Cogeco Communications (CCA) Q1 2025 earnings summary

Executive summary

• Early progress on a three-year transformation program with over 150 initiatives focused on synergies, digitization, analytics, network expansion, and wireless cross-sell, supporting sustainable growth and cash flow.

• Strong Canadian internet subscriber growth and improving U.S. customer metrics contributed to positive momentum.

• Unified management of Breezeline and Cogeco Connexion aims to drive synergies and sustainable growth.

• Focus on capital-light wireless expansion and fibre-to-the-home growth in both Canada and the U.S., with preparation for a Canadian wireless launch progressing.

• Consistent return of capital to shareholders, including 16% share repurchase since 2019 and annual dividend increases.

Financial highlights

• Revenue declined by 1.2% year-over-year to $738.7M, mainly due to lower American segment revenue, while Canadian revenue remained stable.

• Adjusted EBITDA increased by 1.7% to $365.2M, with margin improving to 49.4%.

• Net income rose 11.9% to $107.2M, with diluted EPS up 18.4% to $2.38, aided by lower financial expenses and a $13.8M gain from a sale-leaseback transaction.

• Free cash flow increased 8.0% to $148.9M, mainly due to asset disposals and higher EBITDA.

• Quarterly dividend raised 8.0% to $0.922 per share.

Outlook and guidance

• Fiscal 2025 annual guidance maintained, with revenue and adjusted EBITDA expected to remain stable versus 2024.

• Net capital expenditures projected at $650M–$725M, with $140M–$190M for network expansion.

• Capital intensity forecasted at 22%–24%, with Q2 anticipated to be about 200 basis points above last year.

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

• Cost reduction initiatives and transformation program expected to support future EBITDA growth.