Cogeco Communications (CCA) Q4 2024 earnings summary

Executive summary

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

• Completed merger of U.S. and Canadian teams, generating cost savings and unified management to drive synergies and sustainable growth.

• Launched AI-powered customer service chatbot, managed over 80,000 inquiries in September, and expanded digital brand customer base.

• Ongoing fibre-to-the-home and wireless expansion in both Canada and the U.S., with strategic partnerships for Canadian MVNO launch and U.S. wireless operation in early stages.

• Consistent return of capital to shareholders, including 16% share repurchase since 2019 and an 8% dividend increase to $0.922 per share.

Financial highlights

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

• Q4 revenue rose 0.6% year-over-year to $747.8M; adjusted EBITDA grew 5.4% to $370.4M, with margin improving to 49.5%.

• Free cash flow increased 66.6% year-over-year, aided by lower CapEx, higher EBITDA, and reduced financial expenses.

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

• Net debt-to-EBITDA ratio improved to 3.3x; cash and cash equivalents at $76M, available liquidity $816M as of August 31, 2024.

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 expected to decrease 0–10% due to strong 2024 base and higher investments.

• Canadian segment anticipates low single-digit decline in revenue and EBITDA due to competitive pressures and reinvestment; Breezeline expects stable revenue and low single-digit EBITDA growth.