Rogers Communications Reports Second Quarter 2023 Results
Press Release
July 26, 2023
- Rogers’ Q2 results reflect strong execution and healthy growth across operations
- Rogers’ postpaid mobile phone net additions of 170,000, up 39%; year to date postpaid mobile phone net additions of 265,000, up 41% from first six months of 2022
- Wireless service revenue up 7%; adjusted EBITDA up 9%
- Total service revenue up 32% and adjusted EBITDA up 38%
- Rogers and Shaw integration proceeding ahead of plan, with Cable and Internet growth recovering
- Cable service revenue up 93%; adjusted EBITDA up 97%
- Strong Cable adjusted EBITDA margin up 100 basis points to 51%
- Internet loading of 25,000 with organic growth improving across the country
- Company reaffirms guidance of realizing at least $200 million of synergies in 2023, and annualized cost synergies of at least $600 million by the end of Q1 2024
- Company commences deleveraging, driven by adjusted EBITDA growth and effective balance sheet management, while continuing to invest in networks and operational infrastructure
- Debt leverage ratio of 5.1x improved since completing the Shaw Transaction in April 2023 as a result of strong adjusted EBITDA growth; targeting further reduction to 4.9x debt leverage ratio by end of 2023
- Capital expenditures of $1,079 million, with network infrastructure spending up 24%
- Company focused on selling $1 billion in non-core assets
- Introducing changes to dividend reinvestment plan to include a price discount and use of treasury shares
- Company’s strong execution reflected in increasing 2023 outlook
- 2023 free cash flow outlook increased to between $2.2 billion and $2.5 billion compared to prior $2.0 billion to $2.2 billion outlook
- Adjusted EBITDA growth outlook increased to 33% to 36% compared to prior 31% to 35% outlook
TORONTO, July 26, 2023 (GLOBE NEWSWIRE) —
Consolidated Financial Highlights
| Three months ended June 30 | Six months ended June 30 | |||||||
| (In millions of Canadian dollars, except per share amounts, unaudited) | 2023 | 2022 | % Chg | 2023 | 2022 | % Chg | ||
| Total revenue | 5,046 | 3,868 | 30 | 8,881 | 7,487 | 19 | ||
| Total service revenue | 4,534 | 3,443 | 32 | 7,848 | 6,639 | 18 | ||
| Adjusted EBITDA 1 | 2,190 | 1,592 | 38 | 3,841 | 3,131 | 23 | ||
| Net income 2 | 109 | 409 | (73 | ) | 620 | 801 | (23 | ) |
| Adjusted net income 1 | 544 | 463 | 17 | 1,097 | 925 | 19 | ||
| Diluted earnings per share 2 | $0.20 | $0.76 | (74 | ) | $1.19 | $1.57 | (24 | ) |
| Adjusted diluted earnings per share 1 | $1.02 | $0.86 | 19 | $2.11 | $1.81 | 17 | ||
| Cash provided by operating activities | 1,635 | 1,319 | 24 | 2,088 | 2,132 | (2 | ) | |
| Free cash flow 1 | 476 | 344 | 38 | 846 | 859 | (2 | ) | |
“We delivered strong results in the second quarter and continued to demonstrate solid momentum in our core businesses,” said Tony Staffieri, President and CEO. “We upgraded our financial guidance for the year and I am pleased to share the integration with Shaw is tracking ahead of plan. We’re proud that more Canadians continue to choose Rogers as we invest in our customers and our networks to deliver long-term growth.”
1 Adjusted EBITDA is a total of segments measure. Free cash flow is a capital management measure. Adjusted diluted earnings per share is a non-GAAP ratio. Adjusted net income is a non-GAAP financial measure and is a component of adjusted diluted earnings per share. See “Non-GAAP and Other Financial Measures” in our Q2 2023 Management’s Discussion and Analysis (MD&A), available at www.sedarplus.ca, and this earnings release for more information about each of these measures. These are not standardized financial measures under International Financial Reporting Standards (IFRS) and might not be comparable to similar financial measures disclosed by other companies.
2 The significant decrease in net income and diluted earnings per share includes an approximate $0.5 billion ongoing increase in quarterly depreciation and amortization as a result of the assets acquired through the $26 billion Shaw Transaction completed on April 3, 2023. For the purposes of calculating adjusted net income and adjusted earnings per share, we have removed depreciation and amortization of $0.2 billion on the incremental fair value of these assets.
Shaw Transaction
On April 3, 2023, after receiving all required regulatory approvals and after the Freedom Transaction (as defined below) closed, we acquired all the issued and outstanding Class A Participating Shares and Class B Non-Voting Participating Shares (collectively, Shaw Shares) of Shaw Communications Inc. (Shaw) (Shaw Transaction) for total consideration of $20.5 billion, consisting of:
- $19 billion of cash (consisting of $13 billion of cash and restricted cash and $6 billion borrowed from our $6 billion non-revolving term loan facility); and
- approximately $1.5 billion through the issuance of 23.6 million RCI Class B Non-Voting common shares (based on the opening share price of Rogers Class B Non-Voting Shares on April 3, 2023 of $61.33).
We also assumed approximately $2.9 billion of debt, net of cash and consideration received from the Freedom Transaction, on April 3.
The Shaw Transaction was implemented through a court-approved plan of arrangement under the Business Corporations Act (Alberta).
On April 3, 2023, the outstanding shares of Freedom Mobile Inc. (Freedom), a subsidiary of Shaw, were sold to Videotron Ltd. (Videotron), a subsidiary of Quebecor Inc. (Quebecor) (Freedom Transaction). The Freedom Transaction was effected pursuant to an agreement entered into on August 12, 2022 among Rogers, Shaw, Quebecor, and Videotron, which provided for the sale of all Freedom-branded wireless and Internet customers and all of Freedom’s infrastructure, spectrum licences, and retail locations. The Freedom Transaction did not include the sale of Shaw Mobile-branded wireless subscribers; accordingly, these wireless subscribers remained with the Shaw business acquired by Rogers.
On April 3, 2023, following the completion of the Shaw Transaction, Shaw Communications Inc. was amalgamated with RCI. As a result of this amalgamation, RCI became the issuer and assumed all of Shaw’s obligations under the indenture governing Shaw’s outstanding senior notes with a total principal amount of $4.55 billion as at April 3, 2023. As a result, the assumed senior notes now rank equally with RCI’s other unsecured senior notes and debentures, bank credit facilities, and letter of credit facilities. In connection with the Shaw Transaction, RCCI provided a guarantee for Shaw’s payment obligations under those senior notes.
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