Cogeco Inc. · TSX:CGO
Cogeco — FY2020 Earnings Presentation
34 slides from Cogeco's earnings presentation, Oct 27, 2020
Slide 1: Investor Update
Investor Update As of October 27, 2020 TSX: CGO | TSX: CCA
Slide 2: Contents
Contents Overview 5 Cogeco Communications 11 Financial Results 20 Cogeco 28 Appendices 32 Customer Profile 33 Acronyms 34 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 in section 16 of Cogeco Communications’ FY2020 annual report Free cash flow(1) adjusted EBITDA add amortization of deferred transaction costs and discounts on long-term debt share-based payment loss (gai
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 69.0% Voting Rights Cogeco TSX:CGO $2.48 B FY2020 Revenue Market Capitalization $1.3 B (1) 83.0% Voting Rights 100% Voting Rights 32.7% Equity 100% Equity Cogeco Communications Cogeco Media TSX:CCA 2 ND LARGEST CABLE OPE
Slide 6: Investment highlights: Long-term profitable growth
Investment highlights: Long-term profitable growth STRONG CANADIAN CABLE OPERATIONS • Fastest Internet speeds in a large portion of our footprint • Superior locally-based customer support • Industry leading adjusted EBITDA margin • Strong free cash flow generation • Well positioned to partner with g
Slide 7: Cogeco Communications: Key strategic moves
Cogeco Communications: Key strategic moves • Since 2012, Cogeco pursued its expansion in the US market through 5 broadband acquisitions totaling approximately CND$ 4 billion & its Florida expansion. Integration were all successfully executed: consistently superior organic growth partly due to Inte
Slide 8: DERYtelecom acquisition: Enhances growth profile
DERYtelecom acquisition: Enhances growth profile • Many of DERY’s systems are directly adjacent to Cogeco’s existing footprint • Opportunity to further expand rural footprint through network extensions, including through government sponsored programs • Located in non-metropolitan markets with fragme
Slide 9: Five strategic growth pillars
Five strategic growth pillars 9
Slide 10: Corporate social responsibility ("CSR") at Cogeco
Corporate social responsibility (“CSR”) at Cogeco • Cogeco Communications ranked among Corporate Knights’ 2020 Global 100 Most Sustainable Corporations in the World and 50 Best Corporate Citizens in Canada for a third consecutive year • Our last CSR report was published in February 2020 on our websi
Slide 11: Cogeco Communications
Cogeco Communications (,; coceco COMMUNICATIONS
Slide 12: Cogeco Communications overview
Cogeco Communications overview Cogeco Connexion STRONG REVENUE GROWTH THROUGH U.S. CABLE • Covers a footprint of 1,776,000 households and EXPANSION REPRESENTING 150,000 businesses which provides ample room to 46% OF COMBINED REVENUE grow the Internet and business customer base • Offers services to 8
Slide 13: 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 • Gradually launch the new IPTV service in across Canadian footprint • Pursue Florida’s high growth opportunities: secure new bulk contr
Slide 14: Cogeco Connexion: Second largest cable operator in Ontario and Quebec
Cogeco Connexion: Second largest cable operator in Ontario and Quebec Serving more than 400 communities from Gaspé to Windsor ULTRAFAST INTERNET 37 COMMUNITY SUPPORT TO MORE THAN CLOSE TO SPEEDS TO MORE THAN TV STATIONS AND MORE 300 LOCAL 2,300 EMPLOYEES 14 812,000 CUSTOMERS THAN 1,000 VOLUNTEERS OR
Slide 15: 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 70% of the footprint • Leverage advanced multiplatform video with e
Slide 16: Cogeco Connexion FY2021 priorities
Cogeco Connexion FY2021 priorities 1. RESIDENTIAL GROWTH: ACQUISITION, ENHANCED SERVICES & NETWORK EXTENSIONS • Once acquisition is closed, leverage Cogeco’s product and sales expertise to complement DERY’s service offering, grow the customer base and deliver superior revenue growth • Expand the lau
Slide 17: Atlantic Broadband: A scale operator from Maine to Florida
Atlantic Broadband: A scale operator from Maine to Florida Serving more than 500 communities in 11 states in U.S.A. CLOSE TO ULTRAFAST NAMED INDEPENDENT FEATURING LATEST 21% MINORITY 1,500 EMPLOYEES INTERNET SPEEDS TO CABLE OPERATOR OF HIGH DEMAND SHAREHOLDER AND KEY IN OUR COMMUNITIES NEARLY 500,00
Slide 18: 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 19: Atlantic Broadband: FY2021 priorities
Atlantic Broadband: FY2021 priorities 1. DRIVE GROWTH: INTERNET SUPERIORITY, COMMERCIAL FOCUS & NETWORK EXPANSION • Continuing residential focus on ever-increasing demand for high-speed Internet service • Further expansion in commercial markets led by hosted voice service • Continue to focus on edge
Slide 20: Financial Results
Financial Results (,; coceco COMMUNICATIONS
Slide 21: Revenue and adjusted EBITDA growth
Revenue and adjusted EBITDA growth • FY2020 revenue and adjusted EBITDA grew by 2.2% and 3.7%, respectively, in constant currency(1) • FY2020 profit for the year from continuing operations has increased by 11.1% • The decline in profit for FY2020 is related to discontinued operations which generated
Slide 22: Strong free cash flow generation
Strong free cash flow generation • After achieving free cash flow growth of 50.0%, in constant currency(1), in FY2019, FCF was essentially flat in FY2020 due to an increase in capex of 10.2%(2), in constant currency • The increased capex was mainly related to higher purchases of equipment as a resul
Slide 23: 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 24: Sustained dividend growth
Sustained dividend growth Annual dividend declared per share CAGR 10% $2.56(1) $2.32 $2.10 $1.90 $1.72 FY2017 FY2018 FY2019 FY2020 FY2021 • Sustained free cash flow generation has allowed us to pursue growth objectives while returning capital to shareholders • Estimated FY2021 free cash flow dividen
Slide 25: History of de-leveraging following acquisitions
History of de-leveraging following acquisitions Evolution of net leverage(1) ratios Liquidity: $1,309 M Atlantic Connecticut MetroCast Cogeco Pro forma Broadband & Peer1 August 31, 2020 system Acquisition DERY Peer 1 Hosting Acquisition Sale(4) telecom Acquisition Revolving acquisition 946 Credit Fa
Slide 26: Low cost of capital and spread-out maturities
Low cost of capital and spread-out maturities August August 2019 2020 DEBT MATURITIES Excluding credit facilities(2) Average Cost of Debt(1) 4.4% 3.8% $M Average Life 4.9Y 4.2Y Cogeco Communications Atlantic Broadband $2,033(3)(4) $313(3) $300 $200 $196(3) FY2021 FY2022 FY2023 FY2024 FY2025 FY2026 F
Slide 27: 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 28: Cogeco
Cogeco (; coceco
Slide 29: Cogeco public market value of equity
Cogeco Cogeco TSX:CGO PUBLIC MARKET VALUE OF EQUITY $1,339 M (16.0M shares at $83.68 (1)) 15.7M shares of CCA Investment in Cogeco Communications TSX:CCA Cogeco Media RADIO BROADCASTING $1,531 M $95.66 per CGO share(1)(2) 29 (1) As of October 22, 2020 (2) Based on a CCA share price of $97.55 multipl
Slide 30: Cogeco Media: Strong network of radio stations
Cogeco Media: Strong network of radio stations Radio broadcasting And news agency STATIONS THAT ARE RANKED AMONGST THE BEST 23 RADIO STATIONS LARGEST PRIVATE MORE THAN 5.4 MILLION INTEGRATED SALES RADIO NEWS NETWORK LISTENERS / WEEK SERVICES IN QUÉBEC IN QUÉBEC 30
Slide 31: Cogeco Media: Most important radio broadcaster in Quebec
Cogeco Media: Most important radio broadcaster in Quebec(1) Broad radio coverage • 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 17.1 hours per week News agency with a presence in m
Slide 32: Appendices
Appendices (,; coceco COMMUNICATIONS
Slide 33: Customer profile
Customer profile Cogeco Atlantic August 31, 2020 Connexion Broadband Total Homes passed 1,775,885 922,872 2,698,757 Primary service units(1) 1,799,706 957,925 2,757,631 Internet service customers 812,016 492,212 1,304,228 Internet penetration(2) 45.7% 53.3% 48.3% Video service customers 619,249 317,
Slide 34: Acronyms
Acronyms CAGR Compound Average Growth Rate DOCSIS Data Over Cable Service Interface Specifications Gbps Gigabits per second HPBX Hosted Private Branch Exchange IP Internet Protocol Mbps Megabits per second HMNO Hybrid Mobile Network Operator Wi-Fi WIreless FIdelity 34