Cogeco Communications Inc. · TSX:CCA
Cogeco Communications — Investor Presentation (July 2023)
34 slides from Cogeco Communications's investor presentation, Jul 13, 2023
Slide 1: Investor Update
Investor Update As of July 13, 2023
Slide 2: Contents
Contents Cogeco Communications (TSX: CCA) 4 Breezeline 15 Cogeco Connexion 19 Additional Financial Information 24 Cogeco (TSX: CGO) 28 Appendix 33 Customer Profile 34 2
Slide 3: Forward-Looking Statements and Presentation of Financial Information
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 financial measu
Slide 4: Cogeco Communications
Cogeco Communications TSX: CCA 4
Slide 5: Investment Highlights
Investment Highlights Growing competitive force in the North American telecom sector Providing Internet, video and phone to 1.6M customers High adjusted EBITDA margins and strong Free Cash Flow TSX:CCA Driven by stable business model, scale, and operational $3.2B 4.4% efficiency Dividend Market
Slide 6: Competitive Differentiation Driving Growth
Competitive Differentiation Driving Growth High quality product offering Internet Service Customers Revenue As of May 31, 2023 Internet packages of up to 1 Gbps $M 000’s for residential customers and 10 Gbps for commercial customers Canada Canada U.S. FTTH in all expansion territories U.S. Mod
Slide 7: Expanding Addressable Market
Expanding Addressable Market Network Evolution & Expansion Homes Passed FTTH expansions in Canada and the U.S. resulting in 171,000 000’s homes passed added(1) Canada U.S. including partnering with governments to expand connectivity in areas with currently no high-speed Internet Mid-teens targ
Slide 8: Strong Return of Capital to Shareholders
Strong Return of Capital to Shareholders Shareholder returns enhanced through return of capital to complement growth investments Predictable Dividend per Share Strategy Share Buybacks $3.50 +10% annual increase over the past 9 years Shares Outstanding (M) 22%(1) dividend payout ratioviii in F202
Slide 9: Attractive Margins and Profitability
Attractive Margins and Profitability High profit margins due to span of operations, stable business model and operational efficiency Adjusted EBITDAi Profit $M $M (except per share) Reported Consolidated in CAD Profit attributable to owners of Cogeco Communications from Continuing Operations Consoli
Slide 10: Significant FCF Generation
Significant FCF Generation Strong cash flow generation has enabled growth investments and return of capital Free Cash Flowii Cash flows from operating activities $M $M Free Cash Flow Network Expansions 1,240 1,019 1,001 918 869 582(1) 563(1) 487 454 455 157 202 487 454 455 424 362 F2019 F2020 F2021
Slide 11: Prudent Use of Leverage to Drive Returns
Prudent Use of Leverage to Drive Returns Strong Financial Position Return on Equity(2) (attributable to owners of the As of May 31, 2023 Corporation) Net indebtedness to adjusted EBITDA ratiovi of 3.4x Available liquidityvii of $848M 17.1% 16.8% Cash and cash equivalents of $365M 16.4% Weigh
Slide 12: Balanced Capital Allocation
Balanced Capital Allocation Span of operations provides stability, while strong cash flow generation enables us to invest in the business and return capital to shareholders 1 1. 2 2. 3 3. 4 4. Strong Investment Strong Share Balance Sheet in the Business Dividend Buybacks • Target net leverage in • E
Slide 13: Financial Guidelines
Financial Guidelines In millions of Canadian dollars, except Fiscal 2023 Fiscal 2022 percentages Projections Actual constant currencyiv(1) Revenue 2,901 Increase of 0.5% to 2.0% Adjusted EBITDAi 1,393 Increase of 0.5% to 2.0% Net capital expendituresiii 689 $700 to $775 Net capital expenditures in c
Slide 14: Sustainable Value through Strong ESG Practices
Sustainable Value through Strong ESG Practices Environmental Social Governance First Canadian telecommunications company with Continuing to foster a culture of Diversity & Variable executive compensation linked in part to an approved near-term science-based Inclusion (D&I) ESG performance emissions
Slide 15: Breezeline
we breezeline™ «a Cogeco company
Slide 16: Breezeline’s Broadband Network
Breezeline’s Broadband Network Serving 500+ communities in 13 states in the U.S. 16
Slide 17: Breezeline’s Financial Results Overview
Breezeline’s Financial Results Overview Strong growth in revenue and adjusted EBITDAi, with capital invested into FTTH network expansion and acquisition integration to drive future growth Adj. EBITDA & Net CapExiii & Revenue Adj. EBITDA Margini Capital Intensityv $M of US dollars $M of US dollars $M
Slide 18: Breezeline’s Highlights
Breezeline’s Highlights Strong financial profile Growth opportunity • Strong adjusted EBITDAi and margini with • Extending fibre services into New Hampshire and West solid free cash flowii generation Virginia communities not previously served by the company • The only fibre-to-the-home provider in e
Slide 19: Cogeco Connexion
(C; coGeco CONNEXION
Slide 20: Cogeco Connexion’s Broadband Network
Cogeco Connexion’s Broadband Network Serving 600+ communities from Windsor to Gaspé Through its 2nd brand oxio operates in majority of Canadian provinces 20
Slide 21: Cogeco Connexion’s Financial Results Overview
Cogeco Connexion’s Financial Results Overview Strong growth and industry leading adjusted EBITDA margini, with capital invested into government subsidized FTTH network expansion to drive future growth Adj. EBITDA & Adj. EBITDA Net CapExiii & Capital Revenue Margini Intensityv $M $M $M 450 100% 1,475
Slide 22: Cogeco Connexion’s Highlights
Cogeco Connexion’s Highlights Strong financial profile Product offering • Strong adjusted EBITDAi and margini with • Superior Internet speeds and video platform solid cash flow generation • 1 Gbps Internet service offered in close to 75% of the footprint • IPTV platform available in many markets • D
Slide 23: Developments on Mobile Service
Developments on Mobile Service • Acquired $397M mid-band • Doubling addressable Growth spectrum licenses covering 95% of market based on Opportunity Canadian footprint customer telecom spend CRTC Requirements • Cross-sell to existing customer base • Better target younger • CRTC has now clarified the
Slide 24: Additional Financial Information
Additional Financial Information 24
Slide 25: History of De-Leveraging Following Acquisitions
History of De-Leveraging Following Acquisitions Evolution of net indebtedness to adjusted EBITDA ratiovi Available liquidity: $848M May 31, 2023 Breezeline Connecticut system MetroCast Sale DERYtelecom Ohio (formerly Atlantic broadband $M Acquisition Acquisition of data Acquisition Broadband) & cent
Slide 26: Low Cost of Capital and Spread-Out Maturities
Low Cost of Capital and Spread-Out Maturities Debt Maturities Excluding credit facilities and lease liabilities(2) $M May August 2023 2022 Cogeco Communications Breezeline (excluding Breezeline) U.S. subsidiaries(6) Average Cost 5.1% 4.0% of Debt(1) $2,118(3)(4) $1,148(3)(5) $500 $326(3) $300 $204(3
Slide 27: Compensation Aligned with Economic Value Creation (EVC)
Compensation Aligned with Economic Value Creation (EVC) Between 50% and 80% 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 Economic Value vs target and 40% based on stra
Slide 28: Cogeco
Cogeco TSX: CGO 28
Slide 29: Cogeco
Cogeco Cogeco TSX: CGO 15.7M shares of CCA $3.1B 85% Voting Rights LTM Revenue 100% Voting Rights 35% Equity 100% Equity $880M Market Capitalization(1) 5.2% Dividend Yield(2) Investment in Cogeco Cogeco Media Communications RADIO BROADCASTING TSX: CCA $1.1B (1)(3) $95M Investment Value(1) LTM Revenu
Slide 30: 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 21 RADIO STATIONS LARGEST INDEPENDENT MORE THAN 5 MILLION INTEGRATED SALES RADIO NEWS SERVICE LISTENERS / WEEK SERVICES IN QUÉBEC IN QUÉBEC 30
Slide 31: Cogeco Media Top Ratings
Cogeco Media Top Ratings Largest radio broadcaster in Québec(1) and 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 Montrealers ● 92.5 THE BEAT is the #1 English music station in Montréal ● 96.9 CKOI reaches 1.8 M li
Slide 32: Cogeco Media Digital Footprint
Cogeco Media Digital Footprint Web Sites Unique users : 1.5 M /monthly App 256 K downloads Podcasts 6.2 M downloads /annually Live Streaming 1.1 M /monthly listeners 11.1M /monthly sessions Social fan base FB : 1.4 M fans IG : 116 K fans MIQ x Cogeco Media Exclusive representation agreement in the Q
Slide 33: Appendix
APPENDIX 33
Slide 34: Customer Profile
Customer Profile May 31, 2023 COGECO CONNEXION BREEZELINE TOTAL Homes passed(1) 2,048,872 1,728,165 3,777,037 Primary service units(2) 1,867,317 1,120,931 2,988,248 Internet service customers 840,662 680,785 1,521,447 Video service customers 639,920 296,952 936,872 Phone service customers 386,735 14
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