Cogeco Communications (CCA) Q1 2025 earnings summary

Executive summary

• Strong Canadian internet subscriber growth and improving U.S. subscriber performance supported by a three-year transformation program focused on synergies, digitization, analytics, and network expansion.

• Unified management of Canadian and U.S. operations aims to drive synergies and sustainable growth, with a focus on capital-light wireless and fibre-to-the-home expansion.

• Transformation and disciplined capital deployment are driving sustainable growth, cash flow, and operational efficiencies.

• Consistent return of capital to shareholders, including share repurchases and annual dividend increases.

• On track to launch wireless services in Canada in the coming quarters.

Financial highlights

• Q1 FY2025 revenue was $738.7M, down 1.2% year-over-year (1.6% in constant currency), mainly due to lower U.S. segment revenue; Canadian revenue remained stable.

• Adjusted EBITDA rose 1.7% to $365.2M (1.4% in constant currency), with margin improving to 49.4%.

• Net income increased 11.9% to $107.2M, with diluted EPS up 18.4% to $2.38.

• Free cash flow grew 8.0% to $148.9M, aided by a $13.8M gain from a sale-leaseback transaction and higher EBITDA.

• Quarterly dividend of $0.922 per share declared, up 8.0% year-over-year.

Outlook and guidance

• Fiscal 2025 annual guidance maintained, with expectations for stable revenue and adjusted EBITDA, continued network expansion, and operational efficiencies.

• Net capital expenditures projected at $650M–$725M, with $140M–$190M for network expansion; capital intensity forecasted at 22%–24%.

• Free cash flow (excluding network expansions) expected to decrease by 0% to 10%.

• Wireless launch in Canada remains on schedule.

• Cost reduction initiatives expected to support future EBITDA growth.