 2024.

"During the quarter, we continued to execute on multiple initiatives, including pursuing several fibre-to-the-home network expansion projects," stated Frederic Perron, president and chief executive officer of Cogeco. "We also leveraged the technological enhancements we have made to our networks to drive growth in our Internet customer base, notably those subscribing to higher speeds. On the wireless front, we recently announced the launch of Breezeline Mobile, using a capital-light MVNO approach, and are making progress with our wireless preparations in Canada. At Cogeco Media, radio advertising sales continued to build momentum again this quarter. Meanwhile, our strong listener engagement and intense focus on providing digital solutions and multiplatform audio content also helped drive meaningful revenue growth.

"While we operate in a challenging environment, value creation continues to be at the forefront of our strategy and culture. Our plans will therefore place a strong focus on driving profitable growth through digitization and operational effectiveness," continued Mr. Perron. "I look forward to leading Cogeco on its ambitious path of delivering high-quality and cost-effective telecommunications and media services to our customers across both of the countries we serve. I want to thank all of our customers, listeners and stakeholders for their support in this journey," concluded Mr. Perron.

Operating results

For the second quarter of fiscal 2024 ended on Feb. 29, 2024:

• Revenue decreased by 0.7 per cent to $751.9-million. On a constant currency basis, revenue decreased by 0.6 per cent due to revenue growth in the Canadian telecommunications segment being offset by a decline in the American telecommunications segment, as explained below:
  • Canadian telecommunications revenue increased by 1.4 per cent, mainly driven by the oxio acquisition completed on March 3, 2023, as well as the cumulative effect of high-speed Internet service additions over the past year.
  • American telecommunications revenue decreased by 3.1 per cent, or 2.8 per cent in constant currency, mainly due to lower video subscriptions and a lower customer base over the past year, with an increasing proportion of customers only subscribing to Internet services, partly offset by higher revenue per customer and a better product mix resulting from customers subscribing to increasingly fast Internet speeds.
  • Revenue in the media activities increased by 4.2 per cent.
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) decreased by 1.1 per cent to $347.8-million. On a constant currency basis, adjusted EBITDA decreased by 1.0 per cent, mainly due to higher corporate costs, primarily due to the timing of certain operating expenses, including in relation to its plan to offer mobile services in Canada, while adjusted EBITDA remained stable in both the Canadian and American telecommunications segments, as explained below:
  • Canadian telecommunications adjusted EBITDA remained stable mainly due to revenue growth being offset by higher sales and other operating expenses to drive and support customer growth.
  • American telecommunications adjusted EBITDA remained stable mostly due to a better product mix of higher-margin services and lower operating expenses driven by cost reduction initiatives and operating efficiencies, partially offset by a lower customer base.
• Profit for the period amounted to $93.9-million, of which $24.0-million, or $2.30 per diluted share, was attributable to owners of the corporation compared with $102.6-million, $33.8-million and $2.15 per diluted share, respectively, in the comparable period of fiscal 2023. The decreases in profit for the period and profit attributable to owners of the corporation resulted mainly from higher depreciation and amortization expense and financial expense, and lower adjusted EBITDA, partly offset by lower income tax expense and acquisition, integration, restructuring, and other costs:
  • Adjusted profit attributable to owners of the corporation was $24.3-million, or $2.33 per diluted share, compared with $35.6-million, or $2.27 per diluted share, last year.
• Net capital expenditures were $171.8-million, an increase of 9.5 per cent, compared with $156.8-million in the same period of the prior year. In constant currency, net capital expenditures were $172.4-million, an increase of 9.9 per cent, compared with last year, mainly due to higher costs in relation to customer premise equipment in the Canadian telecommunications segment, partly offset by lower spending in the American telecommunications segment, mainly due to the timing of network expansion projects:
  • Excluding network expansion projects, net capital expenditures were $147.4-million, an increase of 28.6 per cent, compared with $114.6-million in the same period of the prior year. In constant currency, net capital expenditures, excluding network expansion projects, were $148.0-million, an increase of 29.1 per cent compared with last year.
  • Fibre-to-the-home network expansion projects continued in both Canada and the United States, with homes passing additions of more than 32,000 during the first six months of fiscal 2024.
• Acquisition of property, plant and equipment increased by 4.4 per cent to $181.2-million, mainly due to higher costs in the Canadian telecommunications segment, partly offset by lower spending in the American telecommunications segment.
• Free cash flow decreased by 16.5 per cent, or 16.8 per cent in constant currency, and amounted to $98.8-million, or $98.5-million in constant currency, mainly due to higher net capital expenditures. Free cash flow, excluding network expansion projects, decreased by 23.3 per cent, or 23.5 per cent in constant currency, and amounted to $123.2-million, or $122.9-million in constant currency.
• Cash flows from operating activities increased by 38.5 per cent to $286.4-million, resulting mostly from the timing of trade and other payables and trade accounts receivable, lower income taxes paid, and acquisition, integration, restructuring and other costs, offset in part by higher interest paid and lower adjusted EBITDA.
• Cogeco maintains its fiscal 2024 financial guidelines as issued on Nov. 1, 2023.
• At its April 11, 2024, meeting, the board of directors of Cogeco declared a quarterly eligible dividend of 85.4 cents per share, an increase of 16.8 per cent, compared with 73.1 cents per share in the comparable quarter of fiscal 2023.

Additional information

Additional information relating to the corporation is available on SEDAR+ and on the corporation's website.

About Cogeco Inc.

Rooted in the communities it serves, Cogeco is a growing competitive force in the North American telecommunications and media sectors, serving 1.6 million residential and business customers. Its Cogeco Communications Inc. subsidiary provides Internet, video and phone services in Canada, as well as in 13 states in the United States through its business units Cogeco Connexion and Breezeline. Through Cogeco Media, it owns and operates 21 radio stations primarily in the province of Quebec, as well as a news agency. Cogeco's subordinate voting shares are listed on the Toronto Stock Exchange (CGO). The subordinate voting shares of Cogeco Communications are also listed on the Toronto Stock Exchange (CCA).

Conference call: Friday, April 12, 2024, at 11 a.m. Eastern Daylight Time

A live audio of the analyst conference call will be available on both the investor relations and the events and presentations pages on Cogeco's website. Financial analysts will be able to listen to the live conference call and ask questions. Media representatives may attend as listeners only. A recording of the conference call will be available on Cogeco's website for a three-month period.

Please use the following dial-in number to listen to the conference call 10 minutes before the start of the conference.

Local -- Toronto:  1-289-514-5100

Toll-free -- North America:  1-800-717-1738

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