Cogeco Releases its Financial Results for the Second Quarter of Fiscal 2021

• Revenue increased by 6.9% (8.5% in constant currency⁽¹⁾) compared to the same period of the prior year to reach $653.2 million;
• Adjusted EBITDA⁽¹⁾ reached $308.4 million, an increase of 10.3% (11.8% in constant currency);
• Free cash flow⁽¹⁾ reached $140.6 million, an increase of 12.4% (12.8% in constant currency);
• Cogeco Communications announced the acceleration of high-speed Internet network expansion in Québec in collaboration with the provincial and federal governments;
• Cogeco Communications completed the acquisition of DERYtelecom, the third largest cable provider in the province of Québec; and
• A quarterly eligible dividend of $0.545 was declared.

MONTRÉAL, April 13, 2021 /CNW Telbec/ - Today, Cogeco Inc. (TSX: CGO) ("Cogeco" or the "Corporation") announced its financial results for the second quarter ended February 28, 2021, in accordance with International Financial Reporting Standards ("IFRS").

OPERATING RESULTS

For the second quarter of fiscal 2021:

• Revenue increased by 6.9% to reach $653.2 million. On a constant currency basis, revenue increased by 8.5%, mainly explained as follows:
• Canadian broadband services revenue increased by 10.1% as a result of the DERYtelecom acquisition completed on December 14, 2020, the cumulative effect of sustained demand for residential high speed Internet since the beginning of the pandemic, and rate increases implemented for certain services, partly offset by a decline in video service customers. Excluding the acquisition of DERYtelecom, revenue in constant currency increased by 2.9%; and
• American broadband services revenue increased by 9.5% in constant currency resulting mainly from a higher Internet service customer base, rate increases implemented for certain services and the impact of the Thames Valley Communications acquisition completed on March 10, 2020. Excluding the acquisition of Thames Valley Communications, revenue in constant currency increased by 8.0%; partly offset by
• lower revenue in the media activities due to a decline of the radio advertising market resulting directly from the COVID-19 pandemic.

_______________________
(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 $308.4 million. On a constant currency basis, adjusted EBITDA increased by 11.8%, mainly explained as follows:
• Canadian broadband services adjusted EBITDA increased by 11.2% in constant currency mainly resulting from revenue growth and the impact of the DERYtelecom acquisition. Excluding the acquisition of DERYtelecom, adjusted EBITDA in constant currency increased by 4.7%.
• American broadband services adjusted EBITDA increased by 12.4% in constant currency mainly resulting from revenue growth and the impact of the Thames Valley Communications acquisition. Excluding the acquisition of Thames Valley Communications, adjusted EBITDA in constant currency increased by 11.0%.
• Profit for the period amounted to $110.2 million, of which $33.7 million, or $2.12 per share, was attributable to owners of the Corporation compared to $113.4 million, $35.0 million, and $2.19 per share, respectively, in the comparable period of fiscal 2020. The decrease resulted mainly from the increase in financial expense, mostly due to a $22.9 million non-cash gain on debt modification recognized during the second quarter of fiscal 2020, and higher income taxes expense, partly offset by higher adjusted EBITDA;
• Free cash flow increased by 12.4% to reach $140.6 million. On a constant currency basis, free cash flow increased by 12.8% as a result of higher adjusted EBITDA, partly offset by the increase in current income taxes;
• Cash flows from operating activities increased by 2.3% to reach $241.6 million mainly due to higher adjusted EBITDA and the decrease in income taxes paid, partly offset by the changes in non-cash operating activities primarily due to changes in working capital, combined with the increase in interest 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 April 13, 2021 meeting, the Board of Directors of Cogeco declared a quarterly eligible dividend of $0.545 per share compared to $0.475 per share in the comparable quarter of fiscal 2020.

"For the second quarter of fiscal 2021, we are pleased with Cogeco's overall performance, which includes continued growth in revenue and adjusted EBITDA," declared Philippe Jetté, President and Chief Executive Officer of Cogeco Inc.

"In our Canadian broadband segment, we have seen growth in our customer base, with many opting for a mix of services or upgrading their existing services, highlighting the importance of our fixed broadband product at this time," said Mr. Jetté. "Our team at Cogeco Connexion has also been hard at work with the integration of DERYtelecom and the announcement to extend high-speed Internet access in 13 regions across Québec in partnership with the Government of Canada and the Government of Québec. The government funding support is excellent news, as we continue supporting our communities and contributing to the economic vitality of regional areas."

"At Atlantic Broadband, customer growth has been strong, underscoring our Broadband First strategy, offering best-in-class managed WiFi and transparent everyday pricing," added Mr. Jetté.

"As for Cogeco Media, we continue to maintain our financial discipline and results are as expected, in the context of the pandemic's continued impact on the advertising market. We are pleased to have the commitment of our listeners who put many of our radio stations at the top of the Numeris rankings again last quarter," continued Mr. Jetté.

"We also received important recognition during this last quarter for our continued efforts around corporate social responsibility, and environmental, social and corporate governance, with Cogeco Communications having been named among Corporate Knights' Global 100 Most Sustainable Corporations for a second year in a row, as well as having our ambitious new emission reduction targets gain approval from the Science Based Targets Initiative," 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 first half of fiscal 2021, we continued to experience some of the trends from past quarters. Those primarily relate to sustained demand for our residential high speed Internet product, due to customers spending more time at home for work, online education and entertainment purposes, and a reduction of certain expenses due to a more stable customer base (fewer connections and disconnections) and not being able to use all usual sales channels. 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. 

We expect that the current "work-from-home" trend will continue after the COVID-19 pandemic, where more workers will work from home than pre-pandemic on a partial or full-time basis.

As for our radio operations, they were negatively impacted by the pandemic with a revenue decline of 18% in the first half compared to the previous year, due to certain segments of the retail industry reducing or cutting their advertising activities. As it did in prior quarters, Cogeco Media managed its operating expenses tightly while maintaining quality programming.

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.

ABOUT COGECO
Cogeco Inc. is a holding corporation which operates in the communications and media sectors. Its Cogeco Communications Inc. subsidiary provides residential and business customers with Internet, video and telephony services through its two-way broadband fibre networks, operating in Québec and Ontario, Canada, under the Cogeco Connexion name, and in the United States under the Atlantic Broadband brand (in 11 states along the East Coast, from Maine to Florida). Its Cogeco Media subsidiary owns and operates 23 radio stations with complementary radio formats and extensive coverage serving a wide range of audiences mainly across the province of Québec, as well as Cogeco News, a news agency. Cogeco's subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CGO). The subordinate voting shares of Cogeco Communications Inc. are also listed on the Toronto Stock Exchange (TSX: CCA).

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:	Wednesday, April 14, 2021 at 11:00 a.m. (Eastern Daylight 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.

FINANCIAL HIGHLIGHTS 

	Three months ended					Six months ended
	February 28, 2021	February 29, 2020	Change	Change in constant currency ^(1)(2)	Foreign exchange impact ^(1)	February 28, 2021	February 29, 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	653,156	610,797	6.9	8.5	(9,597)	1,299,511	1,229,266	5.7	6.6	(10,768)
Adjusted EBITDA ^(2)	308,414	279,609	10.3	11.8	(4,192)	629,504	570,118	10.4	11.2	(4,702)
Integration, restructuring and acquisition costs ^(3)	2,330	5,458	(57.3)			3,511	5,538	(36.6)
Profit for the period	110,156	113,384	(2.8)			230,603	207,600	11.1
Profit for the period attributable to owners of the Corporation	33,737	34,975	(3.5)			74,226	66,259	12.0
Cash flow
Cash flows from operating activities	241,619	236,117	2.3			477,151	387,188	23.2
Acquisition of property, plant and equipment ^(4)	115,748	111,222	4.1	6.5	(2,703)	232,239	233,252	(0.4)	0.9	(3,094)
Free cash flow ^(2)	140,555	125,067	12.4	12.8	(533)	288,791	233,960	23.4	23.7	(684)
Financial condition ^(5)
Cash and cash equivalents						267,745	406,113	(34.1)
Total assets						7,203,055	7,024,696	2.5
Indebtedness ^(6)						3,331,872	3,290,354	1.3
Equity attributable to owners of the Corporation						803,597	761,501	5.5
Per share data ^(7)
Earnings per share
Basic	2.12	2.19	(3.2)			4.67	4.15	12.5
Diluted	2.11	2.18	(3.2)			4.64	4.12	12.6
Dividends	0.545	0.475	14.7			1.09	0.95	14.7

(1)	Key performance indicators presented on a constant currency basis are 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. For the three and six-month periods ended February 29, 2020, the average foreign exchange rates used for translation were 1.3182 USD/CDN and 1.3203 USD/CDN, respectively.
(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 and six-month periods ended February 28, 2021, integration, restructuring and acquisition costs resulted mostly from the acquisition and integration of DERYtelecom, which was completed on December 14, 2020. For the three and six-month periods ended February 29, 2020, integration, restructuring and acquisition costs resulted primarily from organizational changes initiated across the Corporation resulting in cost optimization, as well as the acquisition and integration of Thames Valley Communications, which was completed on March 10, 2020.
(4)	For the three and six-month periods ended February 28, 2021, acquisition of property, plant and equipment in constant currency amounted to $118.5 million and $235.3 million, respectively.
(5)	At February 28, 2021 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.

SOURCE Cogeco Inc.

Related Links

http://www.cogeco.ca