Cogeco Communications Inc. · TSX:CCA
Cogeco Communications — Investor Presentation (April 2020)
33 slides from Cogeco Communications's investor presentation, Apr 7, 2020
Slide 1: Investor Update
Investor Update As of April 7, 2020 TSX: CGO | TSX: CCA
Slide 2: Contents
Contents Overview 5 Cogeco Communications 10 Financial Results 19 Cogeco 27 Appendices 31 Customer Profile 32 Acronyms 33 2
Slide 3: Forward-looking statement and Presentation of financial information
Forward-looking statement and Presentation of financial information Certain statements contained in this presentation may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to our future outlook and anticipated events, business, opera
Slide 4: Non-IFRS measures
Non-IFRS measures The following non-IFRS measures are used in the presentation and are described on page 16 and 27 of Cogeco Communications’ FY2020 second quarter shareholders’ report Free cash flow(1) adjusted EBITDA add amortization of deferred transaction costs and discounts on long-term debt sha
Slide 5: Cogeco generates over $2.4 B in revenue
Cogeco generates over $2.4 B in revenue Gestion Audem AUDET FAMILY 10.0% Equity 68.9% Voting Rights Cogeco TSX:CGO $2.46 B LTM(1) Revenue Market Capitalization $1.3 B (2) 82.6% Voting Rights 100% Voting Rights 32.2% Equity 100% Equity Cogeco Communications Cogeco Media TSX:CCA 2 ND LARGEST CABLE OPE
Slide 6: Managing the COVID-19 Crisis
Managing the COVID-19 Crisis • Cogeco’s telecommunications, entertainment & radio broadcasting are essential services in full operation • Cogeco has set-up a formal governance structure to manage the COVID-19 crisis which includes a two- tier approach Executive Crisis Management Committee: monitor
Slide 7: Investment highlights: Long-term profitable growth
Investment highlights: Long-term profitable growth STRONG CANADIAN CABLE OPERATIONS • Fastest Internet speeds in a large portion of our footprint • Superior locally-based customer support • Industry leading adjusted EBITDA margin • Strong free cash flow generation SUCCESSFUL U.S. CABLE EXPANSION • S
Slide 8: Six Strategic priorities to enable our growth
Six Strategic priorities to enable our growth 8
Slide 9: Corporate social responsibility (CSR) at Cogeco
Corporate social responsibility (“CSR”) at Cogeco • CSR program overseen by a Steering Committee composed of executives from all business units • Action plans have been developed to integrate the CSR pillars in each business plan • Key performance indicators relative to environmental, social and gov
Slide 10: Cogeco Communications
Cogeco Communications (,; coceco COMMUNICATIONS
Slide 11: Cogeco Communications overview
Cogeco Communications overview Cogeco Connexion STRONG REVENUE GROWTH THROUGH U.S. CABLE • Covers a footprint of 1,771,000 households and EXPANSION REPRESENTING 150,000 businesses which provides ample room to 45% OF COMBINED REVENUE grow the Internet and business customer base • Offers services to 7
Slide 12: Capital allocation priorities
Capital allocation priorities VALUE CREATION 1. PURSUE ACQUISITIONS OF BROADBAND BUSINESSES 2. ENHANCE AND EXTEND BROADBAND NETWORKS TO OFFER MORE EVOLVED SERVICES • Launch an IPTV service in Canada • Pursue the Florida expansion • Extend coverage of the 1 Gbps Internet service • Extend network in u
Slide 13: Cogeco Connexion: Second largest cable operator in Ontario and Quebec
Cogeco Connexion: Second largest cable operator in Ontario and Quebec LEGEND Fibre network Cities served Serving 427 communities 13
Slide 14: Cogeco Connexion's highlights
Cogeco Connexion’s highlights STRATEGIC RESIDENTIAL POSITIONING • Leveraging superior Internet speeds in a large portion of the footprint 120 Mbps offered in virtually all of the footprint 1 Gbps Internet service offered in over 65% of the footprint Offering TiVo’s advanced multiplatform video
Slide 15: Cogeco Connexion FY2020 priorities
Cogeco Connexion FY2020 priorities 1. RESIDENTIAL: ORGANIC GROWTH THROUGH ADDED SERVICES & NETWORK EXTENSIONS • Continue to increase 1 Gbps Internet coverage and offer enhanced WiFi services and features • Launch MediaFirst’s IPTV platform: – Customizable video content and WiFi devices – Savings thr
Slide 16: Atlantic Broadband: A scale operator from Maine to Florida
Atlantic Broadband: A scale operator from Maine to Florida Serving 593 communities 16
Slide 17: Atlantic Broadband's highlights
Atlantic Broadband’s highlights ENHANCED GROWTH THROUGH PRUDENT ACQUISITIONS • Largely non-metropolitan areas with fragmented competition • Completed the acquisition of Thames Valley Communications for COMPETITION SUMMARY US$50 M on March 10, 2020: EXCLUDING FLORIDA(1) − Adjacent broadband systems i
Slide 18: Atlantic Broadband: FY2020 priorities
Atlantic Broadband: FY2020 priorities 1. DRIVE CUSTOMER GROWTH THROUGH INTERNET SUPERIORITY AND BUNDLE SALES • Leverage newly launched 1 Gbps Internet speeds across footprint • Offer Enhanced WiFi as an integral part of the Internet experience • Continue to build out new TiVo features, including use
Slide 19: Financial Results
Financial Results (,; coceco COMMUNICATIONS
Slide 20: Revenue and adjusted EBITDA growth
Revenue and adjusted EBITDA growth • FY2019 revenue and adjusted EBITDA grew by 6.8% and 8.5%, respectively, in constant currency(1) : includes organic and acquisition growth • Profit for the year from continuing operations has declined due to a non-recurring $94 million income tax reduction recorde
Slide 21: Strong free cash flow generation
Strong free cash flow generation • FY2019 free cash flow has grown by 50.0%, in constant currency(1), mainly as a result of Adjusted EBITDA growth and a decline in financial expense and current income taxes(2) Cash flow from Capex & Free cash flow(4) Operating activities capital intensity $M $M $M,
Slide 22: Compensation aligned with economic value creation (EVC)
Compensation aligned with economic value creation (“EVC”) • Between 50% and 75% of senior executives’ compensation is variable and at risk based on long-term creation of Economic Value – Reasonable use of equity compensation to minimize dilution – Stock ownership requirements for senior executives –
Slide 23: Sustained dividend growth
Sustained dividend growth Annual dividend declared per share CAGR 10% $2.32(1) $2.10 $1.90 $1.72 $1.56 FY2016 FY2017 FY2018 FY2019 FY2020 • Sustained free cash flow generation has allowed us to pursue growth objectives while returning capital to shareholders (1) Annualized quarterly dividend of $0.5
Slide 24: History of de-leveraging following acquisitions
History of de-leveraging following acquisitions Evolution of net leverage(1) ratios Liquidity: $1,450 M Atlantic Connecticut MetroCast Cogeco Broadband & system Acquisition February 29, 2020 Peer 1 Peer 1 Hosting Acquisition Acquisition Sale(4) Revolving Credit 951 Facilities(4) 3.5(3) 3.4(3) Amount
Slide 25: Low cost of capital and manageable maturities
Low cost of capital and manageable maturities August August 2018 2019 Average Cost of Debt(1) 4.4% 4.4% Average Life 5.7Y 4.9Y Cogeco Communications Atlantic Broadband Excluding credit facility(2) Excluding credit facility(2) $M $M $2,093(3)(4) $322(3) $300 $200 $200 $201(3) FY2020 FY2021 FY2022 FY2
Slide 26: USD debt hedges U.S. operations
USD debt hedges U.S. operations • Cogeco Communications is mostly naturally hedged from a free cash flow perspective as USD adjusted EBITDA exposure is mainly offset by interest expense on U.S. denominated debt and U.S. denominated capex • The following table(1) highlights, in Canadian dollars, the
Slide 27: Cogeco
Cogeco (; coceco
Slide 28: Cogeco public market value of equity
Cogeco Cogeco TSX:CGO PUBLIC MARKET VALUE OF EQUITY $1,341 M (16.0M shares at $83.60 (1)) 15.7M shares of CCA Investment in Cogeco Communications TSX:CCA Cogeco Media RADIO BROADCASTING $1,477 M $92.12 per CGO share(1)(2) 28 (1) As of April 3, 2020 (2) Based on a CCA share price of $94.15 multiplied
Slide 29: Cogeco Media: Strong network of radio stations
Cogeco Media: Strong network of radio stations 29
Slide 30: Cogeco Media: Most important radio broadcaster in Quebec
Cogeco Media: Most important radio broadcaster in Quebec(1) Broad radio coverage • 23 radio stations covering most demographics • No. 1 in commercial share of hours tuned in Montreal and in Quebec City Radio is an important media for Quebecers • 86% tune in every week • Time spent listening of 17.3
Slide 31: Appendices
Appendices (,; coceco COMMUNICATIONS
Slide 32: Customer profile
Customer profile Cogeco Atlantic February 29, 2020 Connexion Broadband Total Homes passed 1,771,378 882,780 2,654,158 Primary service units(1) 1,812,140 907,207 2,719,347 Internet service customers 795,950 457,233 1,253,183 Internet penetration(2) 44.9% 51.8% 47.2% Video service customers 638,833 30
Slide 33: Acronyms
Acronyms CAGR Compound Average Growth Rate DOCSIS Data Over Cable Service Interface Specifications FTTH Fibre To The Home FTTN Fibre To The Node Gbps Gigabits per second HPBX Hosted Private Branch Exchange IP Internet Protocol Mbps Megabits per second HMNO Hybrid Mobile Network Operator VOD Video On
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