Cogeco (CGO) Q4 2024 earnings summary

Executive summary

• Delivered Q4 and full-year results slightly above guidance, with strong Free Cash Flow performance and continued progress on strategic priorities including U.S.-Canada synergies, digitization, advanced analytics, disciplined network expansion, and wireless initiatives.

• Completed merger of U.S. and Canadian teams, generating cost savings for reinvestment in growth drivers such as digital and revenue analytics, and unified management to drive synergies and sustainable growth.

• Launched AI-powered customer service chatbot, managed over 80,000 inquiries in September, and expanded oxio digital brand customer base.

• Focused on capital-light wireless expansion and fibre-to-the-home growth in both Canada and the U.S., including partnerships for MVNO launches and the introduction of Breezeline Mobile.

• Consistent return of capital to shareholders, including 16% share repurchase since 2019 and annual dividend increases.

Financial highlights

• Fiscal 2024 revenue of $2.98B, with adjusted EBITDA of $1.44B and margin of 48%.

• Free Cash Flow rose 66% year-over-year to $476M, or $613M excluding network expansions, driven by lower CapEx, higher adjusted EBITDA, and reduced financial expenses, taxes, and restructuring costs.

• Net debt-to-EBITDA ratio improved to 3.3x, aided by strong Free Cash Flow.

• Dividend increased by 8% to CAD 0.922 per share, with payout ratio around 30% of Free Cash Flow.

• Profit attributable to owners at $336M, diluted EPS $7.67, impacted by reorganization charges and non-cash impairment.

Outlook and guidance

• Fiscal 2025 will be a year of reinvestment, with stable consolidated revenue and adjusted EBITDA expected on a constant currency basis.

• Net capital expenditures projected at $650M–$735M, with $140M–$190M for network expansion and capital intensity of 22–24% (17–19% excluding network expansions).

• Free Cash Flow and Free Cash Flow excluding network expansions expected to decline 0–10% from last year’s strong performance.

• At Cogeco Connexion, low single-digit declines in revenue and EBITDA are anticipated due to competitive pressures and reinvestment; Breezeline expects stable revenue and low single-digit EBITDA growth.