Cogeco Inc. · TSX:CGO
Cogeco — Q3 2022 Earnings Presentation
33 slides from Cogeco's earnings presentation, Jul 13, 2022
Slide 1: Investor Update
Investor Update As of July 13, 2022 TSX: CGO | TSX: CCA
Slide 2: Contents
Contents Cogeco Communications (TSX: CCA) 4 Breezeline (formerly Atlantic Broadband) 14 Cogeco Connexion 19 Additional Financial Information 23 Cogeco (TSX: CGO) 27 Appendices 31 Historical Financial Information 32 Customer Profile 33 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: Cogeco Communications (TSX: CCA)
((, COGECO — COMMUNICATIONS TSX: CCA
Slide 5: Overview
Overview Unique North American broadband platform with strong operational experience Providing Internet, video and TSX:CCA phone to 1.6 million residential and business customers $2.8B LTM Revenue(1) $4.1B Market Capitalization(2) Breezeline (formerly Atlantic Broadband) is the 8th largest cab
Slide 6: Business segment overview
Business segment overview BREEZELINE Consolidated Revenue(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 1.7 million(2) homes which Breezeline provides for attractive residential and b
Slide 7: Capital allocation priorities
Capital allocation priorities Span of operations in North America provides stability, while strong cash flow generation enables to reinvest in the business and return capital to shareholders CAPITAL ALLOCATION TO VALUE CREATION ACTIVITIES 1• Enhance and extend broadband networks to offer more evolve
Slide 8: Financial snapshot
Financial snapshot Steady growth from both organic execution and strategic acquisitions In $M Revenue Adjusted EBITDA & Adjusted EBITDA margini 15% - 17% 2% - 4% growth growth 14% - 16% 1.5% - 3.5% 2,332 2,384 2,510 2,147 growth growth 1,108 1,149 1,206 1,007 46.9% 47.5% 48.2% 48.0% 2018 2019 2020 2
Slide 9: Free cash flow generation
Free cash flow generation Sustained free cash flow generation has allowed us to pursue growth objectives while returning capital to shareholders In $M Free cash flowii Cash flows from operating activities 1,019 487 16% to 5% 918 454 455 26% decline 869 growth(1) to 5% growth(1) 302 621 13% to 2% to
Slide 10: Dividend growth and low payout ratio
Dividend growth and low payout ratio Strong and consistent dividend per share growth +10% annual increase over the past 9 years 22%-31%(2) dividend payout ratio (1) 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 (1) Based on a quarterly dividend of $0.705 per share declared on Nove
Slide 11: Share buybacks
Share buybacks Cogeco Communications renewed its Normal Course Issuer Bid, enabling it to acquire up to 1,500,000 subordinate voting shares from May 4, 2022 to May 3, 2023 3.8M shares, or 20%(1) float, 50.0 repurchased since $131M shares 49.0 May 2019 repurchased in Outstanding shares in M +10.2% fi
Slide 12: Key Strategic Initiatives
Key Strategic Initiatives Recent acquisition of the Ohio broadband systems for a purchase price of Consolidator of U.S. US$1.125B(1), closed on September 1, 2021 Regional Operator Strong track record of successfully integrating acquisitions Competitive advantage with 1 Gig Internet offered in
Slide 13: Delivering sustainable value to our stakeholders 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 14: Breezeline (formerly Atlantic Broadband)
(formerly Atlantic Broadband) 14
Slide 15: Breezeline: eighth 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. 15
Slide 16: Breezeline's financial results overview
Breezeline’s financial results overview Strong revenue and adjusted EBITDAi growth In $M 1,372 1,097 1,117 1,037 847 13.7% revenue Revenue CAGR(3) since FY2018 FY2018 (1) FY2019 (1) FY2020 (1) FY2021 (1) LTM (1)(2) 15.5% adjusted EBITDAi CAGR(3) 46.1% since FY2018 634 45.8% 496 512 Adj. EBITDA 4
Slide 17: Breezeline's highlights
Breezeline’s highlights Strong Financial Growing adjusted EBITDAi and margini, contributing to free cash flow Profile generation Major growth plan to extend fiber services into New Hampshire and West Virginia communities not previously served by the company The only fiber-to-the-premise provid
Slide 18: Ohio broadband systems acquisition: enhances growth profile
Ohio broadband systems acquisition: enhances growth profile • Provides ability to grow revenue per customer from Internet speed lift and the introduction of new services • Established player in this market for the past 20 years Rationale • Markets with very attractive demographic profiles: younger d
Slide 19: Cogeco Connexion
(C;, COGECO — CONNEXION
Slide 20: Cogeco Connexion: second largest cable operator in Ontario and Québec
Cogeco Connexion: second largest cable operator in Ontario and Québec Serving 600+ communities from Windsor to Gaspé 20
Slide 21: Cogeco Connexion's financial results overview
Cogeco Connexion’s financial results overview Stable operations with solid adjusted EBITDA margini In $M 1,436 1,393 1,300 1,295 1,288 Revenue (1) (2) 2.7% revenue CAGR(3) FY2018 FY2019 FY2020 FY2021 LTM since FY2018 46.1% 763 3.1% adjusted EBITDAi 751 45.2% 45.8% Adj. EBITDA & CAGR(3) since FY2
Slide 22: Cogeco Connexion's highlights
Cogeco Connexion’s highlights Strong Financial Strong adjusted EBITDA margini and cash flow generation Profile Partnering with governments to expand connectivity in underserved and unserved areas with strong economics Fiber-to-the-premise deployment in areas where competition has much lower sp
Slide 23: Additional Financial Information
Additional Financial Information 23
Slide 24: History of de-leveraging following acquisitions
History of de-leveraging following acquisitions Liquidity: $1.0B Evolution of net leverage(1) ratios May 31, 2022 $M Breezeline & Sale DERYtelecom and Revolving Credit Connecticut MetroCast Peer 1 Hosting system Acquisition of data Ohio broadband Facilities 940 Acquisitions Acquisition centers(4) sy
Slide 25: Low cost of capital and spread-out maturities
Low cost of capital and spread-out maturities 2022 August August Guidelines 2021 2020 DEBT MATURITIES Average Cost of Debt(1) 4.2% 3.3% 3.8% Excluding credit facilities and lease liabilities(2) $M Average Life 4.0Y 3.2Y 4.2Y Breezeline Cogeco Communications (excluding Breezeline) U.S. subsidiaries(6
Slide 26: 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 27: Cogeco (TSX: CGO)
(C; COGECO —_ TSX: CGO
Slide 28: Cogeco TSX: CGO
Cogeco Cogeco TSX: CGO LTM(1) Revenue $2.9 B PUBLIC MARKET VALUE OF EQUITY $1,081 M (15.8M shares at $68.40(2)) 15.7M shares of CCA 84% Voting Rights 100% Voting Rights 34% Equity 100% Equity Investment in Cogeco Communications TSX: CCA Cogeco Media $88.53 RADIO BROADCASTING $1,400 M $2.8 B per CGO
Slide 29: 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 29
Slide 30: Cogeco Media
Cogeco Media Most important radio broadcaster in Québec(1) and talented 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 2 million lis
Slide 31: Appendices
Appendices 31
Slide 32: Cogeco Communications: Historical financial information
Cogeco Communications: Historical financial information Fiscal 2022 Fiscal 2021 (In thousands of Canadian dollars) Q1 Q2 Q3 Q1 Q2 Q3 Q4 Annual Revenue Canadian broadband services 355,047 362,323 362,072 328,009 354,902 353,336 356,850 1,393,097 American broadband services 363,494 366,226 366,046 290
Slide 33: Customer profile
Customer profile May 31, 2022 Cogeco Connexion Breezeline Total Homes passed 2,002,859 1,657,201 3,660,060 Primary service units(1) 1,982,223 1,214,961 3,197,184 Internet service customers 922,695 717,919 1,640,614 Internet penetration(2) 46.1% 43.3% 44.8% Video service customers 661,272 332,312 993