Cogeco Inc. · TSX:CGO
Cogeco — Q3 2024 Earnings Presentation
35 slides from Cogeco's earnings presentation, Jul 11, 2024
Slide 1: Investor Update
Investor Update As of July 11, 2024
Slide 2: Contents
Contents Cogeco Communications (TSX: CCA) 4 Cogeco Connexion 16 Breezeline 21 Supplementary Information 25 Cogeco (TSX: CGO) 30 Appendix 34 Customer Profile 35 2
Slide 3: Forward-Looking Statements and Presentation of Financial Information
Investor Update Forward-Looking Statements and Presentation of Financial Information Forward-looking statements Presentation of financial information Certain statements contained in this presentation may constitute forward-looking information within This presentation also includes non-IFRS and other
Slide 4: Cogeco Communications TSX: CCA
Cogeco Communications TSX: CCA 4
Slide 5: Cogeco Communications Investment Highlights
Cogeco Communications Overview Investment Highlights Growing competitive force in the North American telecom sector • Fibre-powered network delivers high-speed Internet, video and wireline phone services to 1.6M residential and business subscribers • Differentiated by speed, reliability, innovation,
Slide 6: Transformation: Delivering Sustainable Growth & Value for Shareholders
Cogeco Communications Overview Transformation: Delivering Sustainable Growth & Value for Shareholders Breezeline and Cogeco Connexion to become one unified North American organization • Nimbler structure positions the company on a sustainable and value creating growth trajectory • Increases competit
Slide 7: Leveraging a North American Platform
Cogeco Communications Overview Leveraging a North American Platform High-quality product offering Revenue Internet Service Subscribers • Internet packages of up to 1 Gbps $M As of May 31, 2024 for residential customers and 10 000’s Gbps for commercial customers Canada U.S. Canada • Fibre-to-the-home
Slide 8: Expanding Addressable Market
Cogeco Communications Overview Expanding Addressable Market Wireless Network Evolution & Expansion • Recent launch of wireless services in the U.S. to be followed by • Fibre-to-the-home expansions in Canada and the the commercialization of wireless services in Canada. Both U.S. resulting in 239,000
Slide 9: Strong History of Returning Capital to Shareholders
Cogeco Communications Overview Strong History of Returning Capital to Shareholders Shareholder returns enhanced through return of capital to complement growth investments Dividends per Share $4.00 F2023(1) F2024(1)(2) $3.50 $3.42 Dividend payout ratioviii 33% 39% $3.10 $3.00 $2.82 Dividend payout ra
Slide 10: Summary of December's Share Repurchase Transaction
Cogeco & Cogeco Communications Overview Summary of December’s Share Repurchase Transaction CCA Benefits: CGO Benefits: • Accretive on a free cash flow per share basis • Accretive on a free cash flow per share basis • 5% reduction in shares outstanding • Increase in net asset per share • Increase in
Slide 11: Attractive Margins & Profitability
Cogeco Communications Overview Attractive Margins & Profitability Impressive adjusted EBITDA margins due to span of operations, stable business model and operational efficiency Adjusted EBITDAi Profit $M $M (except per share) Consolidated Profit attributable to owners of Cogeco Communications Consol
Slide 12: Significant Free Cash Flow Generation
Cogeco Communications Overview Significant Free Cash Flow Generation Strong cash flow generation has enabled growth investments and return of capital to investors Free Cash Flowii Cash flows from operating activities $M $M 1,240 588(1) 1,137 582(1) 526(1) 1,019 963 487 157(2) 918 173(2) 455 113(2) 4
Slide 13: Solid Debt Profile
Cogeco Communications Overview Solid Debt Profile Strong Financial Position As of May 31, 2024 • Net indebtedness to adjusted EBITDA ratiovi of 3.5x • Available liquidityvii of $700M Cogeco Communications: Senior Secured Debt Rating • Cash and cash equivalents of $54M BBB- Q3 F2024 Debt Statistics •
Slide 14: F2024 Financial Guidelines
Cogeco Communications Overview F2024 Financial Guidelines In millions of Canadian dollars, except Fiscal Fiscal 2024 percentages 2023 Projections Actual (constant currency)iv(1) Revenue 2,984 Stable Adjusted EBITDAi 1,421 Stable Net capital expendituresiii 700 $700 to $775 Net capital expenditures i
Slide 15: Recent Developments
Cogeco & Cogeco Communications Overview Recent Developments Cogeco Combines its U.S. and Canadian Telecommunications Teams – May 29th, 2024 • New operating model to optimize our focus on customer experience and operational excellence, and to power future growth • Enables centers of expertise in key
Slide 16: Cogeco Connexion
(C; coceco CONNEXION
Slide 17: Cogeco Connexion's Broadband Network
Cogeco Connexion Cogeco Connexion’s Broadband Network Serving 600+ communities from Windsor to Gaspé Through its digital oxio brand, operates in majority of Canadian provinces 17
Slide 18: Cogeco Connexion Highlights
Cogeco Connexion Highlights Strong financial profile Growth Opportunity • Strong adjusted EBITDAi and margini with • Network expansion projects, including those in solid cash flow generation collaboration with governments, to expand connectivity in underserved and unserved areas • Historic full-year
Slide 19: Financial Results Overview
Cogeco Connexion Financial Results Overview Strong growth and industry leading adjusted EBITDA margini, with capital invested into acquisitions and fibre-to-the-home network expansion to drive future growth Adj. EBITDAi & Adj. EBITDA Net CapExiii & Capital Revenue Margini Intensityv $M $M $M Increas
Slide 20: Wireless Spectrum Coverage to Enable MVNO Framework
Cogeco Connexion Wireless Spectrum Coverage to Enable MVNO Framework 100% broadband footprint covered by wireless spectrum for upcoming launch of mobility services 92% share of spectrum powered by 5G-optimized 3500 & 3800 MHz $588 million in spectrum acquired to date 20
Slide 21: Breezeline
a breezeline™ «a Cogeco company
Slide 22: Breezeline's Broadband Network
Breezeline Breezeline’s Broadband Network Serving 500+ communities in 13 states in the U.S. 22
Slide 23: Breezeline Highlights
Breezeline Highlights Strong financial profile Growth opportunity • Strong adjusted EBITDA margini with solid free • Extending fibre services into New Hampshire, cash flowii generation Massachusetts and West Virginia communities not • Growing revenue per user as our Broadband First previously served
Slide 24: Financial Results Overview
Breezeline Financial Results Overview Internet-led strategy and fibre-to-the-home network expansion are contributing to revenue per user growth and a higher EBITDA margin product mix Adj. EBITDAi & Net CapExiii & Revenue Adj. EBITDA Margini Capital Intensityv $M of US dollars $M of US dollars $M of
Slide 25: Supplementary Information
Supplementary Information 25
Slide 26: Prudently Managing Leverage
Financial Overview – Cogeco Communications Prudently Managing Leverage Evolution of net indebtedness to adjusted EBITDA ratiovi Breezeline (formerly Connecticut system MetroCast Acquisition Sale Wireless Ohio broadband Wireless Share repurchase, Atlantic Broadband) & Acquisition of data spectrum & s
Slide 27: Low Cost of Capital & Spread-Out Maturities
Financial Overview – Cogeco Communications Low Cost of Capital & Spread-Out Maturities Debt Maturities Excluding credit facilities and lease liabilities As at May 31, 2024 $M May 31, Cogeco Communications Breezeline 2024 (excluding Breezeline) U.S. subsidiaries(5) Average Cost 5.6% of Debt(1) $1,766
Slide 28: Sustainable Value through Strong Sustainability Practices
Cogeco & Cogeco Communications Overview Sustainable Value through Strong Sustainability Practices Environmental Social Governance First Canadian telecommunications company with an Fostering a culture of Diversity & Inclusion (D&I) Variable executive compensation linked in part to approved near-term
Slide 29: Compensation Aligned with Economic Value Creation
Financial Overview – Cogeco Communications Compensation Aligned with Economic Value Creation (EVC)(1) Between 55% and 81% of senior executives’ INCENTIVE PROGRAMS SUMMARY FEATURES compensation is variable and at risk based Annual Bonus 60% based on the level of EVC achieved on long-term creation of
Slide 30: Cogeco TSX: CGO
Cogeco TSX: CGO 30
Slide 31: Investment Structure
Cogeco Overview Investment Structure Cogeco TSX: CGO 12.0M shares of CCA(1) 80% Voting Rights $469M 100% Voting Rights 28% Equity Market 100% Equity Capitalization(1) 7.0% Dividend Yield(2) Investment in Cogeco Cogeco Media Communications RADIO BROADCASTING TSX: CCA $617M $100M (1)(3) Investment Val
Slide 32: Cogeco Media: Strong Network of Radio Stations
Cogeco Overview Cogeco Media: Strong Network of Radio Stations Radio broadcasting network and news agency STATIONS THAT ARE RANKED AMONGST THE BEST 21 RADIO STATIONS LARGEST INDEPENDENT 4.7 MILLION INTEGRATED SALES RADIO NEWS SERVICE LISTENERS / WEEK SERVICES IN QUÉBEC IN QUÉBEC 32
Slide 33: Cogeco Media: Top Ratings
Cogeco Overview Cogeco Media: Top Ratings One of the largest radio broadcasters in Québec(1) and the most popular radio hosts in the industry ● 98.5 is the most listened to station in Canada ● RYTHME 105.7 is the #1 music station of Montréalers ● 92.5 THE BEAT is the #1 English music station in Mont
Slide 34: Appendix
APPENDIX 34
Slide 35: Subscriber Profile
Cogeco Communications Subscriber Profile May 31, 2024 COGECO CONNEXION BREEZELINE TOTAL Homes passed(1)(2) 2,089,834 1,760,012 3,849,846 Primary service units(2)(3) 1,872,290 1,049,113 2,921,403 Internet service subscribers(2) 882,992 652,330 1,535,322 Video service subscribers(2) 612,701 268,747 88