Cogeco (CGO) Q3 2024 earnings summary

Executive summary

• Revenue for Q3 2024 increased 1.3% year-over-year to $777.2M, driven by Canadian telecom growth, NRBN acquisition, and stable U.S. operations; profit for the period rose to $75.3M, up from $33.3M last year.

• Adjusted EBITDA grew 4.0% to $369.8M in Q3, with margin improvements in both Canadian and American segments; adjusted profit attributable to owners fell 23.3% to $29.1M due to higher restructuring costs.

• Announced a major organizational restructuring to unify North American operations, combining U.S. and Canadian telecom teams to drive synergies, digitization, and operational excellence.

• Breezeline Mobile launched across most of the U.S. broadband footprint, with Canadian launch preparations underway, expanding bundled offerings and expected to reduce churn.

• Strong focus on sustainability, digital inclusion, and community engagement, with new leadership and continued team expansion.

Financial highlights

• Q3 revenue: $777.2M (+1.3% y/y); Q3 adjusted EBITDA: $369.8M (+4.0% y/y); profit for the period: $75.3M.

• Free cash flow declined 16.9% to $89.3M in Q3, mainly due to higher restructuring and integration costs.

• Adjusted diluted EPS rose 24.3% to $3.02, excluding last year’s impairment and restructuring costs.

• Dividend declared at $0.854 per share, with a 16.8% increase year-over-year.

• Net indebtedness to adjusted EBITDA ratio at 3.5x as of May 31, 2024.

Outlook and guidance

• Fiscal 2024 annual guidance maintained; new organizational structure and NRBN acquisition not expected to materially impact guidance.

• Q4 consolidated revenue expected to be stable, with low single-digit adjusted EBITDA growth; capital intensity anticipated to be about 500 basis points above last year.

• Free cash flow and free cash flow excluding network expansions expected to decline 5%–15% due to mobility investments.

• Mobility service preparation costs estimated to reduce adjusted EBITDA by 1% and free cash flow by 10%.

• Dividend payout ratio targeted at 39% of free cash flow, or 27% excluding network extensions.