Press release details

Montréal, July 9, 2014 – Today, Cogeco Cable Inc. (TSX: CCA) (“Cogeco Cable” or the “Corporation”) announced its financial results for the third quarter of fiscal 2014, ended May 31, 2014, in accordance with International Financial Reporting Standards (“IFRS”).

For the third quarter and first nine months of fiscal 2014: 

• Third quarter revenue increased by $32.0 million, or 6.9%, to reach $496.4 million driven by growth of 3.5% in the Canadian cable services segment, of 12.2% in the American cable services segment and of 15.3% in the Enterprise services segment. Revenue increased organically from all of our operating units combined with favorable foreign exchange rates with our foreign entities. For the nine-month period ended May 31, 2014, revenue reached close to $1.5 billion, an increase of $235.4 million, or 19.3% driven by growth of 2.4% in the Canadian cable services segment, of 65.7% in the American cable services segment and of 75.4% in the Enterprise services segment.  Revenue increased mainly attributable to the full year impact of the acquisitions of Atlantic Broadband and Peer 1 Hosting⁽²⁾ ("PEER 1") ("the recent acquisitions") which both occurred during fiscal 2013 combined with the organic growth from all of our operating segments and favorable foreign exchange rates with our foreign entities; 

• Adjusted EBITDA⁽¹⁾ increased by 6.6% to $229.4 million compared to the third quarter of fiscal 2013, and by 18.7% to $662.5 million compared to the same period of the prior year. The rapid progression for both periods resulted mainly from the recent acquisitions, the improvement in all of our operating segments  as well as the favorable foreign exchange rates for our foreign entities compared to the same period of last year; 

• Operating margin⁽¹⁾ slightly decreased to 46.2% in the quarter and to 45.5% in the first nine months compared to 46.3% and 45.7% for the same periods of the prior year as a result of lower margins from the business activities of the American Cable services and Enterprise services segments; 

• During the third quarter of fiscal 2014, Cogeco Cable impaired an amount of $32.2 million of property, plant and equipment related to an Internet Protocol Television ("IPTV") solution project on which its Canadian Cable services segment had worked in the past few years. As a result of the unforeseen level of technical challenges required to deliver a platform that would meet customers' demand, the Corporation decided to end the project.

However, in order to enhance its competitiveness, the Corporation has concluded an exclusive partnership with TiVo Inc. (“TiVo”), a global leader in next-generation television services and innovative cloud-based solutions that enable viewers to consume content across all screens in and out-of-the home to be introduced at Cogeco Cable Canada by mid-Fiscal 2015. The TiVo experience provides an all-in-one approach for navigating the content by seamlessly combining live, recorded, on-demand and over-the-top television into one intuitive user interface with simple universal search, discovery, viewing and recording from any device, creating the ultimate viewing experience. The TiVo solution was successfully launched in the first half of fiscal 2014 at the Corporation’s Atlantic Broadband subsidiary, with great customer acceptance. 

• Profit for the third quarter amounted to $35.5 million compared to $48.1 million in fiscal 2013. The decline for the quarter is attributable to the impairment on property, plant and equipment explained above, partly offset by the improvement of the adjusted EBITDA. For the first nine months of fiscal 2014, profit for the period amounted to $145.6 million compared to $141.0 million for the comparable period of the prior year. Profit progression for the period is mostly attributable to the improvement of the adjusted EBITDA explained above combined with the decrease in integration, restructuring and acquisition costs, partly offset by the impairment on property, plant and equipment also explained above  as well as the increases in financial expense and depreciation and amortization expense essentially related to the recent acquisitions; 

• Third quarter free cash flow⁽¹⁾ increased by $49.0 million to reach $91.1 million compared to $42.2 million in the third quarter of fiscal 2013. This increase for the quarter is mainly due to the improvement of adjusted EBITDA explained above and the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives. For the first nine months, free cash flow increased by $156.6 million to reach $252.5 million compared to $95.9 million for the same period of fiscal 2013. This variance is mostly attributable to the improvement of adjusted EBITDA explained above, the decrease in acquisitions of property, plant and equipment due to the timing of certain initiatives as well as the decrease in integration, restructuring and acquisition costs, partly offset by the increase in financial expense due to higher indebtedness level from the recent acquisitions; 

• Fiscal 2014 third-quarter cash flow from operating activities reached $184.4 million compared to $167.0 million, an increase of $17.5 million, or 10.5%, compared to fiscal 2013 third-quarter. The increase for the quarter is mainly attributable to the improvement of the adjusted EBITDA explained above and the increase in changes in non-cash operating activities, partly offset by the increase in financial expense paid. For the first nine months of fiscal 2014, cash flow from operating activities reached $429.2 million compared to $316.8 million, an increase of $112.4 million, or 35.5%, compared to the same period in fiscal 2013. The increase for the first nine months is mostly attributable to the improvement of the adjusted EBITDA as well as the decreases in integration, restructuring and acquisitions costs and in income tax paid, partly offset by the increase in financial expense paid; 

• A quarterly dividend of $0.30 per share was paid to the holders of subordinate and multiple voting shares, an increase of $0.04 per share, or 15.4%, compared to a dividend of $0.26 per share paid in the third quarter of fiscal 2013. Dividend payments in the first nine months totaled $0.90 per share in fiscal 2014 compared to $0.78 per share in the comparable period of fiscal 2013. 

“We continue to be pleased with our solid quarterly results. The improvement of our adjusted EBITDA, in these highly competitive industries, stemmed from generating more revenue from current and new customers while maintaining appropriate cost controls. This enabled us to keep growing and achieving the Corporation’s financial objectives,” declared Louis Audet, President and Chief Executive Officer of Cogeco Cable Inc. 

“Moreover, I am delighted that we were able to build on the success achieved by the TiVo video platform at our Atlantic Broadband subsidiary by extending our partnership to bring this world leading platform to our Canadian customers at our Cogeco Cable Canada subsidiary. We expect to launch by mid-Fiscal 2015. Excluding the impact of the impairment related to the prior attempt at developing an alternate IPTV video platform, we expect to meet our Fiscal 2014 guidance” concluded Louis Audet. 

(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 Management's discussion and analysis.

(2)    Peer 1 hosting refers to Peer 1 Network (USA) Holdings Inc., Peer (UK) Ltd. and Peer 1 Network Enterprises, Inc.

ABOUT COGECO CABLE

Cogeco Cable Inc. (www.cogeco.ca) is a telecommunications corporation and is the11th largest hybrid fibre coaxial cable operator in North America operating in Canada under the Cogeco Cable Canada brand name in Quebec and Ontario, and in the United States through its subsidiary Atlantic Broadband in Western Pennsylvania, South Florida, Maryland/Delaware and South Carolina. Its two-way broadband fiber networks provide to its residential and small business customers Analogue and Digital Television, High Speed Internet («HSI») and Telephony services. Through its subsidiaries Cogeco Data Services and Peer 1 Hosting, Cogeco Cable Inc. provides its commercial customers a suite of IT hosting, information and communications technology services (Data Centre, Co-location, 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 Inc.’s subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CCA).

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Source:      Cogeco Cable Inc.

Pierre Gagné

Senior Vice President and Chief Financial Officer

Tel.: 514-764-4700

Information:     Media

René Guimond

Vice-President, Public Affairs and Communications

Tel.: 514-764-4700

Analyst Conference Call: Thursday, July 10, 2014 at 11:00 a.m. (Eastern 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: 1 800-820-0231

International Access Number: + 1 416-640-5926

Confirmation Code: 2083261

By Internet at www.cogeco.ca/investors

A rebroadcast of the conference call will be available until July 16, 2014, by dialing: 

Canada and United States access number: 1 888-203-1112
International access number: + 1 647-436-0148
Confirmation code: 2083261