MONTREAL – Good third quarter results from Cogeco Inc. and Cogeco Cable were helped along thanks to six months of operating results of new acquisition Atlantic Broadband and four months operating results from an even newer buy, Peer 1 Network Enterprises, the company reported Wednesday evening.
Third quarter revenue increased by 40.9% to reach $504.4 million and by 26.7% for the first nine months to reach $1.3 billion when compared to the same periods of the prior year.
Operating income before depreciation and amortization increased by 39.2% to $220.6 million when compared to the third quarter of fiscal 2012, and by 29.3% to $573.1 million when compared to the first nine months of the prior year, says the company’s press release. “Operating income before depreciation and amortization increases for both periods are mainly attributable to the acquisitions of ABB and PEER 1 ("recent acquisitions") as well as the improvement in the financial results of the Canadian operations in the Cable segment,” it says.
Profit for the period from continuing operations amounted to $55.1 million in the third quarter compared to $55.4 million for the same period of the previous fiscal year. Profit for the period from continuing operations decreased slightly during the quarter mostly due to acquisition costs, additional depreciation and amortization and financial expense, including costs of approximately $3.5 million to refinance certain long-term debt with respect to the recent acquisitions, partly offset by operating income before depreciation and amortization generated by the Canadian operations and by the recent acquisitions in the Cable segment. For the first nine months of fiscal 2013, profit for the period from continuing operations amounted to $158.7 million compared to $129.3 million for the same period of fiscal 2012. Profit progression for the nine-month period is mostly attributable to the factors described above and by additional income tax expense, reads the release.
Free cash flow reached $45 million for the third quarter compared to $29.5 million in the comparable quarter of the prior year. For the first nine months, free cash flow amounted to $98 million, compared to $73.8 million in the same period of fiscal 2012. The increase for both periods is mostly attributable to the Cable segment by the improvement of operating income before depreciation and amortization, partly offset by the increase in financial expense, the recent acquisition costs as well as the increase in acquisition of property, plant and equipment, reads the release.
In the cable segment, fiscal 2013 third-quarter primary service units (which the company defines as the sum of television, high speed internet, and telephony service customers) decreased by 3,331, but increased by 15,851 for the first nine months of fiscal 2013. As of May 31, 2013, consolidated PSU amounted to 2,470,164 of which 1,981,290 come from the Canadian operations and 488,874 from the American operations.
That said, looking at the cable company’s traditional metric, TV subscribers, Cogeco Cable lost more than 21,000 TV customers in the first three quarters of fiscal 2013. The company chalked up the losses to “the promotional offers of competitors for the video service combined with the tightening of our customer credit controls in Canada,” says the release.
"We are satisfied with the favourable results obtained for the third quarter of fiscal 2013," said Louis Audet, president and CEO, in the release. "The cable subsidiary continues along a path of steady growth and profitability, as per expectations. In the last three months, we successfully refinanced over half of Cogeco Cable's indebtedness in order to take advantage of historically low interest rates. Average maturity was extended from 4.6 years to 6.1 years and fixed rate debt increased from 35% to 66%. Cogeco Cable is well positioned going forward.
"Regarding our media business, Cogeco Diffusion Inc.'s radio business ratings continue to lead in many of its markets and we are pleased to see continued appetite for radio and transit advertising from our customers. Our media business is delivering results according to plan," he added.
