Cogeco Inc. · TSX:CGO
Cogeco — Investor Presentation (January 2022)
35 slides from Cogeco's investor presentation, Jan 13, 2022
Slide 1: Investor Update
Investor Update As of January 13, 2022 TSX: CGO | TSX: CCA
Slide 2: Contents
Contents Overview 5 Cogeco Communications 9 Breezeline (formerly Atlantic Broadband) 13 Cogeco Connexion 18 Financial Results 22 Cogeco 29 Appendices 33 Supplemental Information 34 Customer Profile 35 2
Slide 3: Forward-looking statements and Presentation of financial information
Forward-looking statements 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, oper
Slide 4: Non-IFRS financial measures
Non-IFRS financial measures The following non-IFRS financial measures are used in the presentation and do not have standard definitions prescribed by IFRS and therefore, may not be comparable to similar measures presented by other companies. These financial measures are described in sections 15 and
Slide 5: About Cogeco
About Cogeco 5
Slide 6: Cogeco overview
Cogeco overview Cogeco Communications Cogeco TSX:CGO LTM(2) Market • Unique North American Broadband Revenue $2.7 B Capitalization $1.3 B (3) platform with strong operational experience • Cogeco Connexion is the 2nd largest 84% Voting Rights 100% Voting Rights 100% Equity 34% Equity cable operator i
Slide 7: Five strategic growth pillars
Five strategic growth pillars 7
Slide 8: Delivering sustainable value through strong ESG practices
Delivering sustainable value to our stakeholders through strong ESG practices Environmental Social Governance First Canadian telecommunications Taking additional steps to foster a culture of Variable executive compensation company with an approved, Diversity & Inclusion (D&I) linked in part to ESG p
Slide 9: Cogeco Communications
(C;; COGECO — COMMUNICATIONS
Slide 10: Cogeco Communications overview
Cogeco Communications overview BREEZELINE Consolidated Revenue Segmentation(1) • Cogeco Communications entered into the U.S. market in November 2012 and the segment has grown through 5 other acquisitions since then • Covers a footprint of 1.6 million(2) of homes which Cogeco Connexion 50% 50% provid
Slide 11: Cogeco Communications: Key Strategic initiatives
Cogeco Communications: Key Strategic initiatives • Recent acquisition of the Ohio broadband systems for a base purchase price of US$1.125B(1), closed on September 1, 2021 Expansion in the U.S. • Strong track record of successfully integrating acquisitions • Strong cash flows drive rapid deleveraging
Slide 12: Return capital to shareholders
Return capital to shareholders • Sustained free cash flow Annual dividend declared per share generation has allowed us to pursue growth objectives while returning capital to shareholders • Estimated FY2022 free cash flow dividend payout ratio of $2.82(1) approximately 42%(2) $2.56 $2.32 • Cogeco Com
Slide 13: Breezeline (formerly Atlantic Broadband)
(formerly Atlantic Broadband) 13
Slide 14: Breezeline: Eight Largest Cable Operator in the United States
Breezeline: Eight Largest Cable Operator in the United States Serving 500+ communities in 12 states in the U.S. 14
Slide 15: Breezeline's financial results overview
Breezeline’s financial results overview In millions of Canadian dollars, except % 1,190 • Strong revenue and 1,117 1,097 adjusted EBITDA Revenue growth FY2020 (1) FY2021 (1) LTM (1)(2) • 6.8% revenue CAGR(3) since FY2020 549 • 8.4% adjusted EBITDA 512 46.1% CAGR(3) since FY2020 Adj. EBITDA & 496 45.
Slide 16: Breezeline's highlights
Breezeline’s highlights • The recent Ohio broadband systems acquisition adds meaningful scale with pro forma revenue over US$1 Billion Enhanced Growth Opportunity • Recently announced a major growth plan to extend fiber services into communities not previously served by the company − The only fiber-
Slide 17: Ohio broadband systems acquisition: Enhances growth profile
Ohio broadband systems acquisition: Enhances growth profile • Leverages the strong demand for Internet services which should exhibit robust growth in Ohio for many years • Adds scale in the American Broadband segment which generates superior growth Strategic and is expected to continue generating st
Slide 18: Cogeco Connexion
(C;, COGECO — CONNEXION
Slide 19: Cogeco Connexion: Second Largest Cable Operator in Ontario and Québec
Cogeco Connexion: Second Largest Cable Operator in Ontario and Québec Serving more than 600 communities from Gaspé to Windsor 19
Slide 20: Cogeco Connexion's financial results overview
Cogeco Connexion’s financial results overview In millions of Canadian dollars, except % 1,393 1,420 1,288 Revenue • Stable operations with solid adjusted EBITDA margin (1) (2) FY2020 FY2021 LTM • 8.1% revenue CAGR(3) 751 752 since FY2020 Adj. EBITDA & 46.1% Adj. EBITDA 700 45.2% 45.8% • 5.9% adjuste
Slide 21: Cogeco Connexion: highlights
Cogeco Connexion: highlights • Potential for Internet ARPU gains with 1 Gbps speeds in the majority of the Unique Growth vectors footprint • Developing plans for profitable mobile offering which would sizably expand our addressable market • Well positioned to partner with governments to expand conne
Slide 22: Financial Results
Financial Results Cogeco Communications 22
Slide 23: Revenue and adjusted EBITDA growth
Revenue and adjusted EBITDA growth • FY2021 revenue and adjusted EBITDA increased by 8.1%(1) and 7.4%(1), respectively, in constant currency due to organic growth and the contribution of DERYtelecom(2) and Thames Valley(2) acquisitions • FY2021 profit for the year increased by 8.8% • Cogeco expects
Slide 24: Free cash flow generation
Free cash flow generation • In FY2021, Cogeco invested approximately 21% of its revenue in capex and increased its FCF by 6.7%(1) in constant currency • In FY2022(2), Cogeco expects to invest approximately 28% of its revenue in capex and expects a decrease of -33% to -43% in FCF(3). Excluding networ
Slide 25: Compensation aligned with economic value creation (EVC)
Compensation aligned with economic value creation (EVC) • Between 50% and 80% 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 – B
Slide 26: History of de-leveraging following acquisitions
History of de-leveraging following acquisitions Liquidity: $1,100 M(5) Evolution of net leverage(1) ratios November 30, 2021 $M Breezeline & Sale Pro forma Revolving Credit Connecticut MetroCast Peer 1 Hosting system of data DERYtelecom and Facilities 942 Acquisition Acquisitions Acquisition centers
Slide 27: Low cost of capital and spread-out maturities
Low cost of capital and spread-out maturities 2022 August August Guidelines(2) 2021 2020 DEBT MATURITIES Average Cost of Debt(1) 3.3% 3.3% 3.8% Excluding credit facilities and lease liabilities(3) $M Average Life 3.9Y 3.2Y 4.2Y Breezeline Cogeco Communications (excluding Breezeline) US subsidiaries(
Slide 28: USD debt hedges US operations
USD debt hedges US 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 US denominated debt and US denominated capex • The following table(1) highlights, in Canadian dollars, the impact
Slide 29: Cogeco
Cogeco 29
Slide 30: Cogeco: public market value of equity
Cogeco Cogeco TSX: CGO PUBLIC MARKET VALUE OF EQUITY $1,293 M (16.0M shares at $80.821)) 15.7M shares of CCA Investment in Cogeco Communications TSX: CCA Cogeco Media $100.02 RADIO BROADCASTING $1,600 M per CGO share(1)(2) 30 (1) As of January 11, 2022 (2) Based on a CCA share price of $102.00 multi
Slide 31: Cogeco Media: Strong network of radio stations
Cogeco Media: Strong network of radio stations Radio broadcasting network and news agency STATIONS THAT ARE RANKED AMONGST THE BEST 23 RADIO STATIONS LARGEST PRIVATE 4.4 MILLION INTEGRATED SALES RADIO NEWS NETWORK LISTENERS / WEEK SERVICES IN QUÉBEC IN QUÉBEC 31
Slide 32: Cogeco Media: Most important radio broadcaster in Québec
Cogeco Media: Most important radio broadcaster in Québec(1) Broad radio coverage • No. 1 in commercial share of hours tuned in Montréal and in Québec City Radio is an important media in Québec • 85% tune in every week • Time spent listening of 16.6 hours per week News agency with a presence in more
Slide 33: Appendices
Appendices 33
Slide 34: Cogeco Communications Supplemental Financial Information
Cogeco Communications Supplemental Financial Information Fiscal 2022 Fiscal 2021 (In thousands of Canadian dollars) Q1 Q1 Q2 Q3 Q4 Annual Revenue Canadian broadband services 355,047 328,009 354,902 353,336 356,850 1,393,097 American broadband services 363,494 290,904 279,646 270,972 275,834 1,117,35
Slide 35: Customer profile
Customer profile November 30, 2021 Cogeco Connexion Breezeline Total Homes passed 1,984,397 1,630,411 3,614,808 Primary service units(1) 1,997,006 1,236,558 3,233,564 Internet service customers 918,304 716,778 1,635,082 Internet penetration(2) 46.3% 44.0% 45.2% Video service customers 672,781 346,72