Cogeco Communications (CCA) Q4 2024 earnings summary

Executive summary

• Delivered Q4 and full-year results slightly above guidance, with strong free cash flow performance and progress on strategic priorities including U.S.-Canada synergies, digitization, advanced analytics, disciplined network expansion, and wireless initiatives.

• Completed merger of U.S. and Canadian teams, generating cost savings for reinvestment in growth drivers such as digital and revenue analytics, and signed partnerships for a capital-efficient Canadian wireless launch as an MVNO.

• Launched AI-powered customer service chatbot, managed over 80,000 inquiries in September, expanded oxio digital brand customer base, and launched wireless in the U.S.

• Successfully completed Quebec rural network build with sales penetration exceeding expectations; Ontario expansion ongoing; U.S. BEAD rural opportunity under review.

• Met or exceeded all fiscal 2024 financial guidelines, increased quarterly dividend by 8% to $0.922 per share, and issued stable fiscal 2025 guidance.

Financial highlights

• Fiscal 2024 revenue was $2.98B; adjusted EBITDA $1.44B (47.6% margin); free cash flow $476M.

• Q4 revenue rose 0.6% year-over-year to $747.8M; constant currency revenue declined 0.7% due to U.S. segment softness.

• Adjusted EBITDA grew 5.4% to $370.4M in Q4 (4.2% in constant currency); margin improved to 49.5% from 47.3%.

• Free cash flow surged 66.6% to $148.2M in Q4, driven by lower capex, higher EBITDA, and lower financial expense.

• Dividend per share for F2024: $3.69; dividend payout ratio: 30%.

Outlook and guidance

• Fiscal 2025 revenue and adjusted EBITDA expected to remain stable year-over-year on a constant currency basis.

• Net capital expenditures projected at $650–$725M, with $140–$190M for network expansions; capital intensity forecasted at 22–24% (17–19% excluding network expansion projects).

• Free cash flow and free cash flow excluding network expansion projects expected to decrease 0–10% due to strong 2024 base and higher investments.

• Q1 2025 revenue and EBITDA expected to remain stable; Canadian segment to see low single-digit declines in revenue and EBITDA, U.S. segment to see stable revenue and low single-digit EBITDA growth.