Cogeco Communications (CCA) investor relations material

Executive summary

• Canadian operations achieved year-over-year revenue and adjusted EBITDA growth, while U.S. operations faced revenue declines but showed improving Internet subscriber trends and launched new digital brands such as welo.

• Wireless business expanded in both countries, with positive subscriber growth in Ohio and the launch of digital challenger brands (oxio in Canada, welo in the U.S.).

• Transformation plan and digital initiatives, including accelerated AI deployment, remain on track to drive operational efficiencies and revenue optimization.

• Unified management structure for Canadian and U.S. operations aims to drive synergies and accelerate growth.

• Free cash flow is growing, de-leveraging continues, and the dividend remains well-funded.

Financial highlights

• LTM revenue reached $2.8B, with $1.5B from Canada and $1.3B from the U.S.; consolidated Q2 revenue decreased by 5.3% to $693.6M.

• Adjusted EBITDA margin consistently above 49%; Q2 adjusted EBITDA was $337.7M, down 5.3%.

• Free cash flow (excluding network expansions) at $636M LTM; Q2 free cash flow surged 33% to $155.0M, mainly due to lower net capital expenditures and a $14.8M retroactive tax adjustment.

• Dividend yield of 5.6% with a 7.0% quarterly dividend increase to $0.987 per share.

• Recognized a CAD 14.8 million retroactive tax benefit, resulting in a negative current income tax rate for the quarter.

Outlook and guidance

• Fiscal 2026 revenue expected to decrease 2–4% and adjusted EBITDA to decrease 1.5–3.5% year-over-year; free cash flow and free cash flow excluding network expansions projected to increase 0–10%.

• Net capital expenditures projected at $560M–$600M, with $85M–$110M for network expansion; capital intensity expected at 19.5–21.5%.

• Effective income tax rate revised to 8.5% from 11.5%.

• Canadian business expected to continue year-over-year growth in revenue and adjusted EBITDA; U.S. revenue and adjusted EBITDA to decline year-over-year but at a slower rate in the second half.

• Free cash flow guidance remains unchanged, with a midpoint of CAD 530–540 million for the year in constant currency.