Cogeco’s Q1 Revenue Falls 4.9% While Dividend Increases 7%
Cogeco’s Q1 fiscal 2026 revenue fell 4.9% YoY in constant currency while adjusted EBITDA declined 3.7%, with U.S. operations down 9.9% revenue but showing a 2,600 subscriber gain in Ohio and second consecutive quarter of improved churn metrics. The company maintained full-year guidance and raised its quarterly dividend by 7% to CAD0.987.
1. First-Quarter Results In Line With Plan
Cogeco Communications reported consolidated revenue down 4.9% in constant currency and adjusted EBITDA off 3.7% year-over-year in Q1 fiscal 2026. Diluted earnings per share declined 12.2%, primarily reflecting a one-time gain in the prior year. Capital intensity rose to 22.2% of revenue from 20.4%, while free cash flow in constant currency fell 15.9% due to lower proceeds from sale-and-leaseback transactions. Net debt to EBITDA ended at 3.2 turns, compared with 3.1 at the end of Q4, keeping leverage within the targeted low-three-turns range.
2. U.S. Turnaround Gains Traction
Breezeline’s revenue in the U.S. decreased 9.9% in constant currency, driven by a 1,100-subscriber net decline in internet customers. Management highlighted the best quarterly internet adds in Ohio since acquisition—2,600 net additions—and noted that subscriber trends improved for a second straight quarter. Adjusted EBITDA in the U.S. fell 9.1%, but cost-reduction initiatives helped partially offset lower revenue. Price increases effective January are expected to contribute more meaningfully in Q3 and Q4, and management projects U.S. EBITDA to trend toward year-over-year neutrality by year-end.
3. Solid Canadian Performance
In Canada, Cogeco Connexion delivered stable revenue while growing internet subscribers by 8,900. Adjusted EBITDA rose 2% in constant currency, benefiting from cost-savings tied to the three-year transformation program. The company passed an additional 1,100 homes with fiber-to-the-home infrastructure. Video and wireline phone subscriber losses modestly reduced average revenue per user, but wireline competition during the holiday period had only a manageable revenue impact. Wireless subscriber growth continued, with promotional pullbacks already implemented to support profitability.
4. Dividend, Guidance And Outlook
Cogeco declared quarterly dividends of CAD 0.987 per share at both the Communications and Inc. levels, marking a 7% increase versus last year. Management reiterated full-year fiscal 2026 guidance, forecasting consolidated revenue and EBITDA declines in the low to mid-single digits for Q2. It expects much stronger U.S. performance in the second half driven by price actions, operating efficiencies and new digital offerings, including planned launch of a fully digital second brand.