MONTREAL – Driven by growth at Cogeco Communications, Cogeco Inc. saw a third quarter increase in revenue and profits.
Profit for the period ended May 31, 2017 amounted to $82.1 million, of which $30.0 million was attributable to owners of the Corporation, compared to a $381.9 million loss for the third quarter of fiscal 2016 of which $117.7 million was attributable to the owners of the Corporation.
The profit progression resulted from last year's non-cash pre-tax impairment of goodwill and intangible assets of $450 million and from the claims and litigations of $10.5 million which both occurred in the Communications segment, the company said Friday. The remaining variation is mainly explained by the improvement of adjusted EBITDA combined with the decrease in depreciation and amortization, partly offset by the increase in income taxes.
Revenue increased 4.5% to $599.7 million, up from $574,005 million year-over-year, driven by growth in the Communications segment (Cogeco Communications), while adjusted EBITDA grew 4.6% to $264.8 million from $253.2 million in the same period of fiscal 2016.
Free cash flow reached $109.6 million, a 19.3% increase, compared to the same quarter of the prior year mainly due to the improvement of adjusted EBITDA combined with last year's claims and litigations, partly offset by higher acquisitions of property, plant and equipment, intangible and other assets in the Communications segment.
Over at Cogeco Communications Inc., third quarter revenues grew 4.6% to $565.2 million, mainly driven by growths of 3.3% in the Canadian broadband services segment and of 9.8% in the American broadband services segment, combined with stable revenue in the Business information and communications technology (Business ICT) services segment.
Canadian broadband services revenue increased as a result of the impact of rate increases implemented in December 2016, the continued growth in Internet services customers combined with the movement of customers to higher value packages, partly offset by a decline in video and telephony services customers.
American broadband services revenue increased primarily as a result of the continued growth in Internet and telephony services customers in both the residential and business sectors, rate increases implemented in September 2016 combined with the appreciation of the US dollar against the Canadian dollar compared to the same period of the prior year.
Business ICT services revenue was stable as a result of colocation revenue growth combined with the appreciation of the US dollar against the Canadian dollar compared to the same period of the prior year, partly offset by competitive pricing pressures on the hosting and network connectivity services and the depreciation of the British Pound currency against the Canadian dollar compared to the same period of the prior year.
Profit for the period amounted to $76.2 million compared to a year-over-year loss of $387.4 million as a result of last year's non-cash pre-tax impairment of goodwill and intangible assets of $450 million and claims and litigations of $10.5 million which both occurred in the Business ICT services segment.
Primary service units (PSUs), which represent the sum of Cogeco's video, Internet and telephony service customers, were 2.53 million of which 1.93 million are in Canada and 608,388 are in the United States.
At quarter end, Cogeco’s Canadian television customers totaled 729,701 (down 9,977 year-over-year); Internet service customers reached 764,350 (up 11,167); and telephony service customers were 432,486 (down 3,141).
"Overall we are pleased with our results for the third quarter of fiscal 2017," said Cogeco Inc. president and CEO Louis Audet, in a statement. "Cogeco Connexion, our Canadian broadband subsidiary, has seen marked growth in terms of both revenue and EBITDA.
"Atlantic Broadband continues to produce positive results, in line with expectations," he added. "Our American subsidiary is concentrating its efforts on investments in Florida, a region with a strong potential for growth.”
"At Cogeco Peer 1, our Business ICT subsidiary, the leadership team continues to build and consolidate its client relationships, with a focus on medium and large customers, positioning themselves as a trusted advisor bringing more relevant solutions to market and cross-selling services," continued Audet.
"At Cogeco Media, our radio subsidiary, the latest Numeris ratings results confirm that we continue to maintain our leadership position in the Québec radio market, with very strong audience ratings backed by our solid financial performance," concluded Audet. "Our results in this sector are excellent and I am proud of our team's outstanding work."
Cogeco’s third quarter financial report to shareholders is available here.
