Press release details

• Revenue increased by $9.4 million, or 1.7% to reach $560.9 million;
• Adjusted EBITDA(1)  increased by $5.5 million, or 2.2%, to reach $253.8 million;
• Free cash flow(1)  amounted to $116.8 million, an increase of $42.1 million; and
• A quarterly eligible dividend of $0.43 per share was declared.

Montréal, April 6, 2017 – Today, Cogeco Communications Inc. (TSX: CCA) (“Cogeco Communications” or the “Corporation”) announced its financial results for the second quarter ended February 28, 2017, in accordance with International Financial Reporting Standards (“IFRS”).

For the second quarter of fiscal 2017:

• Revenue increased by $9.4 million, or 1.7%, to reach $560.9 million mainly driven by growths of 3.1% in the Canadian broadband services segment and of 0.7% in the American broadband services segment, partly offset by a decrease of 1.8% in the Business information and communications technology ("Business ICT") services segment.
  • Canadian broadband services revenue increased as a result of the impact of the timing of rate increases implemented in December 2016 compared to rate increases implemented in February 2016 in the comparable period of the prior year. Revenue also benefited from the continued growth in the Internet customer base combined with the movement of customers to higher value packages, partly offset by a decline in video and telephony customers;
  • American broadband services revenue increased primarily as a result of the primary service units ("PSU")(2) progression, growth in the commercial sector as well as rate increases implemented in September 2016. However, revenue progression has been negatively impacted by the depreciation of the US dollar against the Canadian dollar compared to the same period of the prior year;
  • Business ICT services revenue decreased primarily as a result of the depreciation of the US dollar and the British Pound currency against the Canadian dollar compared to the same period last year;

• Adjusted EBITDA increased by $5.5 million, or 2.2%, to reach $253.8 million mainly as a result of the following:
  • Higher adjusted EBITDA in the Canadian broadband services resulting mainly from revenue progression; 
  • Stable adjusted EBITDA in the American broadband services mainly as a result of the depreciation of the US dollar against the Canadian dollar compared to the same period of the prior year; partly offset by
  • Lower adjusted EBITDA in the Business ICT services resulting mainly from a decrease in revenue;

• Operating margin(1) increased from 45.0% to 45.3% in the second quarter of fiscal 2017, with operating margins of 52.1% in the Canadian broadband services, 42.3% in the American broadband services and 32.6% in the Business ICT services segments. The increase for the quarter resulted mainly from a higher margin in the Canadian broadband services segment, partly offset by a slightly lower margin in the American broadband services segment and a decline in the Business ICT services segment;
• Profit for the period amounted to $76.7 million, or $1.56 per share, an increase of $14.6 million, compared to $62.0 million, or $1.27 per share, in the comparable period of fiscal 2016 primarily due to the decrease in depreciation and amortization combined with the improvement of adjusted EBITDA, partly offset by the increase in income taxes;

• Free cash flow amounted to $116.8 million, an increase of $42.1 million, or 56.3% mainly due to lower acquisitions of property, plant and equipment, intangible and other assets as a result of the timing of certain initiatives mainly in the Canadian broadband services segment combined with a greater focus on capital expenditure optimization in the Business ICT services segment. The improvement of adjusted EBITDA also contributed to the increase in free cash flow;

• Cash flow from operating activities increased by $39.6 million, or 19.2%, to reach $245.6 million. The increase for the quarter is mostly attributable to the improvement in adjusted EBITDA, the decrease in income taxes paid and the increase in changes in non-cash operating activities primarily due to changes in working capital;

• A quarterly eligible dividend of $0.43 per share was paid in the second quarter to the holders of multiple and subordinate voting shares, representing an increase of $0.04 per share, or 10.3%, compared to an eligible dividend of $0.39 per share paid in the second quarter of fiscal 2016; and

• At its April 6, 2017 meeting, the Board of Directors of Cogeco Communications declared a quarterly eligible dividend of $0.43 per share for multiple and subordinate voting shares payable on May 4, 2017.

For the six-month period ended February 28, 2017:

• Revenue increased by $18.1 million, or 1.7%, to reach $1.11 billion mainly driven by growths of 3.7% in the American broadband services segment and of 2.1% in the Canadian broadband services segment, partly offset by a decrease of 4.1% in the Business ICT services segment.
  • Canadian broadband services revenue increased as a result of the impact of the timing of rate increases implemented in December 2016 compared to rate increases implemented in February 2016 in the comparable period of the prior year. Revenue also benefited from the continued growth in the Internet customer base combined with the movement of customers to higher value packages, partly offset by a decline in video and telephony customers;
  • American broadband services revenue increased primarily as a result of the PSU progression, growth in the commercial sector as well as rate increases implemented in September 2016, mostly offset by unfavorable foreign exchange rates compared to the same period of the prior year; 
  • Business ICT services revenue decreased primarily as a result of competitive pricing pressures on the hosting and network connectivity services and the depreciation of the US dollar and the British Pound currency against the Canadian dollar compared to the same period of last year;

• Adjusted EBITDA increased by $11.0 million, or 2.2%, to reach $503.5 million mainly as a result of the following:
  • Higher adjusted EBITDA in the Canadian broadband services resulting mainly from revenue progression; 
  • Higher adjusted EBITDA in the American broadband services resulting from organic growth, partly offset by the depreciation of the US dollar against the Canadian dollar compared to the same period of fiscal 2016; partly offset by 
  • Lower adjusted EBITDA in the Business ICT services resulting from a decrease in revenue;
• Operating margin increased from 45.1% to 45.4% for the six-month period ended February 28, 2017, with operating margins of 52.1% in the Canadian broadband services, 43.0% in the American broadband services and 32.0% in the Business ICT services segments. The increase for the first six months resulted mainly from a higher margin in the Canadian broadband services segment, partly offset by a slightly lower margin in the American broadband services segment and a decline in the the Business ICT services segment;
• Profit for the period amounted to $151.7 million, or $3.09 per share, compared to $123.1 million, or $2.52 per share in the comparable period of fiscal 2016, an increase of $28.5 million resulting from the improvement of adjusted EBITDA combined with the decreases in depreciation and amortization and in integration, restructuring and acquisition costs, partly offset by the increase in income taxes;