Cogeco Inc (CGECF) Q4 2024 Earnings Call Highlights: Strong Free Cash Flow and Strategic Growth ...

GuruFocus News
4 min read

In This Article:

  • Revenue (Canada): Increased by 0.8% due to higher internet service subscriber base and NRBN acquisition.

  • Adjusted EBITDA (Canada): Increased by 0.4% driven by revenue growth and cost optimization.

  • Revenue (US - Breezeline): Declined by 2.3% due to lower subscriber base.

  • Adjusted EBITDA (US - Breezeline): Increased by 2.4% due to improved product mix and cost efficiencies.

  • Consolidated Revenue: Declined by 0.7% as US decline offset Canadian growth.

  • Consolidated Adjusted EBITDA: Increased by 4.2% due to margin expansion and reduced corporate expenses.

  • Diluted Earnings Per Share: Stable year over year.

  • CapEx Intensity: Improved to 20% from 24% last year.

  • Free Cash Flow: Increased by 66% year over year.

  • Net Debt to EBITDA Ratio: 3.3 turns, improved by 0.2 turns from prior quarter.

  • Dividend Increase: 8% increase declared.

  • Revenue (Cogeco Inc): Decreased by 1%.

  • Adjusted EBITDA (Cogeco Inc): Grew by 4.2%.

  • Media Operations Revenue: Declined by 10% due to challenging advertising markets.

  • Diluted Earnings Per Share (Cogeco Inc): Increased to $1.99 from $1.87 a year ago.

Release Date: November 01, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • Cogeco Inc (CGECF) reported solid Q4 2024 results, exceeding guidance with strong free cash flow performance.

  • Successful integration of US and Canadian teams under a unified operating model is generating cost savings and optimizing talent deployment.

  • Deployment of AI-powered customer service chatbot managed over 80,000 inquiries, enhancing customer experience and streamlining operations.

  • Continued growth in the Oxo digital brand customer base, with plans to expand on their own network with strong margins.

  • Fiber network expansion added 14,000 new homes in Q4 and 58,000 for the year, contributing to a 9% growth in network since fiscal 2022.

Negative Points

  • Breezeline's revenue declined by 2.3% due to a lower subscriber base, especially for entry-level services.

  • Cogeco Media faced lower than anticipated revenue due to competitive dynamics in the radio advertising market.

  • Fiscal 2025 is expected to be a year of reinvestment, with anticipated modest EBITDA margin compression.

  • The US market remains competitive, with ongoing pressure from fixed wireless access (FWA) impacting growth.

  • Subscriber losses in the US, particularly in Ohio, with 8,700 internet subscriber losses in Q4, including 4,500 ACP subscriber losses.

Q & A Highlights

Q: Can you provide details on the contribution of the NRBN acquisition to Cogeco's revenue and EBITDA growth in Canada? A: Patrice Ouimet, CFO, stated that the NRBN acquisition contributed about 1% to revenue growth. The EBITDA margin from NRBN is slightly higher, but it does not significantly impact the overall margin percentage. The majority of EBITDA growth is attributed to the core business operations.

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