Rogers Communications Reports Third Quarter 2024 Results
More Canadians continue to choose Rogers Wireless and Internet than any other carrier in Canada
Combined mobile phone and Internet net additions of 227,000 in Q3 and 502,000 for the year to date
Q3 postpaid mobile phone net additions of 101,000; prepaid net additions of 93,000; retail Internet net additions of 33,000
Rogers has added industry-best 1.9 million mobile phone and Internet net additions over the past 11 quarters
Continued disciplined loading, strong execution, efficiency gains, industry-leading financial performance, and industry-best margins
Wireless service revenue up 2% and adjusted EBITDA up 5%; margin up 220 basis points to 66%; blended ARPU stable
Cable revenue down 1%; adjusted EBITDA up 5%; margin up 330 basis points to 58%
Free cash flow of $915 million, up 23%
Rogers' network leadership continues
Awarded Canada's fastest and most reliable Internet by Opensignal
Awarded Canada's most reliable 5G network by umlaut and most reliable wireless network by Opensignal
Delivered DOCSIS 4.0 modem technology with 4 Gbps download and 1 Gbps upload speeds - a global first
Rogers announces transaction with a leading global financial investor that will materially reduce leverage with innovative $7 billion structured equity financing
Now expecting leverage at year-end will be 3.7x
Completion subject to finalizing definitive agreements
Expected to close in the fourth quarter; proceeds will be used to pay down debt and further strengthen our balance sheet
Company reaffirms 2024 outlook
Total service revenue growth of 8% to 10%; adjusted EBITDA growth of 12% to 15%; capital expenditures of $3.8 billion to $4.0 billion; and free cash flow of $2.9 billion to $3.1 billion
TORONTO, Oct. 24, 2024 (GLOBE NEWSWIRE) -- Rogers Communications Inc. (TSX:RCI, NYSE:RCI) today announced its unaudited financial and operating results for the third quarter ended September 30, 2024.
Consolidated Financial Highlights
(In millions of Canadian dollars, except per share amounts, unaudited)
Three months ended September 30
Nine months ended September 30
2024
2023
% Chg
2024
2023
% Chg
Total revenue
5,129
5,092
1
15,123
13,973
8
Total service revenue
4,567
4,527
1
13,523
12,375
9
Adjusted EBITDA 1
2,545
2,411
6
7,084
6,252
13
Net income
526
(99
)
n/m
1,176
521
126
Adjusted net income 1
762
679
12
1,925
1,776
8
Diluted earnings (loss) per share
$0.98
$(0.20
)
n/m
$2.19
$0.97
126
Adjusted diluted earnings per share 1
$1.42
$1.27
12
$3.59
$3.37
7
Cash provided by operating activities
1,893
1,754
8
4,545
3,842
18
Free cash flow 1
915
745
23
2,167
1,591
36
n/m - not meaningful
__________________________
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 Q3 2024 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.
"We continued to build on our momentum and deliver industry-leading results and attract more Canadians than any other carrier," said Tony Staffieri, President and CEO. "We delivered strong market share, record margins in Cable and Wireless, and we are on track to deliver our full-year targets. I'm proud of our team for delivering an eleventh straight quarter of growth and sector-leading performance while strengthening our balance sheet."
Strategic Highlights
The five objectives set out below guide our work and decision-making as we further improve our operational execution and make well-timed investments to grow our core businesses and deliver increased shareholder value. Below are some highlights for the quarter.
Build the biggest and best networks in the country
Awarded Canada's most reliable 5G network by umlaut in July 2024.
Recognized as Canada's fastest and most reliable Internet by Opensignal in July 2024.
Delivered 4 Gbps download and 1 Gbps upload speeds with DOCSIS 4.0 modem technology trial.
Deliver easy to use, reliable products and services
Launched home Internet and TV services across Quebec.
Introduced multi-gigabit speeds to 70% of our Internet footprint.
Introduced a program to help newcomers build credit and finance a new smartphone through a partnership with Nova Credit.
Be the first choice for Canadians
Attracted 227,000 net combined mobile phone and Internet customers.
Signed an agreement with BCE Inc. (Bell) to become the majority owner of Maple Leaf Sports & Entertainment (MLSE).
Launched Bravo in Canada and announced plans to launch TV channels for HGTV, Food Network, Magnolia, Discovery ID, and Discovery.
Be a strong national company investing in Canada
Invested $977 million in capital expenditures, further strengthening and growing our networks.
Announced a partnership with SenseNet to bring wildfire detection technology to communities.
Became the first-ever presenting sponsor of the 2024 Toronto International Film Festival.
Be the growth leader in our industry
Grew total service revenue by 1% and adjusted EBITDA by 6%.
Reported industry-leading margins in our Wireless and Cable operations.
Generated free cash flow of $915 million, up 23%, and cash flow from operating activities of $1,893 million.
MLSE TransactionOn September 18, 2024, we announced an agreement with BCE Inc. (Bell) to acquire Bell's indirect 37.5% ownership stake in Maple Leaf Sports & Entertainment Inc. (MLSE) for a purchase price of $4.7 billion subject to certain adjustments, payable in cash (MLSE Transaction). We expect to finance a portion of the purchase price with funding from private investors and we do not expect financing of the MLSE Transaction will affect our debt leverage ratio outlook. The MLSE Transaction will also provide Bell the opportunity to renew its existing MLSE broadcast and sponsorship rights over the long-term at fair market value. This includes access to content rights for 50% of Toronto Maple Leafs regional games and 50% of Toronto Raptors games for which MLSE controls the rights. The MLSE Transaction is subject to certain closing conditions, including sports league and regulatory approvals. When the MLSE Transaction closes, we will be the largest owner of MLSE, with a controlling interest in 75% of MLSE.
MLSE owns the Toronto Maple Leafs (NHL), Toronto Raptors (NBA), Toronto FC (MLS), the Toronto Argonauts (CFL), various minor league teams, and associated real estate holdings, such as Scotiabank Arena. The MLSE Transaction will add to our existing sports portfolio, including ownership of the Toronto Blue Jays, Rogers Centre, and Sportsnet.
Quarterly Financial Highlights
RevenueTotal revenue and total service revenue each increased by 1% this quarter, driven by revenue growth in our Wireless and Media businesses.
Wireless service revenue increased by 2% this quarter, primarily as a result of the cumulative impact of growth in our mobile phone subscriber base over the past year. Wireless equipment revenue decreased by 1%, primarily as a result of fewer device upgrades by existing customers.
Cable revenue decreased by 1% this quarter, improving sequentially, as a result of continued competitive promotional activity and declines in our Home Phone and Satellite subscriber bases.
Media revenue increased by 11% this quarter primarily as a result of higher sports-related revenue.
Adjusted EBITDA and margins Consolidated adjusted EBITDA increased 6% this quarter, and our adjusted EBITDA margin increased by 230 basis points, as a result of full realization of our synergy program associated with the Shaw Transaction together with ongoing cost efficiencies.
Wireless adjusted EBITDA increased by 5%, primarily due to the flow-through impact of higher revenue as discussed above in conjunction with ongoing cost efficiencies. This gave rise to an adjusted EBITDA margin of 66.1%, up 220 basis points.
Cable adjusted EBITDA increased by 5% due to the aforementioned synergy program and ongoing cost efficiencies. This gave rise to an adjusted EBITDA margin of 57.5%, up 330 basis points.
Media adjusted EBITDA increased by 25% this quarter, primarily due to higher revenue as discussed above, partially offset by higher Toronto Blue Jays expenses, including game day-related costs.
Net income and adjusted net income Net income increased by $625 million this quarter to $526 million, primarily as a result of the $422 million loss recognized last year related to an obligation to purchase at fair value the non-controlling interest in one of our joint ventures' investments, higher adjusted EBITDA, and lower restructuring, acquisition and other costs, partially offset by higher income tax expense. Adjusted net income increased by 12% this quarter, primarily as a result of higher adjusted EBITDA.
Cash flow and available liquidity This quarter, we generated cash provided by operating activities of $1,893 million (2023 - $1,754 million) and free cash flow of $915 million (2023 - $745 million), both of which increased primarily as a result of higher adjusted EBITDA.
As at September 30, 2024, we had $4.8 billion of available liquidity2 (December 31, 2023 - $5.9 billion), consisting of $0.8 billion in cash and cash equivalents and $4.0 billion available under our bank and other credit facilities.
Our debt leverage ratio2 as at September 30, 2024 was 4.6 (December 31, 2023 - 5.0, or 4.7 on an as adjusted basis to include trailing 12-month adjusted EBITDA of a combined Rogers and Shaw as if the Shaw Transaction had closed on January 1, 2023). See "Financial Condition" for more information.
We also returned $266 million in dividends to shareholders this quarter and we declared a $0.50 per share dividend on October 23, 2024.
__________________________
2 Available liquidity and debt leverage ratio are capital management measures. Pro forma debt leverage ratio is a non-GAAP ratio. Pro forma trailing 12-month adjusted EBITDA is a non-GAAP financial measure and is a component of pro forma debt leverage ratio. See "Non-GAAP and Other Financial Measures" in our Q3 2024 MD&A for more information about these measures. These are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other companies. See "Financial Condition" in our Q3 2024 MD&A for a reconciliation of available liquidity.
About this Earnings Release
This earnings release contains important information about our business and our performance for the three and nine months ended September 30, 2024, as well as forward-looking information (see "About Forward-Looking Information") about future periods. This earnings release should be read in conjunction with our Third Quarter 2024 Interim Condensed Consolidated Financial Statements (Third Quarter 2024 Interim Financial Statements) and notes thereto, which have been prepared in accordance with International Accounting Standard 34, Interim Financial Reporting, as issued by the International Accounting Standards Board (IASB); our Third Quarter 2024 MD&A; our 2023 Annual MD&A; our 2023 Annual Audited Consolidated Financial Statements and notes thereto, which have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the IASB; and our other recent filings with Canadian and US securities regulatory authorities, including our Annual Information Form, which are available on SEDAR+ at sedarplus.ca or EDGAR at sec.gov, respectively.
For more information about Rogers, including product and service offerings, competitive market and industry trends, our overarching strategy, key performance drivers, and objectives, see "Understanding Our Business", "Our Strategy, Key Performance Drivers, and Strategic Highlights", and "Capability to Deliver Results" in our 2023 Annual MD&A. References in this earnings release to the Shaw Transaction are to our acquisition of Shaw Communications Inc. (Shaw) on April 3, 2023. For additional details regarding the Shaw Transaction, see "Shaw Transaction" in our 2023 Annual MD&A and our 2023 Annual Audited Consolidated Financial Statements.
We, us, our, Rogers, Rogers Communications, and the Company refer to Rogers Communications Inc. and its subsidiaries. RCI refers to the legal entity Rogers Communications Inc., not including its subsidiaries. Rogers also holds interests in various investments and ventures.
All dollar amounts in this earnings release are in Canadian dollars unless otherwise stated and are unaudited. All percentage changes are calculated using the rounded numbers as they appear in the tables. This earnings release is current as at October 23, 2024 and was approved by the Audit and Risk Committee of RCI's Board of Directors (the Board) on that date.
In this earnings release, this quarter, the quarter, or third quarter refer to the three months ended September 30, 2024, first quarter refers to the three months ended March 31, 2024, second quarter refers to the three months ended June 30, 2024, third quarter refers to the three months ended September 30, 2024 and year to date refers to the nine months ended September 30, 2024. All results commentary is compared to the equivalent period in 2023 or as at December 31, 2023, as applicable, unless otherwise indicated.
Trademarks in this earnings release are owned or used under licence by Rogers Communications Inc. or an affiliate. This earnings release may also include trademarks of other parties. The trademarks referred to in this earnings release may be listed without the ™ symbols. ©2024 Rogers Communications
Reportable segmentsWe report our results of operations in three reportable segments. Each segment and the nature of its business is as follows:
Segment
Principal activities
Wireless
Wireless telecommunications operations for Canadian consumers and businesses.
Cable
Cable telecommunications operations, including Internet, television and other video (Video), Satellite, telephony (Home Phone), and home monitoring services for Canadian consumers and businesses, and network connectivity through our fibre network and data centre assets to support a range of voice, data, networking, hosting, and cloud-based services for the business, public sector, and carrier wholesale markets.
Media
A diversified portfolio of media properties, including sports media and entertainment, television and radio broadcasting, specialty channels, multi-platform shopping, and digital media.
Wireless and Cable are operated by our wholly owned subsidiary, Rogers Communications Canada Inc. (RCCI), and certain other wholly owned subsidiaries. Media is operated by our wholly owned subsidiary, Rogers Media Inc., and its subsidiaries.
Summary of Consolidated Financial Results
Three months ended September 30
Nine months ended September 30
(In millions of dollars, except margins and per share amounts)
2024
2023
% Chg
2024
2023
% Chg
Revenue
Wireless
2,620
2,584
1
7,614
7,354
4
Cable
1,970
1,993
(1
)
5,893
5,023
17
Media
653
586
11
1,868
1,777
5
Corporate items and intercompany eliminations
(114
)
(71
)
61
(252
)
(181
)
39
Revenue
5,129
5,092
1
15,123
13,973
8
Total service revenue 1
4,567
4,527
1
13,523
12,375
9
Adjusted EBITDA
Wireless
1,365
1,294
5
3,945
3,695
7
Cable
1,133
1,080
5
3,349
2,663
26
Media
134
107
25
31
73
(58
)
Corporate items and intercompany eliminations
(87
)
(70
)
24
(241
)
(179
)
35
Adjusted EBITDA
2,545
2,411
6
7,084
6,252
13
Adjusted EBITDA margin 2
49.6
%
47.3
%
2.3 pts
46.8
%
44.7
%
2.1 pts
Net income (loss)
526
(99
)
n/m
1,176
521
126
Basic earnings (loss) per share
$0.99
$(0.19
)
n/m
$2.21
$1.00
121
Diluted earnings (loss) per share
$0.98
$(0.20
)
n/m
$2.19
$0.97
126
Adjusted net income 2
762
679
12
1,925
1,776
8
Adjusted basic earnings per share 2
$1.43
$1.28
12
$3.61
$3.41
6
Adjusted diluted earnings per share
$1.42
$1.27
12
$3.59
$3.37
7
Capital expenditures
977
1,017
(4
)
3,034
2,988
2
Cash provided by operating activities
1,893
1,754
8
4,545
3,842
18
Free cash flow
915
745
23
2,167
1,591
36
1
As defined. See "Key Performance Indicators".
2
Adjusted EBITDA margin is a supplementary financial measure. Adjusted basic earnings per share is a non-GAAP ratio. Adjusted net income is a non-GAAP financial measure and is a component of adjusted basic earnings per share. These are not standardized financial measures under IFRS and might not be comparable to similar financial measures disclosed by other companies. See "Non-GAAP and Other Financial Measures" in our Q3 2024 MD&A for more information about each of these measures, available at www.sedarplus.ca.
Results of our Reportable Segments
WIRELESS
Wireless Financial Results
Three months ended September 30
Nine months ended September 30
(In millions of dollars, except margins)
2024
2023
% Chg
2024
2023
% Chg
Revenue
Service revenue
2,066
2,026
2
6,050
5,782
5
Equipment revenue
554
558
(1
)
1,564
1,572
(1
)
Revenue
2,620
2,584
1
7,614
7,354
4
Operating costs
Cost of equipment
545
541
1
1,576
1,550
2
Other operating costs
710
749
(5
)
2,093
2,109
(1
)
Operating costs
1,255
1,290
(3
)
3,669
3,659
—
Adjusted EBITDA
1,365
1,294
5
3,945
3,695
7
Adjusted EBITDA margin 1
66.1
%
63.9
%
2.2 pts
65.2
%
63.9
%
1.3 pts
Capital expenditures
350
381
(8
)
1,150
1,291
(11
)
1 Calculated using service revenue.
Wireless Subscriber Results 1
Three months ended September 30
Nine months ended September 30
(In thousands, except churn and mobile phone ARPU)
2024
2023
Chg
2024
2023
Chg
Postpaid mobile phone 2
Gross additions
459
556
(97
)
1,353
1,304
49
Net additions
101
225
(124
)
311
490
(179
)
Total postpaid mobile phone subscribers 3
10,699
10,332
367
10,699
10,332
367
Churn (monthly)
1.12
%
1.08
%
0.04 pts
1.10
%
0.92
%
0.18 pts
Prepaid mobile phone 4
Gross additions
185
263
(78
)
417
711
(294
)
Net additions
93
36
57
106
23
83
Total prepaid mobile phone subscribers 3
1,161
1,278
(117
)
1,161
1,278
(117
)
Churn (monthly)
2.80
%
6.00
%
