COGECO Inc.
TSX : CGO

COGECO Inc.

October 30, 2013 23:08 ET

COGECO Inc. Reports Strong Fiscal 2013 Financial Results

- Solid revenue and operating income before depreciation and amortization(1) increases in the fourth quarter and in fiscal year 2013, meeting revised financial guidelines

- On target financial results from Cogeco Cable Inc.'s recent acquisitions Atlantic Broadband and Peer1 Network Enterprises Inc. ("PEER 1"); and

- Quarterly dividend increase of 15.8%.

MONTRÉAL, QUÉBEC--(Marketwired - Oct. 30, 2013) - Today, COGECO Inc. (TSX:CGO) ("COGECO" or the "Corporation") announced its financial results for the fourth quarter and fiscal year 2013, ended August 31, 2013, in accordance with International Financial Reporting Standards ("IFRS").

For the fourth quarter and fiscal 2013, which include nine months operating results of Atlantic Broadband and seven months operating results of PEER 1:

  • Fourth quarter revenue increased by 41.5% to reach $504.7 million and by 30.4% for fiscal 2013 to close at $1.8 billion when compared to the same periods of the prior year;

  • Operating income before depreciation and amortization(1) increased by 37.1% to $224.3 million compared to the fourth quarter of fiscal 2012, and by 31.4% to $797.4 million compared to the prior year. Operating income before depreciation and amortization increases for both periods are mainly from the Cable segment and attributable to the acquisitions of Atlantic Broadband and PEER 1 (the "recent acquisitions") as well as to the financial results improvement from organic growth;
(1) The indicated terms do not have standardized definitions prescribed by International Financial Reporting Standards ("IFRS") and, therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section of the Management's discussion and analysis ("MD&A")
  • Profit for the period from continuing operations amounted to $43.8 million in the fourth quarter compared to $44.9 million for the same period of the previous fiscal year. The decrease is mostly attributable to additional depreciation and amortization and financial expense both related to the recent acquisitions. It is partly offset by the operating income before depreciation and amortization improvement stemming from the Cable segment organic growth, the recent acquisitions combined with lower income tax expenses resulting from the recent acquisitions tax structure. For fiscal 2013, profit for the year from continuing operations amounted to $189.8 million compared to $174.2 million for fiscal 2012. Profit progression is mostly attributable to the improvement in the operating income before depreciation and amortization generated by the Cable segment, partly offset by additional depreciation and amortization, financial expense and acquisition costs all related to the recent acquisitions;

  • Profit for the period amounted to $43.8 million in the fourth quarter when compared to $44.9 million for the same period of the previous fiscal year due to the factors previously described. For the year ended August 31, 2013, profit for the year amounted to $189.8 million when compared to $229.7 million for the same period of fiscal 2012. The decline for the year is attributable to the factors previously described and also due to last year's profit of $55.4 million from the sale of the Portuguese subsidiary, Cabovisão - Televisão por Cabo, S.A. ("Cabovisão"), reported as discontinued operations in fiscal 2012;

  • Free cash flow(1) reached $53.7 million for the fourth quarter compared to negative free cash flow of $5.0 million in the comparable quarter of the prior year. The increase for the period is mostly attributable to the improvement of operating income before depreciation and amortization as well as to the decrease in acquisition of property, plant and equipment and current income taxes, partly offset by the increase in financial expense. Fiscal 2013 free cash flow amounted to
    $151.7 million compared to $68.7 million in fiscal 2012. The increase for the year is mostly attributable to the improvement of operating income before depreciation and amortization and the decrease in current income taxes, partly offset by the increase in financial expense, the recent acquisition costs and the increase in acquisition of property, plant and equipment;
(1) The indicated terms do not have standard definitions prescribed by IFRS and, therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section of the MD&A.
  • A quarterly dividend of $0.19 per share was paid to the holders of subordinate and multiple voting shares, an increase of $0.01 per share, or 5.6%, compared to a dividend of $0.18 per share paid in the fourth quarter of fiscal 2012. Dividends paid in fiscal 2013 totaled $0.76 per share compared to $0.72 per share in fiscal 2012;

  • Cable segment fourth-quarter 2013 primary service units ("PSU")(2) decreased by 15,237 and increased by 5,546 for fiscal 2013. At August 31, 2013, consolidated PSU amounted to 2,465,780 of which 1,980,122 come from the Canadian operations and 485,658 from the American operations;

(2) Represents the sum of Television, High Speed Internet ("HSI") and Telephony service customers.
  • On October 30, 2013, COGECO declared an eligible dividend of $0.22 per share, an increase of 15.8% when compared to the $0.19 dividend per share paid in the fourth quarter of fiscal 2013;

  • On June 27, 2013, the Corporation's subsidiary, Cogeco Cable, completed, pursuant to a private placement, the issuance of US$215 million Senior Secured Notes bearing interest at 4.30% payable semi-annually and maturing on June 16, 2025. The net proceeds from this offering along with drawings under Cogeco Cable's credit facilities were used to repay, on July 29, 2013, all the outstanding amount of $300 million Senior Secured Debentures Series 1, due on June 9, 2014;

  • On July 22, 2013, Cogeco Cable entered into interest rate swap agreements to fix the interest rate on US$200 million of its LIBOR based loans. These agreements have the effect of converting the floating US LIBOR base rate at an average fixed rate of 0.39625% under its Term Revolving Facility until July 25, 2015; and

  • On July 5, 2013, Cogeco Cable reduced its Term Revolving Facility from $750 million to $600 million and its Revolving Facility of its Secured Credit Facilities from $240 million to $190 million.

"Fiscal 2013 proved to be a strong financial year for COGECO and its subsidiaries, during which good headway was made in positioning the business toward sustained profitable growth," stated Louis Audet, President & Chief Executive Officer of COGECO Inc.

"Our Cogeco Cable subsidiary completed two acquisitions that allowed the Corporation, on the one hand, to diversify its cable assets geographically and, on the other hand, build a stronger footprint in the promising data hosting and managed IT services market. As a logical aftermath to its evolving portfolio, Cogeco Cable regrouped its Canadian cable operations under a self- standing operational unit, a move that will better facilitate continued excellence in product innovation and customer service to the benefit of its Canadian Digital Television, Telephony and HSI customers. All of this, along with the successful refinancing that was completed during a period of low interest rates, should enhance Cogeco Cable's financial performance in fiscal 2014," continued Mr. Audet.

"Our Cogeco Diffusion subsidiary also fared well in fiscal 2013, having completed the full integration of Cogeco Métromédia. Today, we have the largest commercial talk radio network in the province of Quebec, attracting listeners who represent families among those with the highest per capita income profile very much sought after by advertisers. I am very pleased with our overall results and am optimistic about our ability to deliver on our 2014 projections with a steady performance our investors can count on," concluded Louis Audet.

Fiscal 2014 Financial Guidelines

COGECO revised its fiscal 2014 financial guidelines, as issued on July 10, 2013, as a result of certain adjustments related to the preliminary allocation of the purchase price of Atlantic Broadband and PEER 1 in the Cable segment. Please consult the "Fiscal 2014 financial guidelines" section of the Corporation's 2013 Annual Report for further details.

FINANCIAL HIGHLIGHTS

Quarters ended Years ended
(in thousands of dollars, except PSU growth, percentages and per share data)August 31, August 31, August 31,August 31,
2013 2012 Change 20132012Change
$ $ % $$%
Operations
Revenue504,714 356,685 41.5 1,834,2571,406,35330.4
Operating income before depreciation and amortization(1)224,304 163,617 37.1 797,426606,84231.4
Operating income104,110 95,943 8.5 387,489324,98919.2
Profit for the period from continuing operations43,759 44,900 (2.5)189,777174,2468.9
Profit for the period from discontinued operations- - - -55,446-
Profit for the period43,759 44,900 (2.5)189,777229,692(17.4)
Profit for the period attributable to owners of the Corporation13,826 13,889 (0.5)64,08877,051(16.8)
Cash Flow
Cash flow from operating activities233,464 203,193 14.9 552,195448,76423.0
Cash flow from operations(1)162,427 119,612 35.8 563,091447,11025.9
Acquisitions of property, plant and equipment, intangible and other assets(2)108,756 124,638 (12.7)411,422378,3698.7
Free cash flow(1)53,671 (5,026)- 151,66968,741-
Financial Condition
Property, plant and equipment- - - 1,874,8661,343,90439.5
Total assets- - - 5,452,5133,103,91975.7
Indebtedness(3)- - - 3,054,2751,180,971-
Equity attributable to owners of the Corporation- - - 457,285397,79915.0
Primary service units ("PSU") growth (decline)(4)(15,237)7,564 - 5,54673,645(92.5)
Per Share Data(5)
Earnings per share attributable to owners of the Corporation
From continuing and discontinued operations
Basic0.83 0.83 - 3.834.61(16.9)
Diluted0.82 0.83 (1.2)3.814.58(16.8)
From continuing operations
Basic0.83 0.83 - 3.833.548.2
Diluted0.82 0.83 (1.2)3.813.528.2
From discontinued operations
Basic- - - -1.07-
Diluted- - - -1.06-
(1)The indicated terms do not have standardized definitions prescribed by IFRS, and therefore, may not be comparable to similar measures presented by other companies. For more details, please consult the "Non-IFRS financial measures" section of the MD&A.
(2)Fiscal 2013 fourth-quarter and fiscal 2013 acquisitions of property, plant and equipment, intangible and other assets include assets acquired under finance lease of $0.9 million that are excluded from the statements of cash flows.
(3)Indebtedness is defined as the aggregate of bank indebtedness, principal on long-term debt, balance due on business combinations and obligations under derivative financial instruments.
(4)Represents the sum of Television, High Speed Internet ("HSI") and Telephony service customers.
(5)Per multiple and subordinate voting share.

FORWARD-LOOKING STATEMENTS

Certain statements in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to COGECO's future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as "may"; "will"; "should"; "expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict"; "potential"; "continue"; "foresee", "ensure" or other similar expressions concerning matters that are not historical facts. In particular, statements regarding the Corporation's future operating results and economic performance and its objectives and strategies are forward- looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which COGECO believes are reasonable as of the current date. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. The Corporation cautions the reader that the economic downturn experienced over the past few years makes forward-looking information and the underlying assumptions subject to greater uncertainty and that, consequently, they may not materialize, or the results may significantly differ from the Corporation's expectations. It is impossible for COGECO to predict with certainty the impact that the current economic uncertainties may have on future results. Forward-looking information is also subject to certain factors, including risks and uncertainties (described in the "Uncertainties and main risk factors" section of the Corporation's 2013 annual Management's Discussion and Analysis ("MD&A")) that could cause actual results to differ materially from what COGECO currently expects. These factors include risks pertaining to markets and competition, technology, regulatory developments, operating costs, information systems, disasters or other contingencies, financial risks related to capital requirements, human resources, controlling shareholder and holding structure, many of which are beyond the Corporation's control. Therefore, future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information and should not rely upon this information as of any other date. While management may elect to, the Corporation is under no obligation and does not undertake to update or alter this information at any particular time, except as may be required by law.

All amounts are stated in Canadian dollars unless otherwise indicated. This press release should be read in conjunction with the MD&A included in the Corporation's 2013 Annual Report, the Corporation's consolidated financial statements and the notes thereto, prepared in accordance with the International Financial Reporting Standards ("IFRS") for the year ended August 31, 2013

ADDITIONAL INFORMATION

Additional information relating to the Corporation, including its Annual Information Form, is available on the SEDAR website at www.sedar.com.

The Corporation's 2013 Annual Report can also be found on: http://www.cogeco.ca/cable/corporate/cgo/investors/results_annual_2013.html

A copy of this press release with a more detailed summary of results can be found at http://www.cogeco.ca/cable/corporate/files/press_releases_en/2013/CGO_Q4-2013_detailed_103013.pdf

ABOUT COGECO

COGECO is a diversified holding corporation. Through its Cogeco Cable subsidiary, COGECO provides to its residential and business customers Analogue and Digital Television, High Speed Internet and Telephony services. Cogeco Cable operates in Canada through its subsidiary Cogeco Cable Canada in Quebec and Ontario, and in the United States through its subsidiary Atlantic Broadband in Western Pennsylvania, South Florida, Maryland/Delaware and South Carolina. Through its subsidiary Cogeco Enterprise Services, the holding company of Cogeco Data Services and Peer 1 Network Enterprises, Cogeco Cable provides to its commercial customers, a suite of IT hosting, information and communications technology services (data centre, colocation, managed hosting, cloud infrastructure and connectivity), with 20 data centres, extensive fibre networks in Montreal and Toronto as well as points-of-presence in North America and Europe. Through its subsidiary Cogeco Diffusion, COGECO owns and operates 13 radio stations across most of Québec with complementary radio formats serving a wide range of audiences as well as Cogeco News, its news agency. Through its subsidiary Métromédia, COGECO operates an advertising representation house specialized in the public transit sector that holds exclusive advertising rights in the Province of Québec where it also represents its business partners active across other Canadian markets. COGECO's subordinate voting shares are listed on the Toronto Stock Exchange (TSX:CGO). The subordinate voting shares of Cogeco Cable are also listed on the Toronto Stock Exchange (TSX:CCA). For more information about COGECO and its subsidiaries visit www.cogeco.ca, cogecodiffusion.com and cogecometromedia.com.

Analyst Conference Call: Thursday, October 31, 2013 at 11:00 a.m. (Eastern Daylight Time)
Media representatives may attend as listeners only.
Please use the following dial-in number to have access to the conference call by dialing five minutes before the start of the conference:
Canada/United States Access Number: 1 866-321-6651
International Access Number: + 1 416-642-5212
Confirmation Code: 7376711
By Internet at www.cogeco.ca/investors
A rebroadcast of the conference call will be available until November 7, 2013, by dialing:
Canada and United States access number: 1 888-203-1112
International access number: + 1 647-436-0148
Confirmation code: 7376711

Contact Information

  • Source:
    COGECO Inc.
    Pierre Gagne
    Senior Vice President and Chief Financial Officer
    514-764-4700

    Information:
    Media
    Rene Guimond
    Vice-President, Public Affairs and Communications
    514-764-4700