MONTREAL – Cogeco Inc. reported solid third quarter results late on Wednesday, recording a 1.4% increase in revenue to $626 million and adjusted EBITDA of $298.4 million, an increase of 2.9% compared to the same quarter of 2019.
While the company did take a hit on the radio side as advertising has plummeted during the Covid-19 crisis, its press release said “the situation had various impacts on our business during the last quarter. However, these Covid-related impacts did not have a material effect on our results.” Cogeco’s cable, ISP and telecom businesses in southern Ontario and Quebec and in the U.S. (Atlantic Broadband) dwarf its radio group.
“As most retail stores in Quebec were forced to close temporarily by government decree during the months of March, April and May, they significantly reduced or completely stopped their media spending,” says the press release. “This had a direct impact on our radio business, which recorded a year-over-year decline of 33% in revenue. To mitigate the negative impact of such a decline, the business took immediate actions to reduce its cost base, which partially lowered the negative impact on results.” The company laid off 130 people in March.
With just one quarter left in its fiscal year, the company released financial guidelines for the current fiscal year ending on August 31, 2020. Compared to 2019, it said to expect low-single digit percentage growth in revenue, low-single digit percentage growth in adjusted EBITDA, and mid-single digit percentage growth when it came to free cash flow.
Profit for the period amounted to $97.5 million, compared to $185 million for the same period of fiscal 2019. “The variation is mainly due to discontinued operations which generated a profit of $82.5 million in the same period of the prior year, primarily due to a gain on the disposal of Cogeco Peer 1,” reads the release.
“Overall, we are satisfied with our results for the third quarter of fiscal year 2020 which was marked by unprecedented challenges related to the pandemic,” said Philippe Jetté, president and CEO.
“We are very pleased with how our teams have responded to the Covid-19 crisis, showing great adaptability and dedication. Over the past quarter, we have seen high demand for our services at both Cogeco Connexion and Atlantic Broadband. All our teams across Quebec, Ontario and eleven states across the U.S. East Coast have worked tirelessly to make sure that we maintain a high quality of connectivity services and access to information and entertainment for our customers.
“As for Cogeco Media, we know that the media industry has been particularly hard hit by the effects of this pandemic, and our radio subsidiary is no exception,” added Jetté. “However, our team continues to demonstrate great agility and creativity in adapting programming to provide listeners with high-quality news and entertainment. The Numeris spring rankings has all of our Montreal stations at the top of the city’s rankings, demonstrating our continued leadership position and further illustrating how our listeners appreciate our work.”
On the subscriber side, the company showed a solid increase in broadband customers and a slowing in cable TV cord cutting. For the third-quarter and first nine months of fiscal 2020, internet customers grew by 17,631 and 36,434, respectively, compared to 14,833 and 22,174 for the same periods of fiscal 2019, said the company release. For Q3 and year-to-date on the TV side, cable TV customer net losses amounted to 10,924 and 27,977, respectively, compared to losses of 11,369 and 41,012 for the same periods of fiscal 2019.
Cogeco now has 1.28 million broadband customers (803,000 for Cogeco and 478,000 for Atlantic Broadband) and 939,000 TV customers (627,000 and 312,000). The increase in internet customers was due to “the ongoing interest in high speed offerings especially as more customers are working from home; the sustained interest in bundle offers; the continued demand from Internet resellers in Canada; growth in the residential and business sectors in the United States; and seasonal reconnects from the Maine and New Hampshire areas during the third quarter of fiscal 2020 in the United States,” says the release.
For more on the company’s Q3 results, please click here.
