MONTREAL — Cogeco Inc. reported its revenues and profits increased in the first quarter of 2020 compared to the same period last year, primarily due to growth in its American broadband services business and the acquisition of several radio stations a year ago.
Overall, Cogeco’s revenue increased by 1.8% to reach $618.5 million in Q1 2020, compared to the same quarter of 2019. The company’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) in Q1 2020 reached $290.5 million, an increase of 5.2% over the first quarter of 2019.
Revenue from Cogeco Communications accounted for $586.8 million of the company’s overall revenue in the first quarter, which also represented a 1.8% increase compared to the $576.7 million in revenue reported by the Communications segment in Q1 2019. Cogeco said in its news release the revenue increase in its Communications segment was mostly a result of its American broadband services operations’ growth in both residential and business Internet service customers.
In a separate news release outlining the performance of Cogeco Communications, the company said the segment’s revenue increase was also a result of rate increases mostly implemented during the fourth quarter of fiscal 2019, which was partly offset by a decrease in video service customers and lower political advertising revenue.
The company also said its Canadian broadband services revenue decreased by 0.5% as a result of a decline in video service customers partly due to the trailing impact of the implementation of a new customer management system, which was in stabilization phase at the beginning of fiscal 2019, and lower net pricing from consumer sales, partly offset by the customers’ transition to higher-value offerings and continued growth in Internet service customers.
In a shareholders’ report, Cogeco said its combined Canadian and U.S. subscribers (Internet, video and telephony) now totalled 2.7 million at the end of its first quarter of 2020. During the quarter, Internet service customer net additions amounted to 11,978, compared to net losses of 2,623 in Q1 2019. Video service customer net losses totalled 7,174 in Q1 2020, compared to a net loss of 17,622 subscribers for the same quarter in 2019. Finally, telephony service subscriber net additions in Q1 2020 amounted to 5,686, compared to net losses of 19,206 for the same period of 2019.
In other Communications segment news, on January 10, Cogeco announced its subsidiary Atlantic Broadband had signed a definitive agreement to purchase Thames Valley Communications, a broadband services company operating in southeastern Connecticut, for US$50 million. Still subject to regulatory approval, the transaction would add approximately 10,000 customers to Atlantic Broadband’s operations, Cogeco said.
In Cogeco’s Other segment, which includes Cogeco Media’s radio station operations, revenue increased by 3.1% due to the acquisition of 10 regional radio stations from RNC Média inc. during the first quarter of 2019, offset by a soft advertising market and increased competition in media activities, Cogeco said.
Cogeco’s overall corporate profit for the first quarter of 2020 amounted to $94.2 million, of which $31.3 million, or $1.96 per share, was attributable to owners of the corporation, compared to $79.1 million, $26.2 million, and $1.61 per share, respectively, for the same period of fiscal 2019. This represents a profit increase of 19.0% year over year, and Cogeco said the variation is mainly due to a higher profit from continuing operations combined with a loss for the period from discontinued operations in the same period of the prior year.
The company’s free cash flow decreased by 3.6% to reach $108.9 million during the first quarter of 2020, compared to $113 million in Q1 2019. On January 14, Cogeco’s board of directors declared a quarterly eligible dividend of $0.475 per share, compared to $0.43 per share in the first quarter of fiscal 2019.
“We are satisfied with the overall performance of Cogeco for the first quarter of 2020,” said Philippe Jetté, president and CEO of Cogeco Inc., in the corporate news release.
“At Cogeco Communications, Cogeco Connexion’s adjusted EBITDA increased again this first quarter compared to last year as it continues to focus on operational efficiencies, digital transformation and enhanced marketing activities. We see good progress in primary service units for our Canadian broadband segment and are excited by the upcoming launch of the IPTV platform which will provide an enhanced experience and more entertainment choices for our customers,” said Jetté.
“In the U.S., we are pleased with the results at Atlantic Broadband. Our American broadband operations is pursuing its organic growth fuelled by increased sales and marketing efforts in both the residential and business markets, while we continue to look for new acquisitions to accelerate our growth,” added Jetté.
“Our radio business, now composed of 23 stations, shows satisfying results despite a soft advertising market. Cogeco Media remains competitive, thanks to the excellent ratings many of our stations continue to enjoy and a strong focus on high quality programming and cost efficiency,” concluded Jetté.
