BCE (BCE) Q2 2024 earnings summary

Executive summary

• Adjusted EBITDA grew 2.0% year-over-year, with margin up 1.3 points to 44.9%, driven by a 3.3% reduction in operating costs, despite competitive pricing and revenue loss from The Source closures.

• Free cash flow increased 8.0% year-over-year to $1,097 million, while cash flows from operating activities declined 9.6% due to higher severance, interest, and lower working capital.

• Net earnings surged 52.1% to $604 million, primarily due to a large non-cash loss in Q2 2023; adjusted EPS was $0.78, down 1.3%.

• Subscriber growth was strong: 131,043 total mobile phone net additions (up 4.4%), prepaid net adds up 269%, and broadband and bundling growth continued.

• Digital advertising revenues grew 35% year-over-year, with new ad offerings and partnerships announced.

Financial highlights

• Total revenue declined 1.0% year-over-year to $6,005 million, mainly due to an 8.7% drop in low-margin product sales, including The Source closures.

• Adjusted EBITDA reached $2,697 million, up 2.0% year-over-year, with margin at 44.9%.

• Free cash flow was $1,097 million, up 8.0% year-over-year; capital expenditures fell 25.2% to $978 million, reflecting a planned reduction in capital spending.

• Net earnings were $604 million, up 52.1% year-over-year; adjusted net earnings were $712 million, down 1.4%.

• Adjusted EPS was $0.78, down 1.3% year-over-year.

Outlook and guidance

• 2024 guidance reconfirmed: revenue growth 0–4%, adjusted EBITDA growth 1.5–4.5%, capital intensity below 16.5%, adjusted EPS growth (7%) to (2%), free cash flow growth (11%) to (3%), and annualized dividend per share of $3.99.

• Lower adjusted EPS and free cash flow expected in 2024 due to higher interest, depreciation, amortization, and severance payments.

• Revenue guidance reaffirmed despite tracking below target due to low-margin product declines; growth expected from service revenue and digital initiatives.