New operating model focused on customer experience and operational excellence to power future growth. Expanded our customer value proposition with Breezeline Mobile launched across most of Breezeline's U.S. broadband footprint. Revenue increased by 1.3% compared to the same period last year to $777.2 million, reflecting revenue growth at Cogeco Connexion and stable revenue at Breezeline, in line with expectations. Adjusted EBITDA(1) of $369.8 million increased by 4.0% over last year. Profit for the period amounted to $75.3 million, an increase of $42.0 million, of which $19.0 million was attributable to owners of the Corporation. Earnings per share on a diluted basis rose to $1.97 from a loss of $2.22 in the third quarter of fiscal 2023, while adjusted diluted earnings per share(1)(3) rose by 24.3% to $3.02, which excludes the impact of last year's pre-tax non-cash impairment charges, restructuring and certain other costs. Free cash flow(1) amounted to $89.3 million, a decrease of 16.9% compared to last year reflecting restructuring costs recognized during the quarter, while cash flow from operating activities increased by 18.3% to $335.1 million due to the timing of certain working capital items. Free cash flow, excluding network expansion projects(1) decreased by 18.3% to $113.7 million. Cogeco maintains its fiscal 2024 financial guidelines. A quarterly dividend of $0.854 per share was declared, representing a 16.8% increase over the prior year. MONTRÉAL, July 11, 2024 /CNW/ - Today, Cogeco Inc. (TSX:CGO) ("Cogeco" or the "Corporation") announced its financial results for the third quarter ended May 31, 2024. "We demonstrated solid performance again in the third quarter of 2024, with revenue growth and healthy expansion of our adjusted EBITDA margin due to an improving product mix, combined with an acceleration of our efforts to drive operational efficiency," said Frédéric Perron, President and CEO. "In the third quarter, we implemented the initial steps of a new operating model designed to deliver future growth and increase our focus on customer experience and operational excellence. "Growth in our Canadian telecommunications business was driven by the ongoing expansion of our Internet subscriber base under our Cogeco Connexion and oxio brands. We continue to be impressed by oxio's performance and its robust adoption by consumers and are cascading our learnings from this digital brand across our organization. "In the U.S., we rolled out Breezeline Mobile across most of our footprint, which will provide an even stronger incentive for new and existing customers to bundle their digital services with us. In addition, our Internet-first strategy and persistent endeavors to drive operational efficiency helped deliver adjusted EBITDA growth over last year. "At Cogeco Media, our innovative digital solutions and multi-platform digital content helped generate another quarter of audio sales growth. These gains were driven by strong listener engagement across many of our stations, including at 98.5 Montréal, which remained stalwart in the spring 2024 Numeris ratings as Canada's most listened to radio station. "Lastly, the new operating model and transformation we began during the quarter will allow us to sustain our growth, take our competitive agility to new heights, better serve our customers, and continue to build a strong culture where our colleagues thrive and succeed. We expect it to result in significant value creation for Cogeco over the coming years as the benefits of the transformation are realized." Consolidated Financial Highlights Three months ended May 31 2024 2023 Change Change in constant currency (1) (In thousands of Canadian dollars, except % and per share data) (unaudited) $ $ % % Revenue 777,249 767,603 1.3 1.0 Adjusted EBITDA (1) 369,786 355,459 4.0 3.8 Profit for the period 75,285 33,314 — Profit (loss) for the period attributable to owners of the Corporation 18,960 (34,473) — Adjusted profit attributable to owners of the Corporation (1)(3) 29,102 37,921 (23.3) Cash flows from operating activities 335,126 283,180 18.3 Free cash flow (1) 89,276 107,379 (16.9) (16.8) Free cash flow, excluding network expansion projects (1) 113,709 139,210 (18.3) (18.3) Acquisition of property, plant and equipment 172,404 190,121 (9.3) Net capital expenditures (1)(2) 169,754 170,258 (0.3) (0.7) Net capital expenditures, excluding network expansion projects (1) 145,321 138,427 5.0 4.6 Diluted earnings (loss) per share 1.97 (2.22) — Adjusted diluted earnings per share (1)(3) 3.02 2.43 24.3 Operating results For the third quarter of fiscal 2024 ended on May 31, 2024: Revenue increased by 1.3% to $777.2 million. On a constant currency basis(1), revenue increased by 1.0% driven by revenue growth in the Canadian telecommunications segment, while revenue remained stable in the American telecommunications segment, as explained below. Canadian telecommunications' revenue increased by 2.2%, mostly driven by the cumulative effect of high-speed Internet service additions over the past year as well as the Niagara Regional Broadband Network acquisition ("NRBN") completed on February 5, 2024. American telecommunications' revenue remained stable as reported and in constant currency, mainly resulting from a higher revenue per subscriber and a better product mix resulting from customers subscribing to increasingly fast Internet speeds, offset by lower video subscriptions and a lower Internet subscriber base over the past year, with an increasing proportion of customers only subscribing to Internet services. Revenue in the media activities increased by 3.3%. Adjusted EBITDA increased by 4.0% to $369.8 million. On a constant currency basis, adjusted EBITDA increased by 3.8%, mainly due to higher adjusted EBITDA in both the American and Canadian telecommunications segments, as explained below, and lower corporate costs primarily due to the timing of certain operating expenses. American telecommunications adjusted EBITDA increased by 4.5%, or 3.9% in constant currency, mostly due to lower operating expenses driven by cost reduction initiatives and operating efficiencies. Canadian telecommunications adjusted EBITDA increased by 2.9%, mainly due to revenue growth, partly offset by higher sales and other operating expenses to drive subscriber growth. Profit for the period amounted to $75.3 million, of which $19.0 million, or $1.97 per diluted share, was attributable to owners of the Corporation compared to a profit of $33.3 million, and a loss of $34.5 million, or $2.22 per diluted share, respectively, in the comparable period of fiscal 2023. The increases in profit for the period and profit attributable to owners of the Corporation resulted mainly from last year's non-cash impairment charges of $88 million related to the radio operations and higher adjusted EBITDA, partly offset by higher restructuring costs, depreciation and amortization expense and income tax expense. Adjusted profit attributable to owners of the Corporation(3) was $29.1 million, or $3.02 per diluted share(3), compared to $37.9 million, or $2.43 per diluted share, last year. The increase of adjusted diluted earnings per share over last year reflects the benefit of the Corporation's repurchase and cancellation of shares. Net capital expenditures were $169.8 million, a decrease of 0.3% compared to $170.3 million in the same period of the prior year. In constant currency, net capital expenditures(1) were $169.1 million, a decrease of 0.7% compared to last year, mainly due to lower spending in the American telecommunications segment as expected due to the timing of network expansion projects, partly offset by higher purchases of customer premise equipment and other capital spending related to fibre-to-the-home network expansions in the Canadian telecommunications segment. Excluding network expansion projects, net capital expenditures were $145.3 million, an increase of 5.0% compared to $138.4 million in the same period of the prior year. In constant currency, net capital expenditures, excluding network expansion projects(1) were $144.8 million, an increase of 4.6% compared to last year. Fibre-to-the-home network expansion projects continued in both Canada and the United States, with homes passed additions close to 44,000(4) during the first nine months of fiscal 2024. Acquisition of property, plant and equipment decreased by 9.3% to $172.4 million, mainly resulting from lower spending. Free cash flow decreased by 16.9%, or 16.8% in constant currency, and amounted to $89.3 million as reported and in constant currency, mainly due to higher restructuring costs. Free cash flow, excluding network expansion projects decreased by 18.3% as reported and in constant currency, and amounted to $113.7 million. Cash flows from operating activities increased by 18.3% to $335.1 million, mostly due to the timing of payments of trade and other payables and the collection of trade accounts receivable, lower income taxes paid and higher adjusted EBITDA. Cogeco maintains its fiscal 2024 financial guidelines as issued on November 1, 2023. At its July 11, 2024 meeting, the Board of Directors of Cogeco declared a quarterly eligible dividend of $0.854 per share, an increase of 16.8% compared to $0.731 per share in the comparable quarter of fiscal 2023. ___________________________________________________________________________________________________________________________ (1) Adjusted EBITDA and net capital expenditures are total of segments measures. Constant currency basis, adjusted profit attributable to owners of the Corporation, net capital expenditures, excluding network expansion projects, free cash flow and free cash flow, excluding network expansion projects are non-IFRS financial measures. Change in constant currency and adjusted diluted earnings per share are non-IFRS ratios. These 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 information on these financial measures, please consult the "Non-IFRS and other financial measures" section of this press release. (2) Net capital expenditures exclude non-cash acquisitions of right-of-use assets and the purchases, and related borrowing costs, of spectrum licences, and are presented net of government subsidies, including the utilization of those received in advance. (3) Excludes the impact of non-cash impairment charges and acquisition, integration, restructuring and other costs, net of tax and non-controlling interest. (4) Organic growth calculated by excluding additions resulting from acquisitions. Financial highlights Three and nine months ended May 31 2024 2023 Change Change in constant currency (1) (2) 2024 2023 Change Change in constant currency (1) (2) (In thousands of Canadian dollars, except % and per share data) $ $ % % $ $ % % Operations Revenue 777,249 767,603 1.3 1.0 2,305,329 2,314,484 (0.4) (0.6) Adjusted EBITDA (2) 369,786 355,459 4.0 3.8 1,083,601 1,081,004 0.2 — Acquisition, integration, restructuring   and other costs (3) 46,634 11,377 — 51,121 21,006 — Impairment of goodwill and   intangible assets — 88,000 — — 88,000 — Profit for the period 75,285 33,314 — 267,944 259,714 3.2 Profit (loss) for the period   attributable to owners of the   Corporation 18,960 (34,473) — 77,498 41,396 87.2 Adjusted profit attributable to   owners of the Corporation (2)(4) 29,102 37,921 (23.3) 93,486 116,292 (19.6) Cash flow Cash flows from operating activities 335,126 283,180 18.3 858,427 683,844 25.5 Free cash flow (2) 89,276 107,379 (16.9) (16.8) 329,923 335,193 (1.6) (1.7) Free cash flow, excluding network   expansion projects (2) 113,709 139,210 (18.3) (18.3) 410,406 475,100 (13.6) (13.8) Acquisition of property, plant and   equipment 172,404 190,121 (9.3) 507,427 598,803 (15.3) Net capital expenditures (2)(5) 169,754 170,258 (0.3) (0.7) 488,177 524,432 (6.9) (7.1) Net capital expenditures, excluding    network expansion projects (2) 145,321 138,427 5.0 4.6 407,694 384,525 6.0 5.8 Per share data (6) Earnings (loss) per share Basic 1.99 (2.22) — 6.58 2.65 — Diluted 1.97 (2.22) — 6.52 2.64 — Adjusted diluted (2)(4) 3.02 2.43 24.3 7.87 7.41 6.2 Dividends per share 0.854 0.731 16.8 2.562 2.193 16.8 (1) Key performance indicators presented on a constant currency basis are obtained by translating financial results from the current period denominated in US dollars at the foreign exchange rate of the comparable period of the prior year. For the three and nine-month periods ended May 31, 2023, the average foreign exchange rates used for translation were 1.3562 USD/CDN and 1.3513 USD/CDN, respectively. (2) Adjusted EBITDA and net capital expenditures are total of segments measures. Adjusted profit attributable to owners of the Corporation, free cash flow, free cash flow, excluding network expansion projects and net capital expenditures, excluding network expansion projects are non-IFRS financial measures. Change in constant currency and adjusted diluted earnings per share are non-IFRS ratios. These 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 information on these financial measures, please consult the "Non-IFRS and other financial measures" section of this press release. (3) For the three and nine-month periods ended May 31, 2024, acquisition, integration, restructuring and other costs were mostly related to restructuring costs recognized during the third quarter of fiscal 2024. ...