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Rogers Communications Reports First Quarter 2024 Results

/EIN News/ -- Reports nine straight quarters of industry-leading growth
Reaffirms industry-leading 2024 financial guidance

More Canadians continue to choose Rogers over any other carrier

  • 124,000 postpaid mobile phone and retail Internet net adds
  • Postpaid mobile phone net adds of 98,000, up 3,000
  • Retail Internet net adds of 26,000, up 12,000

Delivers industry-leading growth in Cable and Wireless

  • Total service revenue up 31%; adjusted EBITDA up 34%
  • Wireless service revenue and adjusted EBITDA up 9%
    • Wireless blended ARPU up 1%; up 3% on a pro forma basis (for Shaw Mobile)
  • Cable service revenue up 94%; adjusted EBITDA up 97%

Exceeding Shaw merger commitments

  • $1 billion annualized synergy savings achieved - one year ahead of schedule
  • Industry-leading Cable margins of 56%
  • Debt leverage ratio at 4.7 times; on track to achieve 4.2 times by year-end

Introduces meaningful innovation for Canadians

  • First carrier in Canada to complete national live test of 5G network slicing technology
  • Announced partnership with CableLabs to introduce "CableLabs North"
  • Introduced Rogers 5G Wireless Home Internet service

TORONTO, April 24, 2024 (GLOBE NEWSWIRE) -- Rogers Communications Inc. (TSX: RCI.A and RCI.B; NYSE: RCI) today announced its unaudited financial and operating results for the first quarter ended March 31, 2024.

"We continued to deliver industry-leading growth in the first quarter, our ninth straight quarter of growth and momentum," said Tony Staffieri, President and CEO. "At the one-year milestone of the Shaw merger, more Canadians continue to choose Rogers than any other carrier and we're one year ahead of our synergy targets. I am proud of our team and I remain confident in our future."

Consolidated Financial Highlights

  Three months ended March 31  
(In millions of Canadian dollars, except per share amounts, unaudited)   2024   2023 % Chg  
             
Total revenue   4,901   3,835 28  
Total service revenue   4,357   3,314 31  
Adjusted EBITDA 1   2,214   1,651 34  
Net income   256   511 (50 )
Adjusted net income 1   540   553 (2 )
             
Diluted earnings per share $0.46 $1.00 (54 )
Adjusted diluted earnings per share 1 $0.99 $1.09 (9 )
             
Cash provided by operating activities   1,180   453 160  
Free cash flow 1   586   370 58  

__________________________
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 Q1 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.

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

  • Expanded our cable network to approximately 50,000 new homes passed.
  • Expanded Canada's largest and most reliable 5G network to over 40 new communities.
  • Completed Canada's first national live trial of 5G network slicing.

Deliver easy to use, reliable products and services

  • Launched Rogers 5G Home Internet across our wireless network coverage area.
  • Launched our Ignite Self Protect home security solution in Western Canada.
  • Automated over 84% of Rogers Business wireless activations.

Be the first choice for Canadians

  • Led the industry with 98,000 Wireless postpaid mobile phone net additions.
  • Broadcast Canada's first Law & Order original series and premiered at #1 in the country.
  • Sportsnet was the most-watched specialty channel in Canada.

Be a strong national company investing in Canada

  • Advanced our Shaw Transaction commitments with network investments in Western Canada and growth in our Connected for Success program.
  • Launched our official telecommunications partnership with the Professional Women's Hockey League.
  • Improved wireless coverage on new sections of Highway 16 in British Columbia.

Be the growth leader in our industry

  • Grew total service revenue by 31% and adjusted EBITDA by 34%.
  • Reported industry-leading growth in our Wireless and Cable operations.
  • Completed $1 billion of Shaw Transaction synergy targets one year ahead of schedule.

Quarterly Financial Highlights

Revenue
Total revenue and total service revenue increased by 28% and 31%, respectively, this quarter, driven by revenue growth in our Cable and Wireless businesses.

Wireless service revenue increased by 9% this quarter, primarily as a result of the cumulative impact of growth in our mobile phone subscriber base and revenue from Shaw Mobile subscribers acquired through the Shaw Transaction. Wireless equipment revenue increased by 4%, primarily as a result of a continued shift in the product mix towards higher-value devices.

Cable service revenue increased by 94% this quarter as a result of the Shaw Transaction.

Media revenue decreased by 5% this quarter primarily as a result of lower subscriber revenue, including due to a negotiation of certain content rates last year, and lower Today's Shopping Choice revenue, partially offset by higher advertising revenue.

Adjusted EBITDA and margins
Consolidated adjusted EBITDA increased 34% this quarter and our adjusted EBITDA margin increased by 210 basis points, as a result of improving synergies and efficiencies.

Wireless adjusted EBITDA increased by 9%, primarily due to the flow-through impact of higher revenue as discussed above. This gave rise to an adjusted EBITDA margin of 64.3%.

Cable adjusted EBITDA increased by 97% due to the flow-through impact of higher revenue as discussed above and the achievement of cost synergies associated with integration activities. This gave rise to an adjusted EBITDA margin of 56.2%.

Media adjusted EBITDA decreased by $65 million, or 171%, this quarter primarily due to lower revenue as discussed above, higher programming and production costs as a result of the timing of broadcasts, and higher Toronto Blue Jays expenses, including player payroll, as a result of the timing of games played.

Net income and adjusted net income
Net income decreased by 50% and adjusted net income decreased by 2% this quarter, primarily as a result of higher depreciation and amortization associated with assets acquired through the Shaw Transaction and higher finance costs, partially offset by higher adjusted EBITDA. Net income was also impacted by higher restructuring, acquisition and other costs.

Cash flow and available liquidity
This quarter, we generated cash provided by operating activities of $1,180 million (2023 - $453 million); the increase is primarily a result of higher adjusted EBITDA, partially offset by higher interest paid. We also generated free cash flow of $586 million (2023 - $370 million), up 58% as a result of higher adjusted EBITDA, partially offset by higher interest on long-term debt and higher capital expenditures.

As at March 31, 2024, we had $4.6 billion of available liquidity2 (December 31, 2023 - $5.9 billion), consisting of $0.8 billion in cash and cash equivalents and $3.8 billion available under our bank credit and other facilities.

Our debt leverage ratio2 as at March 31, 2024 was 4.7 (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).

We also returned $265 million in dividends to shareholders this quarter and we declared a $0.50 per share dividend on April 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 Q1 2024 MD&A for more information about this measure, available at www.sedarplus.ca. 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 Q1 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 months ended March 31, 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 First Quarter 2024 Interim Condensed Consolidated Financial Statements (First 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 First 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 April 23, 2024 and was approved by RCI's Board of Directors (the Board) on that date.

In this earnings release, this quarter, the quarter, or first quarter refer to the three months ended March 31, 2024, unless the context indicates otherwise. 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 segments
We 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 smart 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 March 31  
(In millions of dollars, except margins and per share amounts)   2024     2023   % Chg  
       
Revenue      
Wireless   2,528     2,346   8  
Cable   1,959     1,017   93  
Media   479     505   (5 )
Corporate items and intercompany eliminations   (65 )   (33 ) 97  
Revenue   4,901     3,835   28  
Total service revenue 1   4,357     3,314   31  
       
Adjusted EBITDA      
Wireless   1,284     1,179   9  
Cable   1,100     557   97  
Media   (103 )   (38 ) 171  
Corporate items and intercompany eliminations   (67 )   (47 ) 43  
Adjusted EBITDA   2,214     1,651   34  
Adjusted EBITDA margin 2   45.2 %   43.1 % 2.1 pts  
       
Net income   256     511   (50 )
Basic earnings per share $0.48   $1.01   (52 )
Diluted earnings per share $0.46   $1.00   (54 )
       
Adjusted net income 2   540     553   (2 )
Adjusted basic earnings per share 2 $1.02   $1.10   (7 )
Adjusted diluted earnings per share $0.99   $1.09   (9 )
       
Capital expenditures   1,058     892   19  
Cash provided by operating activities   1,180     453   160  
Free cash flow   586     370   58  

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 Q1 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 March 31  
(In millions of dollars, except margins) 2024   2023   % Chg  
       
Revenue      
Service revenue 1,996   1,836   9  
Equipment revenue 532   510   4  
Revenue 2,528   2,346   8  
       
Operating costs      
Cost of equipment 539   508   6  
Other operating costs 705   659   7  
Operating costs 1,244   1,167   7  
       
Adjusted EBITDA 1,284   1,179   9  
       
Adjusted EBITDA margin 1 64.3 % 64.2 % 0.1 pts  
Capital expenditures 404   452   (11 )

Calculated using service revenue.

Wireless Subscriber Results 1

  Three months ended March 31  
(In thousands, except churn and mobile phone ARPU)   2024     2023     Chg  
       
Postpaid mobile phone 2      
Gross additions   443     318     125  
Net additions   98     95     3  
Total postpaid mobile phone subscribers 3   10,486     9,487     999  
Churn (monthly)   1.10 %   0.79 %   0.31 pts  
Prepaid mobile phone 4      
Gross additions   84     217     (133 )
Net losses   (37 )   (8 )   (29 )
Total prepaid mobile phone subscribers 3   1,018     1,247     (229 )
Churn (monthly)   3.90 %   5.96 %   (2.06 pts )
Mobile phone ARPU (monthly) 5 $58.06   $57.26   $0.80  

1 Subscriber counts and subscriber churn are key performance indicators. See "Key Performance Indicators".
2 Effective January 1, 2024, and on a prospective basis, we adjusted our postpaid mobile phone subscriber base to remove 110,000 Cityfone subscribers as we stopped selling new plans for this service as of that date. Given this, we believe this adjustment more meaningfully reflects the underlying organic subscriber performance of our postpaid mobile phone business.
3 As at end of period.
4 Effective January 1, 2024, and on a prospective basis we adjusted our prepaid mobile phone subscriber base to remove 56,000 Fido prepaid subscribers as we stopped selling new plans for this service as of that date. Given this, we believe this adjustment more meaningfully reflects the underlying organic subscriber performance of our prepaid mobile phone business.
5 Mobile phone ARPU is a supplementary financial measure. See "Non-GAAP and Other Financial Measures" in our Q1 2024 MD&A for more information about this measure, available at www.sedarplus.ca.

Service revenue
The 9% increase in service revenue this quarter was primarily a result of:

  • the cumulative impact of growth in our mobile phone subscriber base over the past year; and
  • the impact of the Shaw Mobile subscribers acquired through the Shaw Transaction in April 2023.

The increase in mobile phone ARPU this quarter was primarily associated with the changes in subscribers.

The continued significant postpaid gross and net additions this quarter were a result of sales execution in a growing Canadian market.

Equipment revenue
The 4% increase in equipment revenue this quarter was primarily as a result of:

  • an increase in new subscribers purchasing devices; and
  • a continued shift in the product mix towards higher-value devices; partially offset by
  • lower device upgrades by existing customers.

Operating costs
Cost of equipment
The 6% increase in the cost of equipment this quarter was a result of the equipment revenue changes discussed above.

Other operating costs
The 7% increase in other operating costs this quarter was primarily a result of:

  • higher costs associated with the increased revenue and subscriber additions including commissions and costs associated with our expanded network; and
  • investments made in customer service.

Adjusted EBITDA
The 9% increase in adjusted EBITDA this quarter was a result of the revenue and expense changes discussed above.

CABLE

Cable Financial Results

  Three months ended March 31
(In millions of dollars, except margins) 2024   2023   % Chg
       
Revenue      
Service revenue 1,947   1,006   94
Equipment revenue 12   11   9
Revenue 1,959   1,017   93
       
Operating costs 859   460   87
       
Adjusted EBITDA 1,100   557   97
       
Adjusted EBITDA margin 56.2 % 54.8 % 1.4 pts
Capital expenditures 480   319   50


Cable Subscriber Results
1

  Three months ended March 31  
(In thousands, except ARPA and penetration)   2024     2023     Chg  
       
Homes passed 2   9,992     4,829     5,163  
Customer relationships      
Net additions   7     1     6  
Total customer relationships 2   4,643     2,591     2,052  
ARPA (monthly) 3 $140.10   $129.58   $10.52  
       
Penetration 2   46.5 %   53.7 %   (7.2 pts )
       
Retail Internet      
Net additions   26     14     12  
Total retail Internet subscribers 2   4,188     2,298     1,890  
Video      
Net losses   (27 )   (8 )   (19 )
Total Video subscribers 2   2,724     1,517     1,207  
Smart Home Monitoring      
Net losses   (1 )   (5 )   4  
Total Smart Home Monitoring subscribers 2   88     96     (8 )
Home Phone      
Net losses   (35 )   (13 )   (22 )
Total Home Phone subscribers 2   1,594     823     771  

Subscriber results are key performance indicators. See "Key Performance Indicators".
As at end of period.
ARPA is a supplementary financial measure. See "Non-GAAP and Other Financial Measures" in our Q1 2024 MD&A for more information about this measure, available at www.sedarplus.ca

Service revenue
The 94% increase in service revenue this quarter was a result of:

  • revenue related to our acquisition of Shaw, which contributed approximately $1 billion for the quarter; partially offset by
  • continued increased competitive promotional activity; and
  • declines in our Home Phone, Smart Home Monitoring, and Satellite subscriber bases.

The higher ARPA this quarter was primarily a result of the acquisition of Shaw.

Operating costs
The 87% increase in operating costs this quarter was primarily a result of:

  • our acquisition of Shaw, partially offset by the realization of cost synergies associated with integration activities; and
  • investments in customer service.

Adjusted EBITDA
The 97% increase in adjusted EBITDA this quarter was a result of the service revenue and expense changes discussed above.

MEDIA

Media Financial Results

  Three months ended March 31  
(In millions of dollars, except margins) 2024   2023   % Chg  
       
Revenue 479   505   (5 )
Operating costs 582   543   7  
       
Adjusted EBITDA (103 ) (38 ) 171  
       
Adjusted EBITDA margin (21.5 )% (7.5 )% (14.0 pts )
Capital expenditures 120   61   97  


Revenue

The 5% decrease in revenue this quarter was a result of:

  • lower subscriber revenue due to the negotiation of certain content rates in the prior year; and
  • lower Today's Shopping Choice revenue; partially offset by
  • higher advertising revenue.

Operating costs
The 7% increase in operating costs this quarter was a result of:

  • higher programming and production costs as a result of the timing of broadcasts; and
  • higher Toronto Blue Jays expenses, including players payroll as a result of the timing of games played; partially offset by
  • lower Today's Shopping Choice costs in line with lower revenue.

Adjusted EBITDA
The decrease in adjusted EBITDA this quarter was a result of the revenue and expense changes discussed above.

CAPITAL EXPENDITURES

  Three months ended March 31  
(In millions of dollars, except capital intensity) 2024   2023   % Chg  
       
Wireless 404   452   (11 )
Cable 480   319   50  
Media 120   61   97  
Corporate 54   60   (10 )
       
Capital expenditures 1 1,058   892   19  
       
Capital intensity 2 21.6 % 23.3 % (1.7 pts )

1 Includes additions to property, plant and equipment net of proceeds on disposition, but does not include expenditures for spectrum licences, additions to right-of-use assets, or assets acquired through business combinations.
2 Capital intensity is a supplementary financial measure. See "Non-GAAP and Other Financial Measures" in our Q1 2024 MD&A for more information about this measure, available at www.sedarplus.ca.

One of our objectives is to build the biggest and best networks in the country. As we continually work towards this, we once again plan to spend more on our wireless and wireline networks this year than we have in the past several years. We continue to roll out our 5G network (the largest 5G network in Canada as at March 31, 2024) across the country, as we work toward our commitment to expand coverage across Western Canada. We also continue to invest in fibre deployments, including fibre-to-the-home (FTTH), in our cable network and we are expanding our network footprint to reach more homes and businesses, including in rural, remote, and Indigenous communities.

These investments will strengthen network resilience and stability and will help us bridge the digital divide by expanding our network further into rural and underserved areas through participation in various programs and projects.

Wireless
The decrease in capital expenditures in Wireless this quarter was due to the timing of investments. We continue to make investments in our network development and 5G deployment to expand our wireless network. The ongoing deployment of 3500 MHz spectrum continues to augment the capacity and resilience of our earlier 5G deployments in the 600 MHz spectrum band.

Cable
The increase in capital expenditures in Cable this quarter reflects our acquisition of Shaw and continued investments in our infrastructure, including additional fibre deployments to increase our FTTH distribution. These investments incorporate the latest technologies to help deliver more bandwidth and an enhanced customer experience as we progress in our connected home roadmap, including service footprint expansion and upgrades to our DOCSIS 3.1 platform to evolve to DOCSIS 4.0, offering increased network resilience, stability, and faster download speeds over time.

Media
The increase in capital expenditures in Media this quarter was primarily a result of higher Toronto Blue Jays stadium infrastructure-related expenditures associated with the second phase of the Rogers Centre modernization project.

Capital intensity
Capital intensity decreased in the quarter as the increase in capital expenditure investments, as noted above, was partially offset by higher revenue.

Review of Consolidated Performance

This section discusses our consolidated net income and other income and expenses that do not form part of the segment discussions above.

  Three months ended March 31  
(In millions of dollars) 2024 2023   % Chg  
       
Adjusted EBITDA 2,214 1,651   34  
Deduct (add):      
Depreciation and amortization 1,149 631   82  
Restructuring, acquisition and other 142 55   158  
Finance costs 580 296   96  
Other expense (income) 8 (27 ) n/m  
Income tax expense 79 185   (57 )
       
Net income 256 511   (50 )

n/m - not meaningful

Depreciation and amortization

  Three months ended March 31
(In millions of dollars) 2024 2023 % Chg
       
Depreciation of property, plant and equipment 906 557 63
Depreciation of right-of-use assets 110 68 62
Amortization 133 6 n/m
       
Total depreciation and amortization 1,149 631 82


Total depreciation and amortization increased this quarter, primarily as a result of the property, plant and equipment, right-of-use assets, and customer relationship intangible assets acquired through the Shaw Transaction.

Restructuring, acquisition and other

  Three months ended March 31
(In millions of dollars) 2024 2023
     
Restructuring and other 112 22
Shaw Transaction-related costs 30 33
     
Total restructuring, acquisition and other 142 55


The Shaw Transaction-related costs in 2023 and 2024 consisted of incremental costs supporting acquisition (in 2023) and integration activities (in 2023 and 2024) related to the Shaw Transaction.

The restructuring and other costs in 2023 and 2024 were primarily severance and other departure-related costs associated with the targeted restructuring of our employee base, which also included costs associated with a voluntary departure program in 2024. These costs also included costs related to real estate rationalization programs.

Finance costs

  Three months ended March 31  
(In millions of dollars) 2024   2023   % Chg  
       
Total interest on borrowings 1 508   393   29  
Interest earned on restricted cash and cash equivalents   (146 ) (100 )
       
Interest on borrowings, net 508   247   106  
Interest on lease liabilities 35   23   52  
Interest on post-employment benefits (2 ) (2 )  
Loss on foreign exchange 109   14   n/m  
Change in fair value of derivative instruments (98 ) (11 ) n/m  
Capitalized interest (12 ) (8 ) 50  
Deferred transaction costs and other 40   33   21  
       
Total finance costs 580   296   96  

1 Interest on borrowings includes interest on short-term borrowings and on long-term debt.

Interest on borrowings, net
The 106% increase in net interest on borrowings this quarter was primarily a result of:

  • a reduction in interest earned on restricted cash and cash equivalents, as we used these funds to partially fund the Shaw Transaction on April 3, 2023;
  • interest expense associated with senior notes issued in September 2023 and February 2024;
  • interest expense associated with the borrowings under the term loan facility used to partially fund the Shaw Transaction; and
  • interest expense associated with the long-term debt assumed through the Shaw Transaction; partially offset by
  • the repayment at maturity of senior notes in March 2023, October 2023, November 2023, January 2024, and March 2024 at different underlying interest rates.

Income tax expense

  Three months ended March 31  
(In millions of dollars, except tax rates) 2024   2023  
     
Statutory income tax rate 26.2 % 26.5 %
Income before income tax expense 335   696  
Computed income tax expense 88   184  
Increase (decrease) in income tax expense resulting from:    
Non-(taxable) deductible stock-based compensation (6 ) 6  
Non-taxable portion of equity income   (4 )
Non-taxable income from security investments   (3 )
Other items (3 ) 2  
     
Total income tax expense 79   185  
     
Effective income tax rate 23.6 % 26.6 %
Cash income taxes paid 74   150  


Cash income taxes paid decreased this quarter due to the timing of installment payments. The decrease in our statutory income tax rate this quarter was a result of a greater portion of our income being earned in provinces with lower income tax rates.

Net income

  Three months ended March 31  
(In millions of dollars, except per share amounts)   2024   2023 % Chg  
       
Net income   256   511 (50 )
Basic earnings per share $0.48 $1.01 (52 )
Diluted earnings per share $0.46 $1.00 (54 )


Adjusted net income

We calculate adjusted net income from adjusted EBITDA as follows:

  Three months ended March 31  
(In millions of dollars, except per share amounts)   2024   2023   % Chg  
       
Adjusted EBITDA   2,214   1,651   34  
Deduct:      
Depreciation and amortization 1   907   631   44  
Finance costs   580   296   96  
Other income (expense)   8   (27 ) n/m  
Income tax expense 2   179   198   (10 )
       
Adjusted net income 1   540   553   (2 )
       
Adjusted basic earnings per share $1.02 $1.10   (7 )
Adjusted diluted earnings per share $0.99 $1.09   (9 )

1 Our calculation of adjusted net income excludes depreciation and amortization on the fair value increment recognized on acquisition of Shaw Transaction-related property, plant and equipment and intangible assets. For purposes of calculating adjusted net income, we believe the magnitude of this depreciation and amortization, which is significantly affected by the size of the Shaw Transaction, affects comparability between periods and the additional expense recognized may have no correlation to our current and ongoing operating results. Depreciation and amortization excludes depreciation and amortization on Shaw Transaction-related property, plant and equipment and intangible assets for the three months ended March 31, 2024 of $242 million (2023 - nil). Adjusted net income includes depreciation and amortization on the acquired Shaw property, plant and equipment and intangible assets based on Shaw's historical cost and depreciation policies.
2 Income tax expense excludes recoveries of $100 million (2023 - recoveries of $13 million) for the three months ended March 31, 2024 related to the income tax impact for adjusted items.

Key Performance Indicators

We measure the success of our strategy using a number of key performance indicators that are defined and discussed in our 2023 Annual MD&A and this earnings release. We believe these key performance indicators allow us to appropriately measure our performance against our operating strategy and against the results of our peers and competitors. The following key performance indicators, some of which are supplementary financial measures (see "Non-GAAP and Other Financial Measures"), are not measurements in accordance with IFRS. They include:

  • subscriber counts;
    • Wireless;
    • Cable; and
    • homes passed (Cable);
  • Wireless subscriber churn (churn);
  • Wireless mobile phone average revenue per user
    (ARPU);
  • Cable average revenue per account (ARPA);
  • Cable customer relationships;
  • Cable market penetration (penetration);
  • capital intensity; and
  • total service revenue.


Non-GAAP and Other Financial Measures

Reconciliation of adjusted EBITDA

  Three months ended March 31  
(In millions of dollars) 2024 2023  
     
Net income 256 511  
Add:    
Income tax expense 79 185  
Finance costs 580 296  
Depreciation and amortization 1,149 631  
EBITDA 2,064 1,623  
Add (deduct):    
Other expense (income) 8 (27 )
Restructuring, acquisition and other 142 55  
     
Adjusted EBITDA 2,214 1,651  


Reconciliation of pro forma trailing 12-month adjusted EBITDA

  As at December 31
(In millions of dollars) 2023
   
Trailing 12-month adjusted EBITDA - 12 months ended December 31, 2023 8,581
Add (deduct):  
Acquired Shaw business adjusted EBITDA - January 2023 to March 2023 514
   
Pro forma trailing 12-month adjusted EBITDA 9,095


Reconciliation of adjusted net income

  Three months ended March 31  
(In millions of dollars) 2024   2023  
     
Net income 256   511  
Add (deduct):    
Restructuring, acquisition and other 142   55  
Depreciation and amortization on fair value increment of Shaw Transaction-related assets 242    
Income tax impact of above items (100 ) (13 )
     
Adjusted net income 540   553  


Reconciliation of free cash flow

  Three months ended March 31  
(In millions of dollars) 2024   2023  
     
Cash provided by operating activities 1,180   453  
Add (deduct):    
Capital expenditures (1,058 ) (892 )
Interest on borrowings, net and capitalized interest (496 ) (239 )
Interest paid, net 555   323  
Restructuring, acquisition and other 142   55  
Program rights amortization (16 ) (18 )
Change in net operating assets and liabilities 289   704  
Other adjustments 1 (10 ) (16 )
     
Free cash flow 586   370  

1 Consists of post-employment benefit contributions, net of expense, cash flows relating to other operating activities, and other investment income from our financial statements.

Rogers Communications Inc.
Interim Condensed Consolidated Statements of Income
(In millions of Canadian dollars, except per share amounts, unaudited)

  Three months ended March 31  
    2024   2023  
     
Revenue   4,901   3,835  
     
Operating expenses:    
Operating costs   2,687   2,184  
Depreciation and amortization   1,149   631  
Restructuring, acquisition and other   142   55  
Finance costs   580   296  
Other expense (income)   8   (27 )
     
Income before income tax expense   335   696  
Income tax expense   79   185  
     
Net income for the period   256   511  
     
Earnings per share:    
Basic $0.48 $1.01  
Diluted $0.46 $1.00  


Rogers Communications Inc.

Interim Condensed Consolidated Statements of Financial Position
(In millions of Canadian dollars, unaudited)

  As at
March 31
As at
December 31
  2024 2023
     
Assets    
Current assets:    
Cash and cash equivalents 764 800
Accounts receivable 4,810 4,996
Inventories 506 456
Current portion of contract assets 170 163
Other current assets 1,121 1,202
Current portion of derivative instruments 99 80
Assets held for sale 137 137
Total current assets 7,607 7,834
     
Property, plant and equipment 24,530 24,332
Intangible assets 17,768 17,896
Investments 603 598
Derivative instruments 794 571
Financing receivables 1,075 1,101
Other long-term assets 759 670
Goodwill 16,280 16,280
     
Total assets 69,416 69,282
     
Liabilities and shareholders' equity    
Current liabilities:    
Short-term borrowings 3,066 1,750
Accounts payable and accrued liabilities 3,780 4,221
Other current liabilities 351 434
Contract liabilities 845 773
Current portion of long-term debt 1,355 1,100
Current portion of lease liabilities 531 504
Total current liabilities 9,928 8,782
     
Provisions 62 54
Long-term debt 38,965 39,755
Lease liabilities 2,136 2,089
Other long-term liabilities 1,378 1,783
Deferred tax liabilities 6,338 6,379
Total liabilities 58,807 58,842
     
Shareholders' equity 10,609 10,440
     
Total liabilities and shareholders' equity 69,416 69,282


Rogers Communications Inc.

Interim Condensed Consolidated Statements of Cash Flows
(In millions of Canadian dollars, unaudited)

  Three months ended March 31  
  2024   2023  
Operating activities:    
Net income for the period 256   511  
Adjustments to reconcile net income to cash provided by operating activities:    
Depreciation and amortization 1,149   631  
Program rights amortization 16   18  
Finance costs 580   296  
Income tax expense 79   185  
Post-employment benefits contributions, net of expense 15   (2 )
Income from associates and joint ventures (1 ) (14 )
Other 4   5  
Cash provided by operating activities before changes in net operating assets and liabilities, income taxes paid, and interest paid 2,098   1,630  
Change in net operating assets and liabilities (289 ) (704 )
Income taxes paid (74 ) (150 )
Interest paid (555 ) (323 )
     
Cash provided by operating activities 1,180   453  
     
Investing activities:    
Capital expenditures (1,058 ) (892 )
Additions to program rights (13 ) (25 )
Changes in non-cash working capital related to capital expenditures and intangible assets 87   (38 )
Acquisitions and other strategic transactions, net of cash acquired (95 )  
Other 13   9  
     
Cash used in investing activities (1,066 ) (946 )
     
Financing activities:    
Net proceeds received from short-term borrowings 1,304   1,342  
Net repayment of long-term debt (1,108 ) (388 )
Net (payments) proceeds on settlement of debt derivatives and forward contracts (2 ) 227  
Transaction costs incurred (42 ) (264 )
Principal payments of lease liabilities (112 ) (81 )
Dividends paid (190 ) (253 )
     
Cash (used in) provided by financing activities (150 ) 583  
     
Change in cash and cash equivalents and restricted cash and cash equivalents (36 ) 90  
Cash and cash equivalents and restricted cash and cash equivalents, beginning of period 800   13,300  
     
Cash and cash equivalents and restricted cash and cash equivalents, end of period 764   13,390  
     
Cash and cash equivalents 764   553  
Restricted cash and cash equivalents   12,837  
     
Cash and cash equivalents and restricted cash and cash equivalents, end of period 764   13,390  


About Forward-Looking Information

This earnings release includes "forward-looking information" and "forward-looking statements" within the meaning of applicable securities laws (collectively, "forward-looking information"), and assumptions about, among other things, our business, operations, and financial performance and condition approved by our management on the date of this earnings release. This forward-looking information and these assumptions include, but are not limited to, statements about our objectives and strategies to achieve those objectives, and about our beliefs, plans, expectations, anticipations, estimates, or intentions.

Forward-looking information

  • typically includes words like could, expect, may, anticipate, assume, believe, intend, estimate, plan, project, guidance, outlook, target, and similar expressions;
  • includes conclusions, forecasts, and projections that are based on our current objectives and strategies and on estimates, expectations, assumptions, and other factors that we believe to have been reasonable at the time they were applied but may prove to be incorrect; and
  • was approved by our management on the date of this earnings release.

Our forward-looking information includes forecasts and projections related to the following items, among others:

  • revenue;
  • total service revenue;
  • adjusted EBITDA;
  • capital expenditures;
  • cash income tax payments;
  • free cash flow;
  • dividend payments;
  • the growth of new products and services;
  • expected growth in subscribers and the services to which they subscribe;
  • the cost of acquiring and retaining subscribers and deployment of new services;
  • continued cost reductions and efficiency improvements;
  • our debt leverage ratio;
  • the benefits expected to result from the Shaw Transaction, including corporate, operational, scale, and other synergies, and their anticipated timing; and
  • all other statements that are not historical facts.

Our conclusions, forecasts, and projections are based on a number of estimates, expectations, assumptions, and other factors, including, among others:

  • general economic and industry conditions, including the effects of inflation;
  • currency exchange rates and interest rates;
  • product pricing levels and competitive intensity;
  • subscriber growth;
  • pricing, usage, and churn rates;
  • changes in government regulation;
  • technology and network deployment;
  • availability of devices;
  • timing of new product launches;
  • content and equipment costs;
  • the integration of acquisitions; and
  • industry structure and stability.

Except as otherwise indicated, this earnings release and our forward-looking information do not reflect the potential impact of any non-recurring or other special items or of any dispositions, monetizations, mergers, acquisitions, other business combinations, or other transactions that may be considered or announced or may occur after the date on which the statement containing the forward-looking information is made.

Risks and uncertainties

Actual events and results can be substantially different from what is expressed or implied by forward-looking information as a result of risks, uncertainties, and other factors, many of which are beyond our control, including, but not limited to:

  • regulatory changes;
  • technological changes;
  • economic, geopolitical, and other conditions affecting commercial activity;
  • unanticipated changes in content or equipment costs;
  • changing conditions in the entertainment, information, and communications industries;
  • sports-related work stoppages or cancellations and labour disputes;
  • the integration of acquisitions;
  • litigation and tax matters;
  • the level of competitive intensity;
  • the emergence of new opportunities;
  • external threats, such as epidemics, pandemics, and other public health crises, natural disasters, the effects of climate change, or cyberattacks, among others;
  • anticipated asset sales may not be achieved within the expected timeframes or at all for proceeds in the amount or type expected;
  • new interpretations and new accounting standards from accounting standards bodies; and
  • the other risks outlined in "Risks and Uncertainties Affecting our Business" in our 2023 Annual MD&A.


These factors can also affect our objectives, strategies, and intentions. Many of these factors are beyond our control or our current expectations or knowledge. Should one or more of these risks, uncertainties, or other factors materialize, our objectives, strategies, or intentions change, or any other factors or assumptions underlying the forward-looking information prove incorrect, our actual results and our plans could vary significantly from what we currently foresee.

Accordingly, we warn investors to exercise caution when considering statements containing forward-looking information and caution them that it would be unreasonable to rely on such statements as creating legal rights regarding our future results or plans. We are under no obligation (and we expressly disclaim any such obligation) to update or alter any statements containing forward-looking information or the factors or assumptions underlying them, whether as a result of new information, future events, or otherwise, except as required by law. All of the forward-looking information in this earnings release is qualified by the cautionary statements herein.

Before making an investment decision

Before making any investment decisions and for a detailed discussion of the risks, uncertainties, and environment associated with our business, its operations, and its financial performance and condition, fully review the sections in our 2023 Annual MD&A entitled "Regulation in our Industry" and "Risk Management", as well as our various other filings with Canadian and US securities regulators, which can be found at sedarplus.ca and sec.gov, respectively. Information on or connected to sedarplus.ca, sec.gov, our website, or any other website referenced in this document is not part of or incorporated into this earnings release.

About Rogers

Rogers is Canada's leading wireless, cable and media company that provides connectivity and entertainment to Canadian consumers and businesses across the country. Our shares are publicly traded on the Toronto Stock Exchange (TSX: RCI.A and RCI.B) and on the New York Stock Exchange (NYSE: RCI).

Investment community contact Media contact
   
Paul Carpino Sarah Schmidt
647.435.6470 647.643.6397
paul.carpino@rci.rogers.com sarah.schmidt@rci.rogers.com


Quarterly Investment Community Teleconference

Our first quarter 2024 results teleconference with the investment community will be held on:

  • April 24, 2024
  • 8:00 a.m. Eastern Time
  • webcast available at investors.rogers.com
  • media are welcome to participate on a listen-only basis

A rebroadcast will be available at investors.rogers.com for at least two weeks following the teleconference. Additionally, investors should note that from time to time, Rogers' management presents at brokerage-sponsored investor conferences. Most often, but not always, these conferences are webcast by the hosting brokerage firm, and when they are webcast, links are made available on Rogers' website at investors.rogers.com.

For More Information

You can find more information relating to us on our website (investors.rogers.com), on SEDAR+ (sedarplus.ca), and on EDGAR (sec.gov), or you can e-mail us at investor.relations@rci.rogers.com. Information on or connected to these and any other websites referenced in this earnings release is not part of, or incorporated into, this earnings release.

You can also go to investors.rogers.com for information about our governance practices, environmental, social, and governance (ESG) reporting, a glossary of communications and media industry terms, and additional information about our business.


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