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01/11 03:36
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call shows mixed results: EPS missed expectations, but there is optimistic guidance for cable revenue and subscriber growth. The equity investment and debt repayment are positive, but the removal of the DRIP discount is negative. The Q&A reveals concerns about market growth and vague responses on tariffs and MLSE, indicating uncertainty. Overall, the neutral rating reflects balanced positive and negative factors, suggesting limited stock movement in the short term.
EPS $0.69 EPS, down from expectations of $0.71.
Service Revenue 2% growth year-over-year, driven by subscriber growth.
Adjusted EBITDA 2% growth year-over-year, primarily driven by subscriber growth.
Wireless Margin Up by 40 basis points year-over-year, just under 65%, reflecting efficiencies and balance between subscriber growth and pricing.
Net New Wireless Subscribers 34,000 net new subscribers, down from 61,000 last year, due to a smaller market size from reduced immigration.
Blended Mobile Phone ARPU $57, down just under 2% from $58 in the prior year, due to competitive intensity and lower roaming revenue.
Cable Service Revenue Down 1% year-over-year, due to competitive promotional activity and customer churn.
Cable Adjusted EBITDA Up 1% year-over-year, driven by a 4% decrease in operating costs.
Cable Margins Just over 57%, a 110-basis-point increase from the prior year.
Sports Revenue Up 24% year-over-year, driven by additional Toronto Blue Jays home games and advertising revenue from the four Nations Hockey Tournament.
Consolidated Operating Margins Up slightly to just over 45%.
Capital Expenditures $978 million, down 8% from one year ago.
Free Cash Flow $586 million, unchanged from the prior year.
Net Debt Leverage Ratio 4.3 times, down from 4.5 times at December 31, 2024, and down from 5.3 times when Shaw was closed.
Liquidity $7.5 billion, comprised of $2.7 billion in cash and short-term deposits and $4.8 billion available under revolving credit facilities.
New Technology: Rogers started delivering 4-gig download and 1-gig upload speeds in select Calgary communities with the Rogers Xfinity modem, supporting multi-gig symmetrical speeds and including Wi-Fi 7.
Market Positioning: Rogers reported 57,000 Wireless and Internet net additions despite a slower growth market, reflecting a focus on price discipline and delivering profitable subscriber growth.
Partnership Renewal: Rogers renewed its partnership with the NHL, locking in national media rights until 2038, which are the most valuable media rights in Canada.
MLSE Transaction: Rogers expects to close the transaction for a 37.5% additional ownership stake in MLSE for $4.7 billion in mid-2025.
Operational Efficiencies: Rogers aims to bring costs in line with revenue growth and identify efficiencies, including digital investments to reduce costs and improve customer experience.
Delevering Efforts: Rogers has attracted $9 billion of equity capital, reducing leverage from 4.5 times to 3.6 times, positioning itself with the lowest leverage among major Canadian carriers.
Strategic Focus: Rogers is focused on disciplined execution, profitable growth, and delevering the balance sheet in a cautious economic environment.
Earnings Expectations: Rogers Communications Inc. missed earnings expectations with a reported EPS of $0.69 against expectations of $0.71.
Competitive Pressures: The company is facing a highly competitive market, which has resulted in slower growth and a decrease in net new wireless subscribers.
Regulatory Issues: The company is awaiting league and regulatory approvals for the transaction to buy an additional ownership stake in MLSE.
Supply Chain Challenges: The company is experiencing challenges in subscriber growth due to reduced immigration, impacting overall market size.
Economic Factors: The current economic environment is described as cautious, with a focus on financial discipline and cost efficiencies.
Debt Levels: Rogers is working to reduce its leverage from 4.5 times to 3.6 times, indicating a focus on deleveraging amidst a competitive landscape.
Market Size: The slower rate of growth in the market is attributed to lower immigration, which is affecting subscriber additions and overall revenue.
Delevering Efforts: Rogers is focused on delevering the balance sheet, aiming to reduce leverage to 3.5 times within 36 months post-merger with Shaw. Current leverage is projected to be 3.6 times after recent equity capital raises.
Investment in Sports Assets: Rogers is advancing its strategy to surface value from sports assets, including a renewed partnership with the NHL and plans to close a deal for a 75% stake in MLSE by mid-2025.
Operational Efficiency: The company is committed to delivering efficiencies across operations, including digital investments to reduce costs and improve customer experience.
Subscriber Growth: Rogers reported 57,000 net additions in Wireless and Internet subscribers, focusing on price discipline and profitable growth despite a competitive market.
Revenue and EBITDA Growth: Rogers maintains a positive outlook for revenue and EBITDA growth for 2025, despite a slower growth environment.
Capital Expenditures: Capital expenditures for Q1 2025 were $978 million, down 8% year-over-year, with a focus on maintaining capital intensity.
Free Cash Flow: Free cash flow for the quarter was $586 million, unchanged from the prior year.
Leverage Ratio: The net debt leverage ratio is expected to be approximately 3.6 times on a pro forma basis after closing the recent equity investment.
Dividend Reinvestment Plan (DRIP): The discount on the dividend reinvestment plan has been removed effective from the next dividend payment in July.
Equity Investment: Rogers has agreed to terms for a $7 billion equity investment led by Blackstone and backed by several leading Canadian institutions.
Shareholder Return Strategy: Rogers intends to use the net proceeds from the equity investment to substantially repay debt and strengthen its balance sheet.
MLSE Transaction: Rogers is moving forward on an agreement to buy an additional 37.5% ownership stake in MLSE for $4.7 billion.
The earnings call summary presents a mixed picture. Basic financial performance and expenses show some concerns, such as increased debt leverage and unchanged EBITDA guidance. However, product development, market strategy, and shareholder return plans are more positive, with revenue growth expectations and strong demand for satellite services. The Q&A reveals confidence in pricing and churn management but notes some revenue declines. Overall, the sentiment is balanced, leading to a neutral prediction, as positive elements are offset by financial constraints and uncertainties.
Rogers shows strong financial health with increased free cash flow and improved debt leverage. The positive outlook for revenue and EBITDA growth, coupled with strategic investments in sports and wireless, indicates a promising future. While some uncertainties remain, such as sports asset monetization and MLSE synergies, the overall sentiment is positive due to strong financial metrics and strategic focus.
The earnings call shows mixed results: EPS missed expectations, but there is optimistic guidance for cable revenue and subscriber growth. The equity investment and debt repayment are positive, but the removal of the DRIP discount is negative. The Q&A reveals concerns about market growth and vague responses on tariffs and MLSE, indicating uncertainty. Overall, the neutral rating reflects balanced positive and negative factors, suggesting limited stock movement in the short term.
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