Release Date: April 10, 2025
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Cogeco Inc (CGECF, Financial) expects significant growth in free cash flow over the next two years, driven by the end of a CapEx investment cycle and network modernization efforts.
- The company is experiencing strong demand for its upcoming Canadian wireless launch, with pre-registrations exceeding expectations.
- Cogeco Inc (CGECF) reported operational performance ahead of expectations, with transformation efforts contributing to expanded EBITDA margins.
- The fibre-to-the-home expansion program added nearly 7,000 new homes passed in the quarter, primarily in Canada.
- Increased customer satisfaction and improved service mix in the US have led to stable EBITDA despite revenue pressures.
Negative Points
- Cogeco Inc (CGECF) experienced a 2.7% decline in consolidated revenue, driven by lower revenue in both US and Canadian segments.
- Adjusted EBITDA in Canada declined by 2.8% in constant currency due to lower revenue and higher operating expenses.
- The US segment, Breezeline, saw a 4.5% revenue decline in constant currency due to subscriber base decline, particularly in entry-level services.
- Diluted earnings per share decreased by 20% due to higher D&A expenses, acquisition integration, restructuring expenses, and higher taxes.
- The radio advertising market remains challenging, impacting Cogeco Media's revenue despite growth in digital advertising solutions.
Q & A Highlights
Q: What actions are being taken to address the decline in broadband disconnections in the US, particularly in Ohio?
A: Frederic Perron, President of Cogeco Connexion, explained that while competition remains high, they expect a slowdown in fixed wireless access (FWA) growth based on competitors' forecasts. They are seeing an increase in wireless sales, which could support cable performance. Additionally, they are exploring a dual-brand strategy similar to oxio and improving sales and marketing efforts. Customer satisfaction improvements are also expected to contribute positively over time.
Q: How is Cogeco addressing competitive pricing pressures in Canada, and what impact has the recent price increase had?
A: Frederic Perron noted that the recent price increase in Canada was slightly smaller than last year, and the market response has been calm with minimal churn. The company continues to realize annual rate increases despite competitive pressures.
Q: Can you provide insights into the sustainability of Breezeline's profitability in the US amid competitive pressures?
A: Frederic Perron highlighted that TV cord-cutting is occurring at low margins, and internet customer losses are primarily lower ARPU customers. They are achieving healthy rate increases and cost reductions, contributing to stable profitability. Patrice Ouimet added that current US margins are sustainable, with potential upside from transformation benefits.
Q: What is the outlook for CapEx and free cash flow for the rest of the year?
A: Patrice Ouimet stated that while CapEx and free cash flow can be volatile, they expect higher CapEx in Q3 and Q4, aligning with their annual guidance. They are comfortable with the ranges provided and anticipate staying within those targets.
Q: How does Cogeco view potential asset divestitures in the US?
A: Frederic Perron mentioned that while they have not commented on specific reports, they are open to pruning assets in the US if it makes strategic and financial sense. This remains an area of interest for the company.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
