Cogent Communications Reports First Quarter 2020 Results and Increases Regular Quarterly Dividend on Common Stock
WASHINGTON, May 7, 2020 /PRNewswire/ --
Financial and Business Highlights
-- Cogent approved a $0.02 increase per share to its regular quarterly
dividend to $0.68 per share for Q2 2020 from $0.66 per share for Q1 2020
- Cogent's thirty-first consecutive quarterly dividend increase.
-- The Q2 2020 $0.68 dividend per share represents an annual increase
of 13.3% from the dividend per share of $0.60 for Q2 2019.
-- Service revenue, on a constant currency basis, increased by 0.6% from Q4
2019 to Q1 2020 and increased from Q1 2019 to Q1 2020 by 5.6%.
-- Service revenue increased by 0.4% from Q4 2019 to Q1 2020 and
increased from Q1 2019 to Q1 2020 by 5.1%.
-- GAAP gross profit increased by 9.6% from Q1 2019 to $65.5 million for Q1
2020. Non-GAAP gross profit increased by 6.3% from Q1 2019 to $85.2
million for Q1 2020.
-- GAAP gross margin increased by 200 basis points from Q1 2019 to Q1
2020 to 46.5%. Non-GAAP gross margin increased by 70 basis points
from Q1 2019 to Q1 2020 to 60.5%.
-- Net cash provided by operating activities decreased to $28.5 million for
Q1 2020.
-- EBITDA decreased by 4.4% from Q4 2019 to $50.4 million for Q1 2020 and
increased by 6.0% from Q1 2019 to Q1 2020.
-- EBITDA margin decreased by 180 basis points from Q4 2019 to 35.8%
for Q1 2020 and increased by 30 basis points from Q1 2019 to Q1
2020.
Cogent Communications Holdings, Inc. (NASDAQ: CCOI) ("Cogent") today announced service revenue of $140.9 million for the three months ended March 31, 2020, an increase of 5.1% from the three months ended March 31, 2019 and an increase of 0.4% from the three months ended December 31, 2019. Foreign exchange negatively impacted service revenue growth from the three months ended December 31, 2019 to the three months ended March 31, 2020 by $0.2 million and negatively impacted service revenue growth from the three months ended March 31, 2019 to the three months ended March 31, 2020 by $0.7 million. On a constant currency basis, service revenue grew by 0.6% from the three months ended December 31, 2019 to the three months ended March 31, 2020 and grew by 5.6% from the three months ended March 31, 2019 to the three months ended March 31, 2020.
On-net service is provided to customers located in buildings that are physically connected to Cogent's network by Cogent facilities. On-net revenue was $103.5 million for the three months ended March 31, 2020; an increase of 0.8% from the three months ended December 31, 2019 and an increase of 6.5% over the three months ended March 31, 2019.
Off-net customers are located in buildings directly connected to Cogent's network using other carriers' facilities and services to provide the last mile portion of the link from the customers' premises to Cogent's network. Off-net revenue was $37.3 million for the three months ended March 31, 2020; a decrease of 0.4% over the three months ended December 31, 2019 and an increase of 1.3% over the three months ended March 31, 2019.
GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue. GAAP gross profit increased by 9.6% from the three months ended March 31, 2019 to $65.5 million for the three months ended March 31, 2020 and increased by 1.8% from the three months ended December 31, 2019. GAAP gross margin was 46.5% for the three months ended March 31, 2020, 44.5% for the three months ended March 31, 2019 and 45.8% for the three months ended December 31, 2019. Excise taxes, including Universal Service Fund fees, recorded on a gross basis and included in service revenue and cost of network operations expense were $3.7 million for the three months ended March 31, 2020, $3.4 million for the three months ended March 31, 2019 and $4.3 million for the three months ended December 31, 2019.
Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Non-GAAP gross profit increased by 6.3% from the three months ended March 31, 2019 to $85.2 million for the three months ended March 31, 2020 and increased by 0.8% from the three months ended December 31, 2019. Non-GAAP gross profit margin was 60.5% for the three months ended March 31, 2020, 59.8% for the three months ended March 31, 2019 and 60.3% for the three months ended December 31, 2019.
Net cash provided by operating activities decreased by 0.6% from the three months ended March 31, 2019 to $28.5 million for the three months ended March 31, 2020 and decreased by 38.3% from the three months ended December 31, 2019.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 6.0% from the three months ended March 31, 2019 to $50.4 million for the three months ended March 31, 2020 and decreased by 4.4% from the three months ended December 31, 2019. EBITDA margin was 35.8% for the three months ended March 31, 2020, 35.5% for the three months ended March 31, 2019 and 37.6% for the three months ended December 31, 2019.
EBITDA, as adjusted, increased by 4.9% from the three months ended March 31, 2019 to $50.4 million for the three months ended March 31, 2020 and decreased by 4.8% from the three months ended December 31, 2019. EBITDA, as adjusted, margin was 35.8% for the three months ended March 31, 2020, 35.9% for the three months ended March 31, 2019 and 37.8% for the three months ended December 31, 2019.
Basic and diluted net income per share was $0.20 for the three months ended March 31, 2020, $0.20 for the three months ended March 31, 2019 and $0.16 for the three months ended December 31, 2019. Unrealized foreign exchange gains (losses) on Cogent's EUR135.0 million Euro notes were $(4.0) million for the three months ended December 31, 2019, or $(0.09) per basic and diluted net income per share and $2.9 million for the three months ended March 31, 2020, or $0.06 per basic and diluted net income per share.
Total customer connections increased by 5.7% from March 31, 2019 to 87,213 as of March 31, 2020 and increased by 0.8% from December 31, 2019. On-net customer connections increased by 5.8% from March 31, 2019 to 75,163 as of March 31, 2020 and increased by 0.8% from December 31, 2019. Off-net customer connections increased by 5.2% from March 31, 2019 to 11,721 as of March 31, 2020 and increased by 0.5% from December 31, 2019.
The number of on-net buildings increased by 117 buildings from March 31, 2019 to 2,823 on-net buildings as of March 31, 2020 and increased by 22 on-net buildings from December 31, 2019.
Quarterly Dividend Increase Approved
On May 6, 2020, the Board approved a regular quarterly dividend of $0.68 per common share payable on June 5, 2020 to shareholders of record on May 22, 2020. This second quarter 2020 regular dividend represents a 3.0% increase of $0.02 per share from the first quarter 2020 regular dividend of $0.66 per share and an annual increase of 13.3% from the Q2 2019 dividend of $0.60 per share.
The payment of any future dividends and any other returns of capital will be at the discretion of the Board and may be reduced, eliminated or increased and will be dependent upon Cogent's financial position, results of operations, available cash, cash flow, capital requirements, limitations under Cogent's debt indenture agreements and other factors deemed relevant by the Board.
Impact of COVID-19
Like many other companies, Cogent has been impacted by the COVID-19 pandemic and the accompanying responses by governments around the world. During the first quarter of 2020, the impact of the COVID-19 pandemic on Cogent was limited. In the last two weeks of March, we saw a positive impact on net-centric revenue but a slight slowdown in corporate installs. We also saw, during these two weeks, a material increase in traffic on our network.
However, the ultimate impact of the pandemic on Cogent is unknown as a significant amount of uncertainty and volatility remains. Beginning in mid-March, Cogent transitioned its entire workforce to work remotely, which continues through today, but we have no assurance that this will be sufficient to protect our workforce or certain key employees. Moreover, our results of operations may be adversely affected in the future as the pandemic and the related government restrictions continue. We may see slowdowns in new customer orders, find it difficult to collect from customers who are experiencing financial distress, encounter difficulties accessing the buildings and locations where we install new customers and serve existing customers, or have difficulties procuring or shipping necessary equipment. Lastly, the global economic impact of the COVID-19 pandemic may have prolonged effects that impact our business well into the future.
These and other risks will be described in more detail in our quarterly report on Form 10-Q for the quarter ending March 31, 2020 and are set forth in our annual report on Form 10-K for the year ended December 31, 2019.
Conference Call and Website Information
Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on May 7, 2020 to discuss Cogent's operating results for the first quarter of 2020 and to discuss Cogent's expectations for full year 2020. Investors and other interested parties may access a live audio webcast of the earnings call in the "Events" section of Cogent's website at www.cogentco.com/events. A replay of the webcast, together with the press release, will be available on the website following the earnings call.
About Cogent Communications
Cogent Communications (NASDAQ: CCOI) is a multinational, Tier 1 facilities-based ISP. Cogent specializes in providing businesses with high-speed Internet access, Ethernet transport, and colocation services. Cogent's facilities-based, all-optical IP network backbone provides services in over 200 markets globally.
Cogent Communications is headquartered at 2450 N Street, NW, Washington, D.C. 20037. For more information, visit www.cogentco.com. Cogent Communications can be reached in the United States at (202) 295-4200 or via email at info@cogentco.com.
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES
Summary of Financial and Operational Results
---
Q1 2019 Q2 2019 Q3 2019 Q4 2019 Q1 2020
---
Metric ($ in 000's, except share and per share data) - unaudited
---
On-Net revenue $97,183 $97,472 $99,416 $102,683 $103,457
---
% Change from previous Qtr. 1.9% 0.3% 2.0% 3.3% 0.8%
---
Off-Net revenue $36,843 $37,191 $37,418 $37,479 $37,321
---
% Change from previous Qtr. 0.8% 0.9% 0.6% 0.2% -0.4%
---
Non-Core revenue (1) $111 $126 $108 $130 $137
---
% Change from previous Qtr. -24.5% 13.5% -14.3% 20.4% 5.4%
---
Service revenue - total $134,137 $134,789 $136,942 $140,292 $140,915
---
% Change from previous Qtr. 1.6% 0.5% 1.6% 2.4% 0.4%
---
Constant currency total revenue quarterly growth rate - sequential quarters (6) 1.7% 0.7% 1.7% 2.5% 0.6%
---
Constant currency total revenue quarterly growth rate - year over year quarters
(6) 5.8% 5.4% 6.0% 6.8% 5.6%
---
Excise Taxes $3,391 $3,191 $3,998 $4,334 $3,743
---
% Change from previous Qtr. 4.9% -5.9% 25.3% 8.4% -13.6%
---
Network operations expenses (2) $53,970 $54,181 $54,971 $55,684 $55,669
---
% Change from previous Qtr. -2.6% 0.4% 1.5% 1.3% -%
---
GAAP gross profit (3) $59,724 $60,403 $61,683 $64,300 $65,486
---
% Change from previous Qtr. 7.7% 1.1% 2.1% 4.2% 1.8%
---
GAAP gross margin (3) 44.5% 44.8% 45.0% 45.8% 46.5%
---
Non-GAAP gross profit (4) (6) $80,167 $80,608 $81,971 $84,608 $85,246
---
% Change from previous Qtr. 4.6% 0.6% 1.7% 3.2% 0.8%
---
Non-GAAP gross margin (4) (6) 59.8% 59.8% 59.9% 60.3% 60.5%
---
Selling, general and administrative expenses (5) $32,568 $33,503 $31,456 $31,884 $34,958
---
% Change from previous Qtr. 12.2% 2.9% -6.1% 1.4% 9.6%
---
Depreciation and amortization expense $20,263 $19,979 $20,006 $20,002 $19,508
---
% Change from previous Qtr. -3.3% -1.4% 0.1% -% -2.5%
---
Equity-based compensation expense $3,434 $5,289 $4,797 $4,940 $5,075
---
% Change from previous Qtr. -22.1% 54.0% -9.3% 3.0% 2.7%
---
Operating income $24,400 $22,022 $25,799 $28,033 $25,850
---
% Change from previous Qtr. 9.4% -9.7% 17.2% 8.7% -7.8%
---
Interest expense $13,456 $13,595 $15,191 $15,211 $15,220
---
% Change from previous Qtr. -0.4% 1.0% 11.7% 0.1% 0.1%
---
Net income $9,217 $7,136 $13,701 $7,465 $9,227
---
Gain (loss) on Euro Notes
$- $177 $6,128 $(4,032) $2,904
--- ---
Basic net income per common share $0.20 $0.16 $0.30 $0.16 $0.20
---
Diluted net income per common share $0.20 $0.16 $0.30 $0.16 $0.20
---
Weighted average common shares - basic 45,223,157 45,354,327 45,438,656 45,553,727 45,658,565
---
% Change from previous Qtr. -0.1% 0.3% 0.2% 0.3% 0.2%
---
Weighted average common shares - diluted 45,644,236 45,912,291 46,019,691 46,145,970 46,391,066
---
% Change from previous Qtr. -0.3% 0.6% 0.2% 0.3% 0.5%
---
EBITDA (6) $47,561 $47,105 $50,515 $52,724 $50,394
---
% Change from previous Qtr. -% -1.0% 7.2% 4.4% -4.4%
--- ---
EBITDA margin 35.5% 34.9% 36.9% 37.6% 35.8%
---
Gains on asset related transactions $536 $185 $87 $251 $39
---
EBITDA, as adjusted (6) $48,097 $47,290 $50,602 $52,975 $50,433
---
% Change from previous Qtr. 0.9% -1.7% 7.0% 4.7% -4.8%
---
EBITDA, as adjusted, margin 35.9% 35.1% 37.0% 37.8% 35.8%
---
Fees - net neutrality
$-
$-
$-
$-
$-
--- ---
Net cash provided by operating activities $28,637 $40,632 $33,443 $46,097 $28,458
---
% Change from previous Qtr. -29.7% 41.9% -17.7% 37.8% -38.3%
---
Capital expenditures $13,288 $11,720 $12,051 $9,899 $12,866
---
% Change from previous Qtr. 21.5% -11.8% 2.8% -17.9% 30.0%
---
Principal payments of capital (finance) lease obligations $3,030 $1,976 $2,029 $2,056 $2,566
---
% Change from previous Qtr. 42.4% -34.8% 2.7% 1.3% 24.8%
---
Dividends paid $26,565 $27,741 $28,565 $29,776 $30,557
---
Purchases of common stock
$ -
$ -
$ -
$ -
$ -
--- ---
Gross Leverage Ratio 4.28 5.08 4.97 4.86 4.78
---
Net Leverage Ratio 2.92 2.93 2.92 2.86 2.92
---
Customer Connections - end of period
---
On-Net 71,066 72,415 73,870 74,554 75,163
---
% Change from previous Qtr. 3.3% 1.9% 2.0% 0.9% 0.8%
---
Off-Net 11,138 11,321 11,503 11,660 11,721
---
% Change from previous Qtr. 1.5% 1.6% 1.6% 1.4% 0.5%
---
Non-Core (1) 318 318 319 325 329
---
% Change from previous Qtr. -12.2% -% -0.3% 1.9% 1.2%
---
Total customer connections 82,522 84,054 85,692 86,539 87,213
---
% Change from previous Qtr. 3.0% 1.9% 1.9% 1.0% 0.8%
---
On-Net Buildings - end of period
---
Multi-Tenant office buildings 1,746 1,751 1,757 1,767 1,769
---
Carrier neutral data center buildings 908 933 960 980 1,000
---
Cogent data centers 52 53 54 54 54
---
Total on-net buildings 2,706 2,737 2,771 2,801 2,823
---
Square feet - multi-tenant office buildings - on-net 949,486,923 951,031,709 954,013,024 957,173,183 961,154,384
---
Network - end of period
---
Intercity route miles 57,426 57,426 57,426 57,600 58,009
---
Metro fiber miles 33,664 34,163 34,985 35,526 36,079
---
Connected networks - AS's 6,668 6,762 6,844 6,954 7,042
---
Headcount - end of period
---
Sales force - quota bearing 501 519 530 548 542
---
Sales force - total 639 656 667 686 684
---
Total employees 997 1,026 1,036 1,055 1,052
---
Sales rep productivity - units per full time equivalent sales rep ("FTE") per
month 5.1 4.9 4.4 4.1 4.5
---
FTE - sales reps 464 478 488 502 522
---
(1) Consists of legacy services of
companies whose assets or
businesses were acquired by
Cogent, primarily including voice
services (only provided in
Toronto, Canada).
(2) Network operations expense excludes
equity-based compensation expense
of $180, $226, $282, $306 and $252
in the three month periods ended
March 31, 2019 through March 31,
2020, respectively. Network
operations expense includes excise
taxes, including Universal Service
Fund fees of $3,391, $3,191,
$3,998, $4,334 and $3,743 in the
three month periods ended March
31, 2019 through March 31, 2020,
respectively.
(3) GAAP gross profit is defined as
total service revenue less network
operations expense, depreciation
and amortization and equity based
compensation included in network
operations expense. GAAP gross
margin is defined as GAAP gross
profit divided by total service
revenue.
(4) Non-GAAP gross profit represents
service revenue less network
operations expense, excluding
equity-based compensation and
amounts shown separately
(depreciation and amortization
expense). Non-GAAP gross margin
is defined as non-GAAP gross
profit divided by total service
revenue. Management believes that
non-GAAP gross profit and non-
GAAP gross profit margin are
relevant metrics to provide
investors, as they are metrics
that management uses to measure
the margin available to the
company after network service
costs, in essence a measure of the
efficiency of the Company's
network.
(5) Excludes equity-based compensation
expense of $3,254, $5,063, $4,515,
$4,634 and $4,823 in the three
month periods ended March 31, 2019
through March 31, 2020,
respectively.
(6) See Schedules of Non-GAAP measures
below for definitions and
reconciliations to GAAP measures.
Schedules of Non-GAAP Measures
EBITDA and EBITDA, as adjusted
EBITDA represents net cash flows provided by operating activities plus changes in operating assets and liabilities, cash interest expense and cash income tax expense. Management believes the most directly comparable measure to EBITDA calculated in accordance with generally accepted accounting principles in the United States, or GAAP, is net cash provided by operating activities. The Company also believes that EBITDA is a measure frequently used by securities analysts, investors, and other interested parties in their evaluation of issuers. EBITDA, as adjusted, represents EBITDA plus net gains (losses) on asset related transactions.
The Company believes that EBITDA, and EBITDA, as adjusted, are useful measures of its ability to service debt, fund capital expenditures and expand its business. EBITDA, and EBITDA, as adjusted are an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. EBITDA, and EBITDA, as adjusted are not recognized terms under GAAP and accordingly, should not be viewed in isolation or as a substitute for the analysis of results as reported under GAAP, but rather as a supplemental measure to GAAP. For example, these metrics are not intended to reflect the Company's free cash flow, as it does not consider certain current or future cash requirements, such as capital expenditures, contractual commitments, and changes in working capital needs, interest expenses and debt service requirements. The Company's calculations of these metrics may also differ from the calculations performed by its competitors and other companies and as such, its utility as a comparative measure is limited.
EBITDA, and EBITDA, as adjusted, are reconciled to net cash provided by operating activities in the table below.
Q1 Q2 Q3 Q4 Q1
2019 2019 2019 2019 2020
($ in 000's) - unaudited
---
Net cash provided by operating activities $28,637 $40,632 $33,443 $46,097 $28,458
---
Changes in operating assets and liabilities 6,727 (5,729) 3,785 (6,557) 5,325
---
Cash interest expense and income tax expense 12,197 12,202 13,287 13,184 16,611
---
EBITDA $47,561 $47,105 $50,515 $52,724 $50,394
---
PLUS: Gains on asset related transactions 536 185 87 251 39
---
EBITDA, as adjusted $48,097 $47,290 $50,602 $52,975 $50,433
---
EBITDA margin 35.5% 34.9% 36.9% 37.6% 35.8%
---
EBITDA, as adjusted, margin 35.9% 35.1% 37.0% 37.8% 35.8%
---
Constant currency revenue is reconciled to service revenue as reported in the tables below.
Constant currency impact on revenue changes - sequential periods
($ in 000's) - unaudited Q1 Q2 Q3 Q4 Q1
2019 2019 2019 2019 2020
---
Service revenue, as reported - current period $134,137 $134,789 $136,942 $140,292 $140,915
---
Impact of foreign currencies on service revenue 135 260 176 88 184
---
Service revenue - as adjusted for currency impact (1) $134,272 $135,049 $137,118 $140,380 $141,099
---
Service revenue, as reported - prior sequential period $132,049 $134,137 $134,789 $136,942 $140,292
---
Constant currency increase $2,223 $912 $2,329 $3,438 $807
---
Constant currency percent increase 1.7% 0.7% 1.7% 2.5% 0.6%
---
(1) Service revenue, as adjusted for
currency impact, is determined
by translating the service
revenue for the current period
at the average foreign currency
exchange rates for the prior
sequential period. The Company
believes that disclosing
quarterly sequential revenue
growth without the impact of
foreign currencies on service
revenue is a useful measure of
sequential revenue growth.
Service revenue, as adjusted for
currency impact, is an integral
part of the internal reporting
and planning system used by
management as a supplement to
GAAP financial information.
Constant currency impact on revenue changes - prior year periods
($ in 000's) - unaudited Q1 Q2 Q3 Q4 Q1
2019 2019 2019 2019 2020
---
Service revenue, as reported - current period $134,137 $134,789 $136,942 $140,292 $140,915
---
Impact of foreign currencies on service revenue 2,078 1,505 1,058 683 746
---
Service revenue - as adjusted for currency impact (2) $136,215 $136,294 $138,000 $140,975 $141,661
---
Service revenue, as reported - prior year period $128,706 $129,296 $130,139 $132,049 $134,137
---
Constant currency increase $7,509 $6,998 $7,861 $8,926 $7,524
---
Percent increase 5.8% 5.4% 6.0% 6.8% 5.6%
---
(2) Service revenue, as adjusted for
currency impact, is determined
by translating the service
revenue for the current period
at the average foreign currency
exchange rates for the
comparable prior year period.
The Company believes that
disclosing year over year
revenue growth without the
impact of foreign currencies on
service revenue is a useful
measure of revenue growth.
Service revenue, as adjusted for
currency impact, is an integral
part of the internal reporting
and planning system used by
management as a supplement to
GAAP financial information.
Non-GAAP gross profit and Non-GAAP gross margin
Non-GAAP gross profit and Non-GAAP gross margin are reconciled to GAAP gross profit and GAAP gross margin in the table below.
Q1 Q2 Q3 Q4 Q1
2019 2019 2019 2019 2020
($ in 000's) - unaudited
---
Service revenue total $134,137 $134,789 $136,942 $140,292 $140,915
---
Minus - Network operations expense including equity-based compensation and
including depreciation and amortization expense 74,413 74,386 75,259 75,992 75,429
---
GAAP Gross Profit (1) $59,724 $60,403 $61,683 $64,300 $65,486
---
Plus - Equity-based compensation - network operations expense 180 226 282 306 252
---
Plus - Depreciation and amortization expense 20,263 19,979 20,006 20,002 19,508
---
Non-GAAP Gross Profit (2) $80,167 $80,608 $81,971 $84,608 $85,246
---
GAAP Gross Margin (1) 44.5% 44.8% 45.0% 45.8% 46.5%
---
Non-GAAP Gross Margin (2) 59.8% 59.8% 59.9% 60.3% 60.5%
---
(1) GAAP gross profit is defined as
total service revenue less network
operations expense, depreciation
and amortization and equity based
compensation included in network
operations expense. GAAP gross
margin is defined as GAAP gross
profit divided by total service
revenue.
(2) Non-GAAP gross profit represents
service revenue less network
operations expense, excluding
equity based compensation and
amounts shown separately
(depreciation and amortization
expense). Non-GAAP gross margin
is defined as non-GAAP gross
profit divided by total service
revenue. Management believes that
non-GAAP gross profit and non-
GAAP gross margin are relevant
metrics to provide to investors,
as they are metrics that
management uses to measure the
margin and amount available to the
Company after network service
costs, in essence these are
measures of the efficiency of the
Company's network.
Gross and Net Leverage Ratios
Gross leverage ratio is defined as total debt divided by the trailing last 12 months EBITDA, as adjusted. Net leverage ratio is defined as total net debt (total debt minus cash and cash equivalents) divided by the trailing last 12 months EBITDA, as adjusted. Cogent's gross leverage ratio and net leverage ratio are shown below.
($ in 000's) - unaudited As of December 31, 2019 As of March 31, 2020
---
Cash and cash equivalents $399,422 $375,116
---
Debt
---
Capital (finance) leases - current portion 8,154 8,268
---
Capital (finance) leases - long term 161,635 159,678
---
Senior unsecured notes 189,225 189,225
---
Senior secured notes 445,000 445,000
---
Senior unsecured Euro notes 151,411 148,507
---
Note payable 12,487 12,264
---
Total debt 967,912 962,942
---
Total net debt 568,490 587,826
---
Trailing 12 months EBITDA, as adjusted 198,964 201,300
---
Gross leverage ratio 4.86 4.78
---
Net leverage ratio 2.86 2.92
---
Cogent's SEC filings are available online via the Investor Relations section of www.cogentco.com or on the Securities and Exchange Commission's website at www.sec.gov.
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF MARCH 31, 2020 AND DECEMBER 31, 2019
(IN THOUSANDS, EXCEPT SHARE DATA)
March 31, December 31,
2020 2019
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $
375,116 $
399,422
Accounts receivable, net of
allowance for credit losses of
$1,976 and $1,771, respectively 42,964 40,484
Prepaid expenses and other
current assets 38,482 35,822
Total current assets 456,562 475,728
Property and equipment, net 367,682 368,929
Right-of-use leased assets 75,724 73,460
Deferred tax assets 275 335
Deposits and other assets 13,382 13,672
Total assets $
913,625 $
932,124
Liabilities and stockholders'
equity
Current liabilities:
Accounts payable $
13,102 $
11,075
Accrued and other current
liabilities 49,239 51,301
Installment payment agreement,
current portion, net of discount
of $313 and $350, respectively 9,122 9,063
Current maturities, operating
lease liabilities 10,409 10,101
Current maturities, finance lease
obligations 8,268 8,154
Total current liabilities 90,140 89,694
Senior unsecured 2024 Euro notes,
net of unamortized debt costs of
$1,341 and $1,410, respectively 147,166 150,001
Senior secured 2022 notes, net of
unamortized debt costs of $1,690
and $1,897, respectively and
including 444,187 444,088
premium of $877 and $985,
respectively
Senior unsecured 2021 notes, net
of unamortized debt costs of
$696 and $857, respectively 188,529 188,368
Operating lease liabilities, net
of current maturities 88,335 86,690
Finance lease obligations, net of
current maturities 159,678 161,635
Other long term liabilities 17,815 15,327
Total liabilities 1,135,850 1,135,803
Commitments and contingencies:
Stockholders' equity:
Common stock, $0.001 par value;
75,000,000 shares authorized;
47,139,369 and 46,840,434 shares
issued and 47 47
outstanding, respectively
Additional paid-in capital 499,455 493,178
Accumulated other comprehensive
income -foreign currency
translation (15,819) (12,326)
Accumulated deficit (705,908) (684,578)
Total stockholders' deficit (222,225) (203,679)
Total liabilities and
stockholders' deficit $
913,625 $
932,124
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND MARCH 31, 2019
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Three Months Three Months
Ended Ended
March 31, 2020 March 31, 2019
(Unaudited) (Unaudited)
Service revenue $
140,915 $
134,137
Operating expenses:
Network operations (including $252
and $180 of equity-based
compensation expense,
respectively, exclusive of 55,921 54,150
depreciation and amortization shown
separately below)
Selling, general, and
administrative (including $4,823
and $3,254 of equity-based
compensation expense, 39,675 35,860
respectively)
Depreciation and amortization 19,508 20,263
Total operating expenses 115,104 110,273
Gains on equipment transactions 39 536
Operating income 25,850 24,400
Interest income and other, net 2,205 1,827
Interest expense (15,220) (13,456)
Income before income taxes 12,835 12,771
Income tax provision (3,608) (3,554)
Net income $
9,227 $
9,217
Comprehensive income:
Net income $
9,227 $
9,217
Foreign currency translation
adjustment (3,493) (1,825)
Comprehensive income $
5,734 $
7,392
Net income per common share:
Basic and diluted net income per
common share $
0.20 $
0.20
Dividends declared per common share $
0.66 $
0.58
Weighted-average common shares -
basic 45,658,565 45,223,157
Weighted-average common shares -
diluted 46,391,066 45,644,236
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND MARCH 31, 2019
(IN THOUSANDS)
Three months Three months
Ended Ended
March 31, 2020 March 31, 2019
(Unaudited) (Unaudited)
Cash flows from operating activities:
Net income $
9,227 $
9,217
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 19,508 20,263
Amortization of debt discount and premium 477 414
Equity-based compensation expense (net of amounts capitalized) 5,075 3,434
Gains - equipment transactions and other, net (454) (231)
Unrealized foreign currency exchange gain on 2024 Euro notes (2,904)
Deferred income taxes 2,439 2,572
Changes in operating assets and liabilities:
Accounts receivable (2,790) 2.264
Prepaid expenses and other current assets (3,093) (3,187)
Accounts payable, accrued liabilities and other long-term liabilities 1,067 (2,778)
Deposits and other assets (94) (3,331)
Net cash provided by operating activities 28,458 28,637
Cash flows from investing activities:
Purchases of property and equipment (12,866) (13,288)
Net cash used in investing activities (12,866) (13,288)
Cash flows from financing activities:
Dividends paid (30,557) (26,565)
Proceeds from exercises of stock options 718 173
Principal payments on installment payment agreement (2,566) (2,387)
Principal payments of finance lease obligations (6,167) (3,030)
Net cash used in financing activities (38,572) (31,809)
Effect of exchange rates changes on cash (1,326) (495)
Net decrease in cash and cash equivalents (24,306) (16,955)
Cash and cash equivalents, beginning of period 399,422 276,093
Cash and cash equivalents, end of period $
375,116 $
259,138
Except for historical information and discussion contained herein, statements contained in this release constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to statements identified by words such as "believes," "expects," "anticipates," "estimates," "intends," "plans," "targets," "projects" and similar expressions. The statements in this release are based upon the current beliefs and expectations of Cogent's management and are subject to significant risks and uncertainties. Actual results may differ from those set forth in the forward-looking statements. Numerous factors could cause or contribute to such differences, including the impact of the COVID-19 pandemic and the related government policies; future economic instability in the global economy or a contraction of the capital markets which could affect spending on Internet services and our ability to engage in financing activities; the impact of changing foreign exchange rates (in particular the Euro to USD and Canadian dollar to USD exchange rates) on the translation of our non-USD denominated revenues, expenses, assets and liabilities; legal and operational difficulties in new markets; the imposition of a requirement that we contribute to the US Universal Service Fund on the basis of our Internet revenue; changes in government policy and/or regulation, including net neutrality rules by the United States Federal Communications Commission and in the area of data protection; increasing competition leading to lower prices for our services; our ability to attract new customers and to increase and maintain the volume of traffic on our network; the ability to maintain our Internet peering arrangements on favorable terms; our reliance on an equipment vendor, Cisco Systems Inc., and the potential for hardware or software problems associated with such equipment; the dependence of our network on the quality and dependability of third-party fiber providers; our ability to retain certain customers that comprise a significant portion of our revenue base; the management of network failures and/or disruptions; and outcomes in litigation as well as other risks discussed from time to time in our filings with the Securities and Exchange Commission, including, without limitation, our Annual Report on Form 10-K for the year ended December 31, 2019. Cogent undertakes no duty to update any forward-looking statement or any information contained in this press release or in other public disclosures at any time.
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SOURCE Cogent Communications Holdings, Inc.
