Investor Update
As of January 14, 2021
TSX: CGO | TSX: CCA
Contents
Overview | 5 |
Cogeco Communications | 11 |
Financial Results | 20 |
Cogeco | 28 |
Appendices | 32 |
Customer Profile | 33 |
Acronyms | 34 |
2
Forward-looking statements and
Presentation of financial information
Certain statements contained in this presentation may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to our future outlook and anticipated events, business, operations, financial performance, financial condition or results. Particularly, statements regarding our financial guidelines, future operating results and economic performance, objectives and strategies are forward-looking statements. Forward-looking statements also include statements relating to the estimated tax benefits of the acquisition of the DERYtelecom assets, the estimated adjusted EBITDA of the Dery business being acquired for the fiscal year ending August 31, 2020 and the cost synergies expected to be realized in the first year. These statements are based on certain factors and assumptions including expected growth, results of operations, performance and business prospects and opportunities, which we believe are reasonable as of the current date. Refer in particular to the "Corporate Objectives and Strategies" and the "Fiscal 2021 Financial Guidelines" sections in the MD&A of the 2020 annual report and the "Fiscal 2021 Revised Financial Guidelines" section in the MD&A of the FY2021 first quarter shareholders' report for a discussion of certain key economic, market and operational assumptions we have made in preparing forward-looking statements.
While we consider these assumptions to be reasonable based on the information currently available to us, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including Uncertainties and Main Risk Factors which are described in the MD&A section of the 2020 annual report and the first quarter of FY2021 shareholder report that could cause actual results to differ materially from what we currently expect. These factors include risks such as competitive risks, business risks (including potential disruption to our supply chain), regulatory risks, public health crisis and emergencies such as the current COVID-19 pandemic, technology risks (including cybersecurity risks), financial risks (including variations in currency and interest rates), economic conditions, human-caused and natural threats to our network, infrastructure and systems, community acceptance risks, ethical behavior risks, ownership risks and litigation risks, many of which are beyond Cogeco's control. Moreover, Cogeco's radio operations are significantly exposed to advertising budgets from the retail industry, which can fluctuate due to changing economic conditions.
These factors are not intended to represent a complete list of the factors that could affect Cogeco and future events and results may vary significantly from what we currently foresee. The reader should not place undue importance on forward-looking information contained in this presentation and forward-looking statements contained in this presentation represent our expectations as of January 14, 2021 and are subject to change after such date. While we may elect to do so, we are under no obligation (and expressly disclaim any such obligation) and do not undertake to update or alter this information at any particular time, whether as a result of new information, future events or otherwise, except as required by law.
Presentation of financial information:
IFRS 16 has been applied as of September 1, 2019 using the modified retrospective approach where the comparative period is not restated but the cumulative effect is recognized in the opening retained earnings of FY2020. IFRS 16 eliminates the distinction between operating and finance leases, requiring instead that future lease payments be capitalized and recognized as lease liabilities. As a result, the presentation of expenses between operating expenses, depreciation and financial expenses has changed upon adoption of IFRS 16.
3
Non-IFRS financial measures
The following non-IFRS financial measures are used in the presentation and are described in section 16 of Cogeco Communications' FY2020 annual report
Adjusted EBITDA | profit for the year from continuing operations | ||
add | |||
income taxes | |||
financial expense | |||
depreciation and amortization | |||
integration, restructuring and acquisition costs | |||
Adjusted EBITDA margin | adjusted EBITDA as a % of revenue | ||
Free cash flow(1) | adjusted EBITDA | ||
add | |||
amortization of deferred transaction costs and discounts on long-term debt | |||
share-based payment | |||
loss (gain) on disposals and write-offs of property, plant and equipment | |||
defined benefit plans expense, net of contributions | |||
deduct | |||
integration, restructuring and acquisition costs | |||
financial expense(2) | |||
current income taxes | |||
capital expenditures | |||
repayment of lease liabilities | |||
Capital ("CAPEX")(3) intensity | capital expenditures as a % of revenue | ||
(1) During the second quarter of fiscal 2020, Cogeco modified the calculation method of its free cash flow in order to reflect how Cogeco | |||
analyzes and makes projections of its free cash flow. This modification has no impact on the result under the current and former | |||
4 | calculation, and therefore free cash flow for the comparable periods were not affected by this change. | ||
(2) | Excludes the non-cash gain on debt modification related to the repricing of Atlantic Broadband's Term Loan B recognized in the second | ||
quarter of FY2020 | |||
(3) | Acquisition of property, plant and equipment, excluding purchases of spectrum licenses and acquisition of right-of-use-assets |
Cogeco generates over $2.4 B in revenue
Gestion Audem
AUDET FAMILY | |||||
10.0% Equity | 69.0% Voting Rights | ||||
Cogeco TSX:CGO | |||||
LTM(1) | $2.5 B | Market | (2) | ||
Revenue | Capitalization $1.3 B |
83.0% Voting Rights | 100% Voting Rights | ||
32.8% Equity | 100% Equity | ||
Cogeco Communications | Cogeco Media | ||||||||||||||
TSX:CCA | |||||||||||||||
ST RADIO BROADCASTER | LTM(1) | ||||||||||||||
2 | ND LARGEST | LTM | (1) | $2.4 B | 1 | IN QUÉBEC | (4) | Revenue $91 M | |||||||
CABLE OPERATOR | |||||||||||||||
IN ONTARIO AND | Revenue | ||||||||||||||
QUEBEC | |||||||||||||||
9 | Cogeco Connexion | Atlantic Broadband(3) | |||||||||||||
TH LARGEST | |||||||||||||||
$1.29 B | $1.12 B | ||||||||||||||
IN THE UNITED STATES | |||||||||||||||
CABLE OPERATOR | |||||||||||||||
Market | $4.7 B | ||||||||||||||
(2) | |||||||||||||||
Capitalization | |||||||||||||||
(1) | For the twelve months ended November 30, 2020 | ||||||||||||||
5 | (2) | As of January 5, 2021 | |||||||||||||
(3) | Caisse de dépôt et placement du Québec ("CDPQ") holds an equity investment in Atlantic Broadband, representing a 21% ownership position | ||||||||||||||
(4) | Based on weekly reach |
Unique North American Broadband platform
STRONG CANADIAN CABLE OPERATIONS
- Fastest Internet speeds in a large portion of our footprint
- Superior locally-based customer support
- Industry leading adjusted EBITDA margin
- Strong free cash flow generation
- Well positioned to partner with governments to expand connectivity in underserved and unserved areas
SUCCESSFUL U.S. CABLE EXPANSION
- Strong organic growth opportunity in our largely non-metropolitan markets with fragmented competition
- One of the US industry's highest adjusted EBITDA margin
- Florida expansion provides for higher growth opportunity and stable cash flow
- Positioned to act as a consolidator of regional cable operators
STRONG FINANCIAL PERFORMANCE: SIGNIFICANT SHAREHOLDERS' DISTRIBUTIONS
- Attractive adjusted EBITDA margins, strong free cash flow and annual dividend growth of over 10%
- Cogeco Communications repurchased shares totaling $165 million in FY2020
- Prudent financial management with a history of de-leveraging following acquisitions
6
Cogeco Communications: Key strategic moves
- Since 2012, Cogeco pursued its expansion in the US market through 5 broadband acquisitions totaling approximately CDN$ 4 billion. Integration were all successfully executed:
- consistently superior organic growth with US Internet penetration increasing from 33% to 54%
- one of the US industry's highest EBITDA margins at 45% in FY2020
- unique North American platform with close to half of revenue from higher growth US operations
- Our data hosting business, Cogeco Peer1, was sold enabling Cogeco:
- to focus on its broadband platform
- initiate a large share buyback program while continuing to raise its dividends by 10% annually
- On December 14, 2020, Cogeco Connexion completed the acquisition of DERYtelecom, the 3rd largest cable operator in Quebec, serving approximately 100,000 customers, for an amount of $403 million
- Investments made to expand our footprint, enhance our network and drive the digital transformation:
- 1 Gig Internet in 75% of Canadian footprint and over 90% of U.S. footprint
- Active in government programs in Canada to provide high speed Internet to underserved regions: awarded 25 projects & applied to more than a hundred additional projects which are currently under review
- Successful Florida expansion strategy
- Investment in digital tools has led to more personalized services and improved operational efficiencies
- Forging ahead our plan to enter the Canadian mobile services market through a capital efficient model
7
DERYtelecom acquisition: Enhances growth profile
• Many of DERY's systems are directly adjacent to Cogeco's existing footprint
• Opportunity to further expand rural footprint through network extensions, including through government sponsored programs
Strategic • Located in non-metropolitan markets with fragmented competition and attractive demographics
- Competition: about 60% DSL coverage and 10% FTTN coverage
- Favorable demographics will improve ability to upsize customers' packages
- Expected higher population growth in some regions as a result of increased teleworking
• Opportunity to deliver superior revenue growth by leveraging Cogeco's product & sales expertise to | ||
add to DERY's service offering, upsize customers' packages and increase Internet customer base | ||
Operational | • Expect to achieve significant cost synergies as Cogeco fully integrates systems, implements its | |
digital tools and further benefits from economies of scale | ||
• Quality network comprised of 750 MHz + in more than 70% of the network | ||
• Acquisition was mostly executed through an asset purchase resulting in an estimated tax benefit of | ||
$40 million(1) from the tangible and intangible asset tax bump-up to market value | ||
Financial | • The tax adjusted purchase price represents a multiple of 7.8x estimated FY2020 adjusted EBITDA, | |
including $3 million of cost synergies expected to be realized in the 1st year | ||
• Acquisition was financed through a combination of cash on hand and borrowings under its Term | ||
Revolving Facility |
8 | (1) Present value (at a discounted rate of 9%) of an estimated tax bump-up of $325 million amortized over a period of between 5 and 20 years |
Five strategic growth pillars
9
Corporate social responsibility ("CSR") at Cogeco
- Cogeco Communications ranked among Corporate Knights' 2020 Global 100 Most Sustainable Corporations in the World and 50 Best Corporate Citizens in Canada for a third consecutive year
- Our last CSR report was published in February 2020 on our website(1) and is updated every two years
- An update of our CSR KPIs and key achievements is provided in our latest annual report. Key CSR targets achieved for each of our five pillars:
Be a trusted and reliable partner for our customers
Take part in developing our employees
Take part in developing our communities
Maintain a sound culture and strong corporate governance practices as enablers of value creation
Managing our environmental footprint
Data security: No security incidents resulting in the loss, theft or unauthorized access of customer data
Diversity: Maintained the percentage of women in managerial positions at least at 35%
(Surpassed the target as achieved 37% for Cogeco Inc.)
Community investment: Donated at least 1% of pre-tax profits (Surpassed the target as achieved 2.4% for Cogeco Inc.)
Governance: Remained in top tier of family-controlled dual- class companies as ranked by the Globe & Mail's Board Games Sound culture: Met all objectives with respect to responsible procurement and ethics training
GHG emissions: Reduced GHG emissions by 10% by 2020 on a per revenue basis based on fiscal 2014 emissions (Surpassed target as achieved 34% reduction for Cogeco Inc.)
10
(1) Website: http://corpo.cogeco.com/cca/en/company-overview/corporate-social-responsability/
Cogeco Communications
11
Cogeco Communications overview
Cogeco Connexion - Excluding DERYtelecom
- Covers a footprint of 1,779,000 households and 150,000 businesses which provides ample room to grow the Internet and business customer base
- Offers services to 815,000 Internet service, 612,000 video service and 363,000 telephony service customers
Atlantic Broadband
- Cogeco Communications acquired Atlantic Broadband in November 2012 and the segment has grown through 4 other acquisitions since then
- Covers a footprint of 928,000 households and 190,000 businesses which provides for attractive residential and business organic growth opportunity in all service categories
- Serves 505,000 Internet service, 318,000 video service and 150,000 telephony service customers
12
$M
2,500
2,000
1,500
1,000
500
0
STRONG REVENUE GROWTH
THROUGH U.S. CABLE
EXPANSION REPRESENTING 46% OF COMBINED REVENUE
Cogeco Peer 1
Atlantic Broadband
Cogeco Connexion
46%
28%
16%
72% 58% 54%
FY2013 | FY2016 | LTM-FY2021 |
Capital allocation priorities
VALUE CREATION
1. PURSUE ACQUISITIONS OF BROADBAND BUSINESSES
2. ENHANCE AND EXTEND BROADBAND NETWORKS TO OFFER MORE EVOLVED SERVICES
- Gradually introduce the new IPTV service, branded EPICO, across the Canadian footprint
- Pursue Florida's high growth opportunities: secure new bulk contracts, including condo buildings, and continue network expansion
- Extend coverage of the 1 Gbps Internet service and continue to enhance Wi-Fi experience
- Extend network in underserved and unserved communities
3. DEVELOP A HMNO(1) MOBILE MODEL WHICH MEETS FINANCIAL RETURN OBJECTIVES
RETURN CAPITAL TO SHAREHOLDERS
- Over the last 5 years, Cogeco Communications has increased its dividend by at least 10% annually
- On May 4, 2020 Cogeco Communications renewed its Normal Course Issuer Bid to repurchase up to 1,809,000 subordinate voting shares over a 1 year period
Balance allocation of capital between growing the business organically, making acquisitions and returning capital to investors, while maintaining a prudent level of financial leverage
13
- A hybrid model network operator ("HMNO") consists of areas where Cogeco would be a facilities-based operator where it owns spectrum (mobile network operator or "MNO") and areas where it would lease wholesale network access to large incumbent mobile operators (mobile virtual network operator or "MVNO")
Cogeco Connexion: Second largest cable operator in Ontario and Quebec
Serving more than
400 communities(1) from Gaspé to Windsor
ULTRAFAST INTERNET SPEEDS TO | 37 COMMUNITY | SUPPORT TO MORE THAN | CLOSE TO | |
14 | MORE THAN 815,000 CUSTOMERS(1) | TV STATIONS(1) AND MORE | 300 LOCAL | 2,400 EMPLOYEES(1) |
THAN 1,000 VOLUNTEERS | ORGANIZATIONS | IN OUR COMMUNITIES |
(1) Excluding the DERYtelecom acquisition
Cogeco Connexion's highlights
STRATEGIC RESIDENTIAL POSITIONING
- Leverage superior Internet speeds in a large portion of the footprint
- 120 Mbps offered in virtually all of the footprint
- 1 Gbps Internet service offered in 75% of the footprint
- Leverage advanced multiplatform video with the recent launch of our new IPTV platform and enhanced Wi-Fi
COMMERCIAL GROWTH OPPORTUNITY
- Approximately 150,000 businesses in footprint
- Suite of business solutions, including Hosted PBX phones and ultra fast Internet connections
- Cloud-basedmanaged Wi-Fi solutions
STRONG FINANCIAL PROFILE OVER THE LAST TWO FISCAL YEARS
- Adjusted EBITDA margin of over 53%
- Low capex intensity at 19%
- 1 Gbps Internet speeds deployed in a cost effective way using DOCSIS 3.1 technology
15
Cogeco Connexion FY2021 priorities
1. RESIDENTIAL GROWTH: ACQUISITION, ENHANCED SERVICES & NETWORK EXTENSIONS
- Leverage Cogeco's product and sales expertise to complement DERY's service offering, grow the customer base and deliver superior revenue growth
- Expand the launch of IPTV with an enhanced Wi-Fi solution as an anchor to home entertainment
- Customizable video content
- Savings through increased self-installs, lower equipment cost and increased network capacity
- Expand in underserved and unserved regions: participation in governments' funding programs
- COMMERCIAL: GROW MARKET POSITION IN THE 150,000 BUSINESSES FOOTPRINT
- Continue to drive market share through product enhancement and network expansion
- Introduce evolved customer portal and enhanced management for Dedicated Fibre customers
- Hosted PBX & SIP(1) services offered with enhanced backup and outage resiliency
- OPTIMIZE RETURN ON INVESTMENT : DELIVERING SERVICES MORE EFFICIENTLY
- Permanently capture COVID-19 savings related to field operations efficiencies: self-care, virtual connect tools, reduced calls and truck rolls
- Continue to drive adoption of digital interactions: launch a new IVR(2) system and increase e-Billing
(1) | Session Initiation Protocol | |
16 | (2) | Interactive Voice Response |
Atlantic Broadband: A scale operator from Maine to Florida
Serving more than 500 communities
in 11 states in U.S.A.
CLOSE TO | ULTRAFAST | NAMED INDEPENDENT | FEATURING LATEST | 21% MINORITY |
1,300 EMPLOYEES | INTERNET SPEEDS TO | CABLE OPERATOR OF | HIGH DEMAND | SHAREHOLDER AND KEY |
IN OUR COMMUNITIES | CLOSE TO 505,000 | THE YEAR IN 2020 BY | STREAMING VIDEO | PARTNER FOR FUTURE |
17 | CUSTOMERS | THE MULTICHANNEL | APPS | ACQUISITIONS |
NEWS (U.S.A.) |
Atlantic Broadband's highlights
NEW BROADBAND FIRST OFFER STRATEGY:
ENHANCE CONTRIBUTION MARGIN
- New strategy puts broadband at the center of customer experience
- New pricing strategy revolves around the Internet offering:
- Customers will be incented to add more services through modular pricing with less emphasis on bundling discounts
- Video services will generally no longer be offered to new customers on a stand-alone basis
STRATEGIC RESIDENTIAL POSITIONING
- Superior video platform and Internet speeds
- TiVo platform offers integrated Netflix video search, Amazon Prime Video and voice remotes
- 1 Gbps service offered to over 90% of footprint
COMMERCIAL GROWTH OPPORTUNITY
- Approximately 190,000 businesses in footprint
- Florida expansion provides stable cash flow
STRONG FINANCIAL PROFILE
18 • Strong adjusted EBITDA margin and free cash flow generation
COMPETITION SUMMARY EXCLUDING FLORIDA(1)
DSL Only
79%
Other technologies
21%
- Cogeco's estimates as a percentage of homes passed. Florida is excluded as a large portion of the customer base is comprised of bulk units for which customer penetration rates are not relevant metrics
Atlantic Broadband: FY2021 priorities
1. DRIVE GROWTH: INTERNET SUPERIORITY, COMMERCIAL FOCUS & NETWORK EXPANSION
- Continue to leverage demand for high-speed Internet by growing market share and up-tiering customer speeds
- Further expand in commercial markets led by hosted voice service
- Focus on edge-outs into underserved areas as well as select overbuild opportunities such as the successful Florida expansion
2. ENHANCE CUSTOMER EXPERIENCE
- Maximise the value of existing customers by focusing on:
- Enhanced services such as the new managed Wi-Fi solution for home network optimization
- New offer strategy which puts broadband at the center of the customer experience
- Enhance data and analytics capabilities to leverage data driven customer interactions and offers
- Continue to focus on First Call Resolution and First Time Right and refine self-install programs
- Leverage new IVR(1) capabilities and website enhancements to improve customer service
3.
4.
CONTINUE TO INVEST IN STATE-OF-THE-ART PRODUCTS & NETWORK
- Commence migration planning to IPTV to prepare for future delivery efficiencies
- Further improve network redundancy and reliability
MAINTAIN SOLID ADJUSTED EBITDA MARGIN
- Drive increased efficiencies through regional focus and further utilization of self-care,self-install and on-line capabilities
19 | (1) Interactive Voice Response |
Financial Results
20
Revenue and adjusted EBITDA growth
- FY2020 revenue and adjusted EBITDA grew by 1.5% and 3.0%, respectively, in constant currency(1)
- FY2020 profit for the year from continuing operations increased by 11.1%
- The decline in profit for FY2020 is related to discontinued operations which generated a profit of $75.4 M in FY2019 as a result of the sale of Cogeco Peer 1
- Cogeco expects to realize mid to high single-digit revenue and adjusted EBITDA growth in FY2021(2) based on a strong 1st quarter and the completion of the DERYtelecom acquisition on December 14, 2020(3)
Revenue | Adjusted EBITDA | Profit for the year | Profit for the year | ||
$M | $M | from continuing | $M | ||
operations | |||||
2,332 | 2,384 | $M | 432 | ||
1,149 | 397 | 397 | |||
1,108 | |||||
357 |
FY2019 | FY2020 | FY2019 | FY2020 | FY2019 | FY2020 | FY2019 | FY2020 | |
(1) | FY2020 constant currency basis relative to FY2019 average USD/CDN exchange rate of 1.3255 | |||||||
(2) | FY2021 constant currency basis relative to FY2020 average USD/CDN exchange rate of 1.3456. The financial guidelines do not take into consideration the potential | |||||||
impact of the review and variance process currently pending before the CRTC in connection with the final rates for aggregated wholesale Internet services for resellers. | ||||||||
21 | For further details, please consult the "Business developments" section of the 2020 annual report. The projections take into consideration the experience gained while | |||||||
operating during the COVID-19 pandemic so far but exclude potential unexpected significant material impacts from it. | ||||||||
(3) | The acquisition of DERYtelecom is expected to have a positive impact of approximately 3% on FY2021revenue and adjusted EBITDA. |
Strong free cash flow generation
- After achieving free cash flow growth of 50.0%, in constant currency(1), in FY2019, FCF was essentially flat in FY2020 due to an increase in capex of 10.2%(2), in constant currency:
- The increased capex was mainly related to higher purchases of equipment as a result of increased demand for our Internet service and network extensions in Florida and Canada
- In FY2021, Cogeco expects to invest approximately 20% of its revenue in capex and to realize low double- digit FCF growth(3)
Cash flow from | Capex & | Free cash flow | ||
operating activities | capital intensity | $M | ||
$M | $M, except percentages | |||
918 | 484 | |||
869 | 454 | 455 | ||
435 | ||||
18.6% | 20.3% |
FY2019 | FY2020 | ||||||||
FY2019 | FY2020 | FY2019 | FY2020 |
- FY2019 constant currency basis relative to FY2018 average USD/CDN exchange rate of 1.2773
- FY2020 constant currency basis relative to FY2019 average USD/CDN exchange rate of 1.3255
- FY2021 constant currency basis relative to FY2020 average USD/CDN exchange rate of 1.3456. Free cash flow excludes spectrum acquisitions. The financial guidelines include the impact from the acquisition of DERYtelecom which is expected to have a positive impact on free cash flow growth and the strong fiscal 2021 first quarter financial results. However, the financial guidelines do not take into consideration the potential impact of the review and variance process currently pending before the CRTC in connection with the final rates for aggregated wholesale Internet services for resellers. For further
22 | details, please consult the "Business developments" section of the 2020 annual report and the FY2021 first quarter shareholders' report. The projections take into consideration the experience gained while |
operating during the COVID-19 pandemic so far, but exclude potential unexpected significant material impacts from it. |
Compensation aligned with economic value creation ("EVC")
- Between 50% and 75% of senior executives' compensation is variable and at risk based on long-term creation of Economic Value
- Reasonable use of equity compensation to minimize dilution
- Stock ownership requirements for senior executives
- Balancing risk and reward to avoid excessive risk taking
Incentive Programs | Summary Features |
Annual Bonus | 60-70% based on level of EVC achieved vs. target and the balance |
based on employee engagement, customer experience, health and | |
safety and other objectives | |
Incentive Share Units (25% of the total LTI (1)) | 3 year time vesting |
Performance Share Units (50% of total LTI) | 3 year time and performance vesting based on cumulative EVC |
Stock Options (25% of the total LTI) | 5 year time vesting |
- EVC, which is a form of return on equity, is at the core of our compensation programs
- Annual targets are established at each business segment
- Targets, which are benchmarked against industry, are mainly based on EBITDA growth and capital efficiency objectives
Economic Value Targets | FY2021 |
Cogeco Inc. | 12.6 % |
Cogeco Connexion | 11.0% |
Atlantic Broadband | 15.0% |
23
(1) Long-term incentive
Sustained dividend growth
Annual dividend declared per share
CAGR 10%
$2.56(1)
$2.32
$2.10
$1.90
$1.72
FY2017FY2018FY2019FY2020FY2021
• Sustained free cash flow generation has allowed us to pursue growth objectives while returning | ||
capital to shareholders | ||
• Estimated FY2021 free cash flow dividend payout ratio of approximately 24%(2) | ||
(1) | Annualized quarterly dividend of $0.64 per share declared on October 27, 2020 and January 14, 2021. The dividend is subject to Board of Directors' approval on a quarterly basis and there is no assurance | |
24 | that it will remain at the current level | |
(2) | Based on FY2021 free cash flow guidelines including the DERYtelecom acquisition |
History of de-leveraging following acquisitions
Evolution of net leverage(1) ratios
Atlantic | Connecticut | MetroCast | Cogeco | Pro forma | ||||
Broadband & | system | Acquisition | Peer1 | DERY | ||||
Peer 1 Hosting | Acquisition | Sale(4) | telecom | |||||
Acquisition | Acquisition | |||||||
3.5(3) | (3) | 3.4(3) | ||||||
3.3 | ||||||||
3.0 | 2.9 | |||||||
2.6 | ||||||||
2.3 | 2.4 | 2.5 (3) | ||||||
1.4(2)
FY2012 | FY2013 | FY2014 | FY2015 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 | Q1-FY2021 | |
BBB | BBB | BBB | BBB | BBB | BBB- | BBB- | BBB- | BBB- | BBB- | |
S&P Senior Secured Rating | ||||||||||
Liquidity: $977 M
November 30, 2020 | |
Pro forma Dery(5) | |
Revolving | 944 |
Credit Facilities | |
Amounts drawn | 198 |
Unused credit | 746 |
facilities | |
Cash and cash | 231 |
equivalents | |
Liquidity | 977 |
change in notching methodology for BB+ corporate issuers
(1) Net debt / Adjusted EBITDA. Net debt represents the addition of bank indebtedness, principal on long term debt and obligations under cross currency swaps net of cash and equivalents and short-term investments
(2) Restated for IFRS purposes
(3) Includes twelve months pro forma adjusted EBITDA of the acquisitions
25 (4) Cogeco Peer1 was sold for a net cash consideration of $720 million
- The DERYtelecom acquisition was completed on December 14, 2020 and financed with cash on hand of $208 million and the balance through a $195 million drawing on Cogeco Communications' Term Revolving Facility
Low cost of capital and spread-out maturities
DEBT MATURITIES
Excluding credit facilities and lease liabilities(2) $M
Cogeco Communications
$300$311(3)
$200
August | August | |
2019 | 2020 | |
Average Cost of Debt(1) | 4.4% | 3.8% |
Average Life | 4.9Y | 4.2Y |
Atlantic Broadband
$2,021(3)(4)
$194(3)
FY2021 | FY2022 | FY2023 | FY2024 | FY2025 | FY2026 | FY2027 | FY2025 |
- Excludes amortization of debt issuance cost
- A total of CDN$ 3.2 million was drawn on Cogeco Communications' $750 million revolving facility maturing in FY2025 and Atlantic Broadband's US$150 million revolving facility maturing in FY2024. Cogeco Communications' indebtedness includes lease liabilities in an amount of $38.1 million with a weighted
26 | average lease term of approximately 6.6 years. |
- Converted at the November 30, 2020 closing exchange rate of USD/CDN 1.2965
- Balance payable in FY2025 after giving effect to annual mandatory repayments of US$17 million (CDN$22 million)
USD debt hedges U.S. operations
- Cogeco Communications is mostly naturally hedged from a free cash flow perspective as USD adjusted EBITDA exposure is mainly offset by interest expense on U.S. denominated debt and U.S. denominated capex
- The following table(1) highlights, in Canadian dollars, the impact of a 0.4% appreciation of the Canadian dollar against the USD (or $0.01 USD/CDN(2)) on operating results for the 1st quarter of FY2021
Unfavorable / (Favorable) impact | Cogeco Connexion | Atlantic | Consolidated |
CDN$ M | Broadband | ||
Revenue | - | 1.2 | 1.2 |
Adjusted EBITDA | 0.0 | 0.5 | 0.5 |
Financial expense | (0.1) | ||
Capex | (0.1) | (0.3) | (0.4) |
Others | 0.2 | ||
Free Cash Flow (FCF) impact | 0.2 | ||
Variance relative to total FCF | 0.0% | ||
- Foreign exchange impact related to revenue, adjusted EBITDA, CAPEX and free cash flow is disclosed in section 8.7 of Cogeco Communications' FY2021 first quarter shareholders' report. The impact on financial expense can be derived from the long-term debt note #10 in the consolidated financial statements included in the FY2021 first quarter shareholders' report.
- Decline of the USD exchange rate in the first quarter of FY2021 compared to the average rate of USD/CDN 1.3223 in the first quarter of FY2020 also disclosed in section 6.4 of the FY2021
27 | first quarter shareholders' report. |
Cogeco
28
Cogeco
Cogeco TSX:CGO
PUBLIC MARKET VALUE OF EQUITY
$1,315 M (16.0M shares at $82.17 (1))
15.7M shares of CCA
Investment in | ||||
Cogeco Media | ||||
Cogeco Communications TSX:CCA | ||||
$1,548 M | per CGO share(1)(2) | RADIO BROADCASTING | ||
$96.73 |
29 | (1) | As of January 5, 2021 |
(2) | Based on a CCA share price of $98.65 multiplied by a ratio of 0.98. Ratio equals shares of CCA held by CGO divided by CGO shares outstanding |
Cogeco Media: Strong network of radio stations
Radio broadcasting and news agency
STATIONS THAT ARE
RANKED AMONGST THE BEST
23 RADIO STATIONS | LARGEST PRIVATE | 4.8 MILLION | INTEGRATED SALES |
RADIO NEWS NETWORK | LISTENERS / WEEK | SERVICES | |
30 | IN QUÉBEC | IN QUÉBEC |
Cogeco Media: Most important radio broadcaster in Quebec(1)
Broad radio coverage
- No. 1 in commercial share of hours tuned in Montreal and in Quebec City
Radio is an important media for
Quebecers
- 86% tune in every week
- Time spent listening of 17.1 hours per week
News agency with a presence in more than 50 cities in Québec
- Cogeco Media App launched in the fall 2019: 119,262 downloads
- Podcast production brand "C23"(2) launched in August 2020: 435,000 clip downloads
31 | (1) | Based on weekly reach |
(2) | Includes a selection of the week's best live programming radio shows and original productions |
Appendices
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Customer profile
November 30, 2020 | Cogeco | Atlantic | |
Connexion | Broadband | Total | |
Homes passed | 1,779,083 | 927,564 | 2,706,647 |
Primary service units(1) | 1,790,783 | 972,683 | 2,763,466 |
Internet service customers | 815,248 | 504,621 | 1,319,869 |
Internet penetration(2) | 45.8% | 54.4% | 48.8% |
Video service customers | 612,297 | 318,387 | 930,684 |
Video penetration(2) | 34.4% | 34.3% | 34.4% |
Telephony service customers | 363,238 | 149,675 | 512,913 |
Telephony penetration(2) | 20.4% | 16.1% | 19.0% |
- Includes Internet, video and telephony customers
- As a percentage of homes passed
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Acronyms
CAGR | Compound Average Growth Rate |
DOCSIS | Data Over Cable Service Interface Specifications |
Gbps | Gigabits per second |
HPBX | Hosted Private Branch Exchange |
IP | Internet Protocol |
Mbps | Megabits per second |
HMNO | Hybrid Mobile Network Operator |
Wi-Fi | WIreless FIdelity |
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Attachments
- Original document
- Permalink
Disclaimer
Cogeco Communications Inc. published this content on 15 January 2021 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 15 January 2021 09:31:01 UTC