Cogeco (CGO) Q2 2026 earnings summary

Executive summary

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

• Wireless business scaled up in both countries; positive Ohio Internet subscriber growth for a third consecutive quarter.

• Transformation plan remains on track, leveraging AI-based tools for operational efficiencies and focusing on OpEx and CapEx synergies and diversification into digital and wireless businesses.

• Unified management structure for Canadian and U.S. operations to drive synergies and accelerate growth.

• Free cash flow is growing, de-leveraging continues, and the dividend remains well-funded.

Financial highlights

• Q2 2026 revenue decreased by 5.3% to $713.0M (down 3.7% in constant currency) compared to Q2 2025, mainly due to declines in U.S. telecom and media, partially offset by Canadian growth.

• Adjusted EBITDA fell 5.6% to $337.1M (down 3.9% in constant currency); profit for the period rose 4.2% to $79.8M.

• Free cash flow increased 35.5% to $152.9M, driven by lower capital expenditures and a $14.8M retroactive tax adjustment.

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

• Net income attributable to owners at $316M LTM; diluted EPS at $7.60.

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), mainly due to U.S. revenue pressures and competitive pricing.

• Free cash flow and free cash flow excluding network expansion projects projected to increase 0%–10% due to lower financial expense and income tax.

• Net capital expenditures for FY26 expected between $560M–$605M, with $85M–$110M for network expansion.

• Canadian segment performance remains in line with original guidance; U.S. segment guidance lowered due to ongoing competitive environment.

• Effective income tax rate revised to 8.5% from 11.5%.