Cogeco (CGO) investor relations material

Executive summary

• Achieved continued year-over-year revenue and adjusted EBITDA growth in Canada, while U.S. operations faced revenue and EBITDA declines but showed improving subscriber trends and new digital brand launch.

• Unified management structure for Canadian and U.S. operations to drive synergies and accelerate growth, with a focus on operational efficiency, digital transformation, and customer experience.

• Transformation plan remains on track, leveraging AI-based tools for operational efficiencies and retention, and expanding digital and wireless businesses in both countries.

• Free cash flow is growing, de-leveraging continues, and the dividend remains well-funded, with a 7.0% increase in quarterly dividend.

• Launched digital-only challenger brands (oxio in Canada, welo in the U.S.) to target new customer segments and drive future growth.

Financial highlights

• LTM revenue reached $2.8B, with $1.5B from Canada and $1.3B from the U.S.; Q2 2026 revenue decreased 5.3% year-over-year to $713.0M.

• Adjusted EBITDA margin consistently above 49%; Q2 2026 adjusted EBITDA fell 5.6% to $337.1M.

• Free cash flow (excluding network expansions) at $636M LTM; Q2 2026 free cash flow rose 35.5% to $152.9M, mainly due to lower capex and a $14.8M retroactive tax adjustment.

• Dividend yield of 5.6% with a prudent payout ratio of 30%; quarterly dividend raised 7.0% to $0.987 per share.

• Net income attributable to owners at $316M LTM; diluted EPS at $7.60; adjusted diluted EPS rose 0.5% to $2.12.

Outlook and guidance

• Fiscal 2026 revenue expected to decrease 2–4% and adjusted EBITDA to decrease 1.5–3.5% year-over-year (constant currency); free cash flow and free cash flow excluding network expansion projects expected to increase 0–10%.

• Net capital expenditures projected at $565–$605M, with $85–$110M for network expansion.

• Effective income tax rate revised to 8.5% from 11.5% due to accelerated tax depreciation measures.

• Canadian business expected to continue year-over-year revenue and Adjusted EBITDA growth; U.S. revenue and Adjusted EBITDA expected to decline but at a smaller percentage than in the first half.

• Transformation benefits, including AI tools and price adjustments, anticipated to support improved results in the second half.