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

• Revenue increased by 15.3% (18.0% in constant currency ⁽¹⁾) compared to the same period of the prior year to reach $745.3 million;
• Adjusted EBITDA ⁽¹⁾ reached $354.4 million, an increase of 10.4% (12.9% in constant currency ⁽¹⁾) compared to the same period of the prior year;
• Profit for the period amounted to $119.1 million, a decrease of 1.1%;
• Free cash flow ⁽¹⁾ amounted to $135.8 million, a decrease of 8.4% (7.6% in constant currency ⁽¹⁾) compared to the same period of the prior year;
• Cash flows from operating activities increased by 26.2% to reach 297.3 million; and
• Atlantic Broadband has announced it is changing its name to Breezeline.

MONTRÉAL, Jan. 13, 2022 /CNW Telbec/ - Today, Cogeco Inc. (TSX: CGO) ("Cogeco" 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 15.3% to reach $745.3 million compared to the previous year. On a constant currency basis, revenue increased by 18.0%, 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.
  
  
• Revenue in the media activities decreased by 2.6%, mainly due to radio advertising continuing to be directly impacted by certain segments of the retail industry reducing or cutting their advertising activities in the context of the COVID-19 pandemic and the slow economic recovery for media companies.

(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 10.4% to reach $354.4 million compared to the previous year. On a constant currency basis, adjusted EBITDA increased by 12.9%, 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 restrictions.
  
  
• 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 $119.1 million, of which $38.5 million, or $2.42 per share, was attributable to owners of the Corporation compared to $120.4 million, $40.5 million, and $2.55 per share, respectively, in the comparable period of fiscal 2021. The decreases resulted mainly from higher depreciation and amortization expense, higher integration, restructuring and acquisition costs and higher financial expense, partly offset by higher adjusted EBITDA and lower income tax expense.
  
  
• Free cash flow decreased by 8.4% (7.6% in constant currency) to reach $135.8 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 26.2% to reach $297.3 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.
  
  
• 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 maintains its fiscal 2022 financial guidelines as issued on November 11, 2021.
  
  
• At its January 13, 2022 meeting, the Board of Directors of Cogeco declared a quarterly eligible dividend of $0.625 per share compared to $0.545 per share in the comparable quarter of fiscal 2021.
  
  
• On January 13, 2022, the TSX accepted Cogeco's notice of intention for a normal course issuer bid, enabling it to acquire for cancellation up to 325,000 subordinate voting shares from January 18, 2022 to January 17, 2023.
  
  
• On December 17, 2021, Cogeco amended and extended its $100 million Term Revolving Facility to February 3, 2027 and Cogeco Communications amended and extended its $750 million Term Revolving Facility to January 24, 2027. As part of the amendments, both Cogeco and Cogeco Communications have transitioned their revolving facilities into a Sustainability-linked loan ("SLL") structure, underscoring their strong leadership and dedication to sustainability and the organizations' Environmental, social and governance (ESG) goals.

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

"As for our radio business, Cogeco Media continues to face the pressure of the pandemic on the advertising market," added Mr. Jetté. "However, we continue to enjoy strong listener ratings based on the fall 2021 Numeris survey results, which confirmed the outstanding performance of all Cogeco Media radio stations, and in particular, our 98.5 station which was the most listened-to station in all of Canada."

"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.

As for our radio operations, the pandemic continues to have an impact due to restrictions imposed on portions of the customer base such as the travel industry, as well as supply chain disruptions limiting other customers' businesses, such as the automobile industry. Furthermore, listeners are spending less time commuting in their cars during the pandemic, which negatively impacts listening hours. In order to mitigate the impact on its operations, Cogeco Media continues to manage its operating expenses tightly, as it did since the beginning of the pandemic, while maintaining quality programming.

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 Related Financial 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	745,258	646,355	15.3	18.0		(17,686)
Adjusted EBITDA ^(2)	354,394	321,090	10.4	12.9		(8,032)
Integration, restructuring and acquisition costs ^(3)	18,635	1,181	—
Profit for the period	119,139	120,447	(1.1)
Profit for the period attributable to owners of the Corporation	38,523	40,489	(4.9)
Cash flow
Cash flows from operating activities	297,342	235,532	26.2
Acquisition of property, plant and equipment ^(4)	141,509	116,491	21.5	25.3		(4,452)
Free cash flow ^(2)	135,820	148,236	(8.4)	(7.6)		(1,191)
Financial condition ^(5)
Cash and cash equivalents	409,818	368,434	11.2
Total assets	9,113,437	7,536,313	20.9
Indebtedness ^(2) (6)	4,806,548	3,377,115	42.3
Equity attributable to owners of the Corporation	839,347	816,658	2.8
Per share data ^(7)
Earnings per share
Basic	2.42	2.55	(5.1)
Diluted	2.41	2.53	(4.7)
Dividends	0.625	0.545	14.7

(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 $146.0 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 Inc.'s ("Cogeco" 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 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 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. Moreover, the Corporation's radio operations are significantly exposed to advertising budgets from the retail industry, which can fluctuate due to changing economic conditions. 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 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's 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 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", "free cash flow", ''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. In addition, this press release refers to the adjusted EBITDA margin and capital intensity of the Canadian broadband services and the American broadband services segments, key performance indicators used by Cogeco Communications' management and investors, respectively, to value its performance and to assess its investment in capital expenditures in order to support a certain level of revenue. These financial measures do not have standard definitions 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 is a key measure commonly reported and used in the telecommunications industry, as it allows comparisons between companies that have different capital structures and is a more current measure since it excludes 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's 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's 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 Cogeco Communication'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 the Corporation's 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 RECONCILIATION 

The reconciliation of adjusted EBITDA to the most comparable IFRS financial measure is as follows:

	Three months ended November 30,
	2021	2020
(In thousands of Canadian dollars)	$	$
Profit for the period	119,139	120,447
Income taxes	18,383	37,639
Financial expense	45,608	36,279
Depreciation and amortization	152,629	125,544
Integration, restructuring and acquisition costs	18,635	1,181
Adjusted EBITDA	354,394	321,090

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	297,342	235,532
Amortization of deferred transaction costs and discounts on long-term debt	2,942	2,297
Changes in other non-cash operating activities	(19,729)	19,262
Income taxes paid	26,336	42,188
Current income taxes	(15,549)	(21,313)
Interest paid	32,872	24,462
Financial expense	(45,608)	(36,279)
Acquisition of property, plant and equipment	(141,509)	(116,491)
Repayment of lease liabilities	(1,277)	(1,422)
Free cash flow	135,820	148,236

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	4,731,346	3,329,910
Discounts, transaction costs and other	60,764	42,745
Bank indebtedness	14,438	4,460
Indebtedness	4,806,548	3,377,115
Cash and cash equivalents	(409,818)	(368,434)
Net indebtedness	4,396,730	3,008,681

ABOUT COGECO INC.

Rooted in the communities it serves, Cogeco Inc. (TSX: CGO) is a growing competitive force in the North American telecommunications and media sectors with a legacy of over 60 years. Through its business units Cogeco Connexion and Breezeline (formerly Atlantic Broadband), Cogeco 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. Through Cogeco Media, it owns and operates 23 radio stations as well as a news agency in Quebec. To learn more about Cogeco's 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 Inc.
Tel.: [phone]
[email protected]

Media
Marie-Hélène Labrie
Senior Vice President and Chief Public Affairs, Communications and Strategy Officer
Cogeco Inc.
Tel.: [phone]
[email protected]

Conference Call:	Friday, January 14, 2022 at 9:30 a.m. (Eastern Time)
	A live audio webcast will be available on Cogeco's website at https://corpo.cogeco.com/cgo/en/investors/investor-relations/. The webcast will be available on Cogeco's 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 Inc.