Today, Cogeco Cable Inc. (TSX:CCA) ("Cogeco Cable" or the "Corporation")
announced its financial results for the fourth quarter and fiscal year 2013,
ended August 31, 2013, in accordance with International Financial Reporting
Standards ("IFRS").
For the fourth quarter and fiscal 2013, which include nine months operating
results of Atlantic Broadband and seven months operating results of PEER 1:
-- Fourth quarter revenue increased by 44.8% to reach $470.4 million and by
32.5% for fiscal 2013 to close at $1.7 billion compared to the same
periods of the prior year;
-- Operating income before depreciation and amortization increased by 38.3%
to $222.5 million when compared to the fourth quarter of fiscal 2012,
and by 32.5% to $780.5 million compared to the prior year. Operating
income before depreciation and amortization increased for both periods
mainly due to the acquisitions of Atlantic Broadband and PEER 1 (the
"recent acquisitions") as well as the improvement in the financial
results of the Canadian cable services segment;
-- Operating margin(1) decreased to 47.3% from 49.5% in the quarter and
remained the same at 46.1% in fiscal 2013 when compared to the same
periods of the prior year as a result of lower margins from the business
activities of PEER 1;
(1) The indicated terms do not have standardized definitions prescribed by
International Financial Reporting Standards ("IFRS") and, therefore,
may not be comparable to similar measures presented by other companies.
For more details, please consult the "Non-IFRS financial measures"
section of the Management's discussion and analysis ("MD&A").
-- Profit for the period from continuing operations amounted to $43.9
million in the fourth quarter compared to $45.7 million for the same
period of the previous fiscal year. The decrease is mostly attributable
to additional depreciation and amortization and financial expense both
related to the recent acquisitions. It is partly offset by the operating
income before depreciation and amortization improvement stemming from
the Canadian cable services segment as well as the recent acquisitions
combined with lower income tax expenses resulting from the recent
acquisitions tax structure. For fiscal 2013, profit for the year from
continuing operations amounted to $185.1 million compared to $169.5
million for fiscal 2012. Profit progression for the year is mostly
attributable to the improvement in the operating income before
depreciation and amortization generated by the Canadian cable services
segment as well as the recent acquisitions, partly offset by additional
depreciation and amortization, financial expense and acquisition costs
all related to these acquisitions;
-- Profit for the period amounted to $43.9 million in the fourth quarter
when compared to $45.7 million for the same period of the previous
fiscal year due to the factors previously described. For the year ended
August 31, 2013, profit for the year amounted to $185.1 million when
compared to $225.0 million for the same period of fiscal 2012. The
decline for the year is attributable to the factors previously described
and also due to last year's profit of $55.4 million from the sale of the
Portuguese subsidiary, Cabovisao - Televisao por Cabo, S.A.
("Cabovisao"), reported as discontinued operations in 2012;
-- Free cash flow(1) reached $53.6 million for the fourth quarter compared
to $2.6 million in the comparable quarter of the prior year. The
increase for the period is mostly attributable to the improvement of
operating income before depreciation and amortization as well as the
decrease in acquisition of property, plant and equipment and current
income taxes, partly offset by the increase in financial expense. Fiscal
2013 free cash flow amounted to $149.8 million, compared to $66.3
million in the same period of fiscal 2012. The increase for the year is
mostly attributable to the improvement of operating income before
depreciation and amortization and the decrease in current income taxes,
partly offset by the increase in financial expense, the recent
acquisition costs and the increase in acquisition of property, plant and
equipment;
(1) The indicated terms do not have standard definitions prescribed by IFRS
and, therefore, may not be comparable to similar measures presented by
other companies. For more details, please consult the "Non-IFRS
financial measures" section of the MD&A.
-- A quarterly dividend of $0.26 per share was paid to the holders of
subordinate and multiple voting shares, an increase of $0.01 per share,
or 4%, compared to a dividend of $0.25 per share paid in the fourth
quarter of fiscal 2012. Dividends paid in fiscal 2013 totaled $1.04 per
share compared to $1.00 per share in fiscal 2012;
-- Fiscal 2013 fourth-quarter primary service units ("PSU") (2) decreased
by 15,237 and increased by 5,546 for fiscal 2013. At August 31, 2013,
consolidated PSU amounted to 2,465,780 of which 1,980,122 come from the
Canadian cable services segment and 485,658 from the American cable
services segment;
(2) Represents the sum of Television, High Speed Internet ("HSI") and
Telephony service customers.
-- On October 30 2013, Cogeco Cable declared an eligible dividend of $0.30
per share, an increase of 15.4% when compared to the $0.26 dividend per
share paid in the fourth quarter of fiscal 2013;
-- On June 27, 2013, Cogeco Cable completed, pursuant to a private
placement, the issuance of US$215 million Senior Secured Notes bearing
interest at 4.30% payable semi-annually and maturing on June 16, 2025.
The net proceeds from this offering along with drawings under the
Corporation's credit facilities were used to repay, on July 29, 2013,
all the outstanding amount of $300 million Senior Secured Debentures
Series 1, due on June 9, 2014;
-- On July 22, 2013, the Corporation entered into interest rate swap
agreements to fix the interest rate on US$200 million of its LIBOR based
loans. These agreements have the effect of converting the floating US
LIBOR base rate at an average fixed rate of 0.39625% under its Term
Revolving Facility until July 25, 2015; and
-- On July 5, 2013, Cogeco Cable reduced its Term Revolving Facility from
$750 million to $600 million and its Revolving Facility of its Secured
Credit Facilities from $240 million to $190 million.
"Given the very competitive nature of our market, we are pleased with our strong
fourth quarter and fiscal 2013 financial results," stated Louis Audet, President
and Chief Executive Officer of Cogeco Cable Inc. "I am also satisfied to report
that our two recent acquisitions, Atlantic Broadband and PEER 1, have delivered
results in line with our expectations. With respect to our refinancing program,
it has been completed during a period of historically low interest rates. With
an average cost of indebtedness of 4.1%, as of August 31, 2013, and average
maturities of 6.4 years, our focus going forward will be to reduce our leverage
ratio (Indebtedness on EBITDA(3)) to 3 times by August 31, 2015. Continuing on
our steady dividend growth history, the Board of Directors declared a dividend
increase of 15.4% or $0.04 per share," continued Mr. Audet.
(3) The term EBITDA refers to Operating income before depreciation and
amortization (see point 1 for more details).
"In August 2013, we announced the consolidation of our Canadian cable services
operations under one business unit, Cogeco Cable Canada. This restructuring,
which we will pursue in fiscal year 2014, will allow us to optimize efficiency
in that very important business segment. With this restructuring and the
continuation of the full integration of our two recent acquisitions, I am very
confident that Cogeco Cable will continue on its growth path and deliver on its
2014 projections," concluded Louis Audet.
Fiscal 2014 Financial Guidelines
Cogeco Cable revised its fiscal 2014 financial guidelines, as issued on July 10,
2013, as a result of certain adjustments related to the preliminary allocation
of the purchase price of Atlantic Broadband and PEER 1. Please consult the
"Fiscal 2014 financial guidelines" section of the Corporation's 2013 Annual
Report for further details.
FINANCIAL HIGHLIGHTS
----------------------------------------------------------------------------
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Quarters ended Years ended
August August August August
31, 31, 31, 31,
(in thousands of
dollars, except
PSU growth,
percentages and
per share data) 2013 2012 Change 2013 2012 Change
$ $ % $ $ %
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Operations
Revenue 470,386 324,768 44.8 1,692,466 1,277,698 32.5
Operating income
before
depreciation
and
amortization(1) 222,489 160,825 38.3 780,523 589,052 32.5
Operating
margin(1) 47.3% 49.5% - 46.1% 46.1% -
Operating income 103,681 94,709 9.5 376,239 312,180 20.5
Profit for the
period from
continuing
operations 43,917 45,705 (3.9) 185,083 169,517 9.2
Profit for the
period from
discontinued
operations - - - - 55,446 -
Profit for the
period 43,917 45,705 (3.9) 185,083 224,963 (17.7)
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Cash Flow
Cash flow from
operating
activities 228,230 203,343 12.2 545,010 450,386 21.0
Cash flow from
operations(1) 161,695 126,946 27.4 558,037 441,686 26.3
Acquisitions of
property, plant
and equipment,
intangible and
other assets(2) 108,095 124,392 (13.1) 408,202 375,368 8.7
Free cash
flow(1) 53,600 2,554 - 149,835 66,318 -
Capital
intensity(1) 23.0% 38.3% - 24.1% 29.4% -
----------------------------------------------------------------------------
Financial
Condition
Property, plant
and equipment - - - 1,854,155 1,322,093 40.2
Total assets - - - 5,253,097 2,908,079 80.6
Indebtedness(3) - - - 2,944,182 1,069,112 -
Shareholder's
equity - - - 1,344,092 1,188,431 13.1
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Primary service
units ("PSU")
growth
(decline)(4) (15,237) 7,564 - 5,546 73,645 (92.5)
----------------------------------------------------------------------------
Per Share
Data(5)
Earnings per
share
From
continuing
and
discontinued
operations
Basic 0.90 0.94 (4.3) 3.80 4.62 (17.7)
Diluted 0.90 0.93 (3.2) 3.78 4.60 (17.8)
From
continuing
operations
Basic 0.90 0.94 (4.3) 3.80 3.48 9.2
Diluted 0.90 0.93 (3.2) 3.78 3.46 9.2
From
discontinued
operations
Basic - - - - 1.14 -
Diluted - - - - 1.13 -
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(1) The indicated terms do not have standardized definitions prescribed by
International Financial Reporting Standards ("IFRS") and therefore, may
not be comparable to similar measures presented by other companies. For
more details, please consult the "Non-IFRS financial measures" section
of the Management's discussion and analysis ("MD&A").
(2) Fiscal 2013 fourth-quarter and fiscal 2013 acquisitions of property,
plant and equipment, intangible and other assets include assets
acquired under finance lease of $0.9 million that are excluded from the
statements of cash flows.
(3) Indebtedness is defined as the total of bank indebtedness, principal on
long-term debt, balance due on a business combination and obligations
under derivative financial instruments.
(4) Represents the sum of Television, High Speed Internet ("HSI") and
Telephony service customers.
(5) Per multiple and subordinate voting share.
FORWARD-LOOKING STATEMENTS
Certain statements in this press release may constitute forward-looking
information within the meaning of securities laws. Forward-looking information
may relate to Cogeco Cable's future outlook and anticipated events, business,
operations, financial performance, financial condition or results and, in some
cases, can be identified by terminology such as "may"; "will"; "should";
"expect"; "plan"; "anticipate"; "believe"; "intend"; "estimate"; "predict";
"potential"; "continue"; "foresee", "ensure" or other similar expressions
concerning matters that are not historical facts. In particular, statements
regarding the Corporation's future operating results and economic performance
and its objectives and strategies are forward- looking statements. These
statements are based on certain factors and assumptions including expected
growth, results of operations, performance and business prospects and
opportunities, which Cogeco Cable believes are reasonable as of the current
date. While management considers these assumptions to be reasonable based on
information currently available to the Corporation, they may prove to be
incorrect. The Corporation cautions the reader that the economic downturn
experienced over the past few years makes forward-looking information and the
underlying assumptions subject to greater uncertainty and that, consequently,
they may not materialize, or the results may significantly differ from the
Corporation's expectations. It is impossible for Cogeco Cable to predict with
certainty the impact that the current economic uncertainties may have on future
results. Forward-looking information is also subject to certain factors,
including risks and uncertainties (described in the "Uncertainties and main risk
factors" section of the Corporation's 2013 annual Management's Discussion and
Analysis ("MD&A")) that could cause actual results to differ materially from
what Cogeco Cable currently expects. These factors include risks pertaining to
markets and competition, technology, regulatory developments, operating costs,
information systems, disasters or other contingencies, financial risks related
to capital requirements, human resources, controlling shareholder and holding
structure, many of which are beyond the Corporation's control. Therefore, future
events and results may vary significantly from what management currently
foresees. The reader should not place undue importance on forward-looking
information and should not rely upon this information as of any other date.
While management may elect to, the Corporation is under no obligation and does
not undertake to update or alter this information at any particular time, except
as may be required by law.
All amounts are stated in Canadian dollars unless otherwise indicated. This
press release should be read in conjunction with the MD&A included in the
Corporation's 2013 Annual Report, the Corporation's consolidated financial
statements and the notes thereto, prepared in accordance with the International
Financial Reporting Standards ("IFRS") for the year ended August 31, 2013
ADDITIONAL INFORMATION
Additional information relating to the Corporation, including its 2013 Annual
Report and Annual Information Form, is available on SEDAR at www.sedar.com.
The Corporation's 2013 Annual Report can also be found on:
http://www.cogeco.ca/cable/corporate/cca/investors/results_annual_2013.html
A copy of this press release with a more detailed summary of results can be
found at
http://www.cogeco.ca/cable/corporate/files/press_releases_en/2013/CCA_Q4-2013_detailed_103013.pdf
ABOUT COGECO CABLE
Cogeco Cable is a telecommunications corporation and is the11th largest hybrid
fibre coaxial cable operator in North America operating in Canada through its
subsidiary Cogeco Cable Canada in Quebec and Ontario, and in the United States
of America through its subsidiary Atlantic Broadband in Western Pennsylvania,
South Florida, Maryland/Delaware and South Carolina. Its two-way broadband cable
networks provide to its residential and small business customers Analogue and
Digital Television, High Speed Internet and Telephony services. Through its
subsidiary Cogeco Enterprise Services, the holding company of Cogeco Data
Services and Peer 1 Network Enterprises, Cogeco Cable provides its commercial
customers a suite of IT hosting, information and communications technology
services (data centre, colocation, managed hosting, cloud infrastructure and
connectivity), with 20 data centres, extensive fibre networks in Montreal and
Toronto as well as points-of-presence in North America and Europe. Cogeco
Cable's subordinate voting shares are listed on the Toronto Stock Exchange
(TSX:CCA). For more information about Cogeco Cable and its subsidiaries visit
www.cogeco.ca, cogecodata.com, atlanticbb.com, peer1.com and peer1hosting.co.uk.
Analyst Conference Thursday, October 31, 2013 at 11:00 a.m. (Eastern
Call: Daylight Time)
Media representatives may attend as listeners only.
Please use the following dial-in number to have access
to the conference call by dialing five minutes before
the start of the conference:
Canada/United States Access Number: 1 866-321-6651
International Access Number: + 1 416-642-5212
Confirmation Code: 7376711
By Internet at www.cogeco.ca/investors
A rebroadcast of the conference call will be available
until November 7, 2013, by dialing:
Canada and United States access number: 1 888-203-1112
International access number: + 1 647-436-0148
Confirmation code: 7376711
FOR FURTHER INFORMATION PLEASE CONTACT:
Source:
Cogeco Cable Inc.
Pierre Gagne
Senior Vice President and Chief Financial Officer
514-764-4700
Information:
Media
Rene Guimond
Vice-President, Public Affairs and Communications
514-764-4700
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