Market Overview

Cogeco Communications Inc. Releases Its Results for the Fourth Quarter of Fiscal 2016 and Increases Its Dividend

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MONTREAL, QUEBEC--(Marketwired - Nov. 2, 2016) - Today, Cogeco Communications Inc. (TSX:CCA) ("Cogeco Communications" or the "Corporation") announced its financial results for the fourth quarter ended August 31, 2016, in accordance with International Financial Reporting Standards ("IFRS").

For the fourth quarter of fiscal 2016:



-- Revenue increased by $23.6 million, or 4.5%, to reach $544.1 million
mainly driven by growths of 19.3% in the American broadband services
segment and of 1.4% in the Canadian broadband services segment, partly
offset by a decrease of 6.9% in the Business information and
communications technology ("Business ICT") services segment.

-- American broadband services revenue increased primarily as a result
of the acquisition in the fourth quarter of fiscal 2015 of MetroCast
Communications of Connecticut, LLC (the "Connecticut system"),
organic growth through primary service units ("PSU")(2) progression
in the residential and commercial sectors as well as rate increases;

-- Canadian broadband services revenue increased as a result of rate
increases implemented in February 2016 and the continued growth in
the business sector as well as non-recurring revenue of $1.7 million
in the quarter, partly offset by a decline in video and telephony
customers at August 31, 2016 compared to August 31, 2015 due to the
competitive environment and service category maturity combined with
the impact of the implementation of flexible video packages launched
on March 1, 2016;

-- Business ICT services revenue decreased primarily as a result of
competitive pricing pressures on the hosting and network
connectivity services, transition out of unprofitable services as
well as the depreciation of the British Pound currency against the
Canadian dollar compared to the same period of last year;

-- Adjusted EBITDA increased by $7.2 million, or 3.0%, to reach $247.8
million compared to $240.6 million in the same period of fiscal 2015
mainly as a result of the following:

-- Higher adjusted EBITDA in the American broadband services resulting
from the acquisition of the Connecticut system and organic growth;

-- Higher adjusted EBITDA in the Canadian broadband services resulting
mainly from an increase in revenue and the favorable impact of $3
million in non-recurring items in fiscal 2016 compared to the
unfavorable impact of $3.4 million in non-recurring items in fiscal
2015; partly offset by

-- Lower adjusted EBITDA in the Business ICT services resulting from a
decrease in revenue and additional costs related to the
commissioning of pods 1 and 2 at the Kirkland data centre as well as
the depreciation of the British Pound currency against the Canadian
dollar, partly offset by cost reduction initiatives as a result of
the operational, financial and organizational restructuring
completed in fiscal 2016; and

-- Higher management fees of $4.6 million paid to Cogeco Inc.
("Cogeco") during the fourth quarter of fiscal 2016 under the
Amended and Restated Management Services Agreement which became
effective on September 1, 2015. The management fees are now payable
on a monthly basis. In the previous fiscal year, management fees
were fully paid in the first quarter;

-- Operating margin(1) decreased to 45.5% from 46.2% in the fourth quarter
of fiscal 2016, with operating margins of 52.8% in the Canadian
broadband services, 42.4% in the American broadband services and 29.7%
in the Business ICT services segments. The decrease for the quarter
resulted mainly from higher management fees paid to Cogeco during the
fourth quarter of the year under the Amended and Restated Management
Services Agreement combined with lower margin in the Business ICT
services segment, partly offset by higher margins in the Canadian
broadband services and American broadband services segments;

-- Profit for the period amounted to $74.6 million, or $1.52 per share,
compared to a profit for the period of $78.0 million, or $1.59 per share
in the comparable period of fiscal 2015, a decrease of $3.4 million. The
decline is mainly due to the $27.4 million recognized in fiscal 2015
resulting from the settlement of a claim with a supplier, which is
partly offset in fiscal 2016 by the improvement of adjusted EBITDA
combined with the reduction in integration, restructuring and
acquisition costs;

-- Free cash flow increased by $9.5 million, or 13.3%, to reach $81.6
million compared to $72.0 million for the same period of the prior year
as a result of the improvement of adjusted EBITDA combined with
decreases in the acquisitions of property, plant and equipment,
intangible and other assets, integration, restructuring and acquisition
costs and in current income taxes, partly offset by the increase in
claims and litigations as a result of an expense in the current year
compared to a gain in the same period of the prior year;

-- Cash flow from operating activities decreased by $9.7 million, or 3.6%,
to reach $261.6 million compared to $271.3 million for fiscal 2015
fourth-quarter. The decrease for the quarter is mostly attributable to
the increase in claims and litigations as a result of an expense in the
current year compared to a gain in the same period of the prior year,
partly offset by the improvement in adjusted EBITDA, the increase in
changes in non-cash operating activities primarily due to changes in
working capital and the decrease in integration, restructuring and
acquisition costs;

-- A quarterly eligible dividend of $0.39 per share was paid to the holders
of subordinate and multiple voting shares, representing an increase of
$0.04 per share, or 11.4%, compared to an eligible dividend of $0.35 per
share paid in the fourth quarter of fiscal 2015; and

-- At its November 2, 2016 meeting, the Board of Directors of Cogeco
Communications declared a quarterly eligible dividend of $0.43, an
increase of 10.3%, compared to the $0.39 per share paid in the fourth
quarter of fiscal 2016;



For the fiscal year ended August 31, 2016:



-- Revenue increased by $132.8 million, or 6.5%, to reach $2.18 billion
mainly driven by growth of 29.7% in the American broadband services
segment with stable revenue in the Canadian broadband services, partly
offset by a decrease of 3.9% in the Business ICT services segments.

-- American broadband services revenue increased primarily as a result
of the acquisition in the fourth quarter of fiscal 2015 of the
Connecticut system, the organic growth through PSU progression in
the residential and commercial sectors, rates increases and the
favorable foreign exchange rates compared to the prior year;

-- Canadian broadband services revenue was stable as a result of rate
increases implemented in February 2016 and the continued growth in
the business sector, partly offset by a decline in video and
telephony customers at August 31, 2016 compared to August 31, 2015
due to the competitive environment and service category maturity
combined with the impact of the implementation of flexible video
packages launched on March 1, 2016;

-- Business ICT services revenue decreased due to competitive pricing
pressures on the hosting and network connectivity services as well
as a transition out of unprofitable services, partly offset by
favorable foreign exchange rates compared to the prior year;

-- Adjusted EBITDA increased by $53.0 million, or 5.7%, to reach $983.4
million compared to $930.5 million in fiscal 2015 mainly as a result of
the following:

-- Higher adjusted EBITDA in the American broadband services resulting
from organic growth, favorable foreign exchange rates compared to
the the prior year and the acquisition of the Connecticut system;

-- Higher adjusted EBITDA in the Canadian broadband services resulting
from stable revenue combined with a decline in operating expenses
partly resulting from favorable non-recurring items of $3 million in
fiscal 2016 compared to unfavorable non-recurring items of $3.4
million in fiscal 2015; partly offset by

-- Lower adjusted EBITDA in the Business ICT services resulting from a
decrease in revenue, partly offset by cost reduction initiatives as
a result of the operational, financial and organizational
restructuring completed in fiscal 2016 combined with favorable
foreign exchange rates compared to the prior year;

-- Operating margin slightly decreased to 45.2% from 45.5% for the year
ended August 31, 2016, with operating margins of 52.0% in the Canadian
broadband services, 42.7% in the American broadband services and 32.6%
in the Business ICT services segments. The decrease resulted mainly from
higher management fees paid to Cogeco and a lower margin in the Business
ICT services segment, partly offset by a stable margin in the American
broadband services segment and a higher margin in the Canadian broadband
services segment;

-- Loss for the year amounted to $189.6 million, or $3.87 per share,
compared to a profit of $257.8 million, or $5.27 per share in fiscal
2015, a decrease of $447.4 million, resulting mainly from the non-cash
pre-tax impairment of goodwill and intangible assets of $450 million
which occurred in the Business ICT services segment. The remaining
variation is explained by the improvement of adjusted EBITDA and the
decreases in integration, restructuring and acquisition costs, financial
expense and income taxes, partly offset by the increases in depreciation
and amortization and in claims and litigations as a result of an expense
in the current year compared to a gain in the prior year;

-- Free cash flow decreased by $5.0 million, or 1.7%, to reach $281.0
million compared to $286.0 million for the prior year resulting from the
increases in the acquisitions of property, plant and equipment,
intangible and other assets and in claims and litigations as a result of
an expense in the current year compared to a gain in the prior year,
partly offset by the improvement of adjusted EBITDA and the decrease in
financial expense;

-- Cash flow from operating activities reached $745.2 million compared to
$688.9 million, an increase of $56.2 million, or 8.2%, compared to
fiscal 2015 mainly due to the improvement in adjusted EBITDA combined
with an increase in changes in non-cash operating activities primarily
due to changes in working capital and a decrease in integration,
restructuring and acquisition costs, partly offset by the increases in
income taxes paid, claims and litigations as a result of an expense in
the current year compared to a gain in the prior year and financial
expense paid; and

-- Dividends payments in fiscal 2016 totaled $1.56 per share compared to
$1.40 per share in fiscal 2015.


(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 the MD&A.
(2) Represents the sum of video, Internet and telephony service customers.



"As we close our fiscal year 2016, we are generally satisfied with our results for the fourth quarter," declared Louis Audet, President and Chief Executive Officer of Cogeco Communications Inc. "Our Canadian broadband services subsidiary, Cogeco Connexion, continues to perform well in a highly competitive and evolving market. Results for the quarter are in line with expectations, demonstrating our capacity to grow, while maintaining rigorous cost control discipline."

"Our American broadband services subsidiary, Atlantic Broadband, has continued to report steady growth, including an increase in primary service units, confirming strong organic growth, and the solid performance of our newly acquired Connecticut system, which recently launched its Gigabit Internet service," added M. Audet.

"At Cogeco Peer 1, our Business ICT services subsidiary, we have been working to grow our client-base through an enhanced go- to-market strategy, always supported by exceptional customer service," stated Mr. Audet. "With a solid new senior leadership team now in place, we have been focused on bringing more relevant solutions to market, redefining our product portfolio - collaborating with partners such as Microsoft Azure - to ensure we continue to meet and exceed the needs of our customers. We expect these strategies will lead to growth in future years."

Fiscal 2017 Financial Guidelines

Cogeco Communications revised its fiscal 2017 preliminary financial guidelines issued on July 6, 2016, to take into consideration the recent decision of the CRTC, on October 6, 2016, to reduce significantly on an interim basis the third party Internet access ("TPIA") capacity rates as well as the changing industry dynamics and the increasingly competitive environment in certain operating segments. Please consult the "Fiscal 2017 financial guidelines" section of the Corporation's 2016 Annual Report for further details.

FINANCIAL HIGHLIGHTS



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Quarters ended


August 31, August 31,
2016 2015 Change
(in thousands of dollars, except
percentages and per share data) $ $ %
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Operations
Revenue 544,056 520,419 4.5
Adjusted EBITDA(1) 247,810 240,592 3.0
Operating margin(1) 45.5% 46.2% -
Integration, restructuring and
acquisition costs 1,326 6,942 (80.9)
Claims and litigations 292 (27,431) -
Impairment of goodwill and intangible
assets - - -
Profit (loss) for the period 74,581 77,986 (4.4)
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Cash Flow
Cash flow from operating activities 261,623 271,328 (3.6)
Acquisitions of property, plant and
equipment, intangible and other assets 110,017 129,946 (15.3)
Free cash flow(1) 81,594 72,047 13.3
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Financial Condition
Cash and cash equivalents - - -
Property, plant and equipment - - -
Total assets - - -
Indebtedness(2) - - -
Shareholders' equity - - -
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Capital intensity(1) 20.2% 25.0% -
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Per Share Data(3)
Earnings (loss) per share
Basic 1.52 1.59 (4.4)
Diluted 1.52 1.58 (3.8)
Dividends 0.39 0.35 11.4
Weighted average number of multiple and
subordinate voting shares outstanding 49,111,998 48,941,618 0.3
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Years ended

August 31, August 31,
2016 2015 Change
(in thousands of dollars, except
percentages and per share data) $ $ %
----------------------------------------------------------------------------

Operations
Revenue 2,176,149 2,043,316 6.5
Adjusted EBITDA(1) 983,449 930,479 5.7
Operating margin(1) 45.2% 45.5% -
Integration, restructuring and
acquisition costs 8,802 13,950 (36.9)
Claims and litigations 10,791 (27,431) -
Impairment of goodwill and intangible
assets 450,000 - -
Profit (loss) for the period (189,628) 257,750 -
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Cash Flow
Cash flow from operating activities 745,168 688,924 8.2
Acquisitions of property, plant and
equipment, intangible and other assets 467,510 439,220 6.4
Free cash flow(1) 280,998 285,967 (1.7)
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Financial Condition
Cash and cash equivalents 62,286 163,166 (61.8)
Property, plant and equipment 1,989,720 1,985,421 0.2
Total assets 5,337,342 6,014,038 (11.3)
Indebtedness(2) 2,929,108 3,261,908 (10.2)
Shareholders' equity 1,496,142 1,758,972 (14.9)
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Capital intensity(1) 21.5% 21.5% -
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Per Share Data(3)
Earnings (loss) per share
Basic (3.87) 5.27 -
Diluted (3.87) 5.22 -
Dividends 1.56 1.40 11.4
Weighted average number of multiple and
subordinate voting shares outstanding 49,032,367 48,887,765 0.3
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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 the Management's Discussion and Analysis
("MD&A").
2 Indebtedness is defined as the aggregate of bank indebtedness,
intercompany note payable, principal on long-term debt and obligations
under derivative financial instruments.
3 Per multiple and subordinate voting share.
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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 Quebec and Ontario, and in the United States under the Atlantic Broadband name in western Pennsylvania, south Florida, Maryland/Delaware, South Carolina and eastern Connecticut. Cogeco Communications Inc. provides its residential and business customers with video, Internet and telephony services through its two-way broadband fibre networks. Through its subsidiary Cogeco Peer 1, Cogeco Communications Inc. provides its business customers with a suite of information technology services (colocation, network connectivity, hosting, cloud and managed services), through its 17 data centres, extensive FastFiber Network(R) and more than 50 points of presence in North America and Europe. Cogeco Communications Inc.'s subordinate voting shares are listed on the Toronto Stock Exchange (TSX:CCA).



Analyst Conference Thursday, November 3, 2016 at 11:00 a.m. (Eastern
Call: Daylight 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: 1 800-505-9573
International Access Number: + 1 416-204-9498
Confirmation Code: 5287515

By Internet at corpo.cogeco.com/cca/en/investors/



FOR FURTHER INFORMATION PLEASE CONTACT:
Source:
Cogeco Communications Inc.
Patrice Ouimet
Senior Vice President and Chief Financial Officer
514-764-4700


Information:
Media
Rene Guimond
Senior Vice-President, Public Affairs and Communications
514-764-4700

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