MONTREAL – Cogeco’s nascent U.S. acquisitions helped to offset weak Canadian results for the second quarter of 2014.
Revenue for the period ended February 28, 2014 increased by 13.1% ($60.0 million) to $518.5 million, driven by the cable segment, mainly as a result of the full quarter impact of the acquisition of Peer 1 Hosting, combined with favorable foreign exchange rates and organic growth from all operating units.
Adjusted EBITDA increased by 13.2% ($25.8 million) to $221.6 million compared to the second quarter of fiscal 2013. Profit for the period amounted to $58.5 million, up from $49.0 million for the same period of previous fiscal year period, which Cogeco attributed to the improvement of the adjusted EBITDA stemming from the cable segment’s recent acquisitions and organic growth, as well as the decrease in integration, restructuring and acquisition costs, partly offset by the increases in financial expense and depreciation and amortization expense all related to the recent acquisitions. Free cash flow was $91.4 million, compared to $34.1 million year-over-year.
In its cable segment, second quarter revenues rose 13.1% ($56.3 million) to reach $486.0 million, driven by 2.3% growth in the Canadian cable services segment, 14.2% growth in the American cable services segment and 98.4% growth in its Enterprise services segment. Profit for the period amounted to $60.4 million compared to $50.8 million last year.
Primary service units (PSUs), which represent the sum of its television, high-speed Internet and telephony service customers, were 2.45 million of which 1.96 million are in Canada and 492,550 are in the United States.
In Canada, PSUs dropped by 13,425 in the quarter compared to an increase of 2,314 PSU for the comparable period of the prior year, mainly as a result of service category maturity, competitive offers in the industry and tightening of customer qualifications.
Cogeco’s Canadian television customers totalled 815,852 at quarter end, down approximately 11,800 from the same period last year; its high-speed Internet customers increased by about 4,700 to 672,981; and its telephony service customers dropped by about 6,300 to 473,244.
At quarter end, the company said 68% (67% in 2013) of its Canadian cable services customers subscribed to two or more services. The distribution of customers by number of services for the Canadian cable services were: 32% who subscribe to the single play (33% in 2013), 32% to the double play (30% in 2013) and 36% to the triple play (37% in 2013).
As a result of revised projections in the Cable segment as well as the improvement in the radio and advertising transit businesses activities, the Cogeco revised its consolidated projections for the 2014 fiscal year. Revenue is now expected to reach $2,105 million, an increase of $30 million; adjusted EBITDA should increase from $900 million to $915 million; and profit for the year should rise from $233 million to $240 million.
"We are satisfied with our financial results for the second quarter of fiscal year 2014 as well as with the growth opportunities ahead of us," said president and CEO Louis Audet, in a statement. “We've remained very diligent with our cost management, which has helped contribute to the strong performance across all of our segments and helped maintain the operating margin over the last quarter to a satisfying level."
The board of directors of Cogeco declared a quarterly eligible dividend of $0.22 per share for multiple voting and subordinate voting shares, payable on May 7, 2014, to shareholders of record on April 23, 2014.
