Rogers Communications RCI reported fourth-quarter 2023 adjusted earnings of 87 cents per share, which beat the Zacks Consensus Estimate by 14.47% and increased 8.7% year over year.
Revenues of $3.91 billion lagged the consensus mark by 1.79% but jumped 27.7% year over year.
In domestic currency (Canadian dollar), adjusted earnings increased 9.2% year over year to C$1.19 per share. Total revenues increased 28.1% year over year, reaching C$5.33 billion, driven primarily by revenue growth in wireless and cable businesses.
Rogers Communication, Inc. Price, Consensus and EPS Surprise
Rogers Communication, Inc. Price, Consensus and EPS Surprise
Rogers Communication, Inc. price-consensus-eps-surprise-chart | Rogers Communication, Inc. Quote
Wireless Details
Wireless (53.8% of total revenues) increased 11.2% year over year to C$2.86 billion. Service revenues increased 8.8% to C$2.02 billion. Equipment revenues were up 17.5% to C$848 million.
Wireless service revenues benefited from growth in the mobile phone subscriber base and revenues from Shaw Mobile subscribers acquired through the Shaw Transaction (completed on Apr 3, 2023).
Monthly mobile phone ARPU was C$57.96, down 1.2% year over year.
As of Dec 31, 2023, the prepaid subscriber base totaled 1.111 million, reflecting a loss of 144K subscribers year over year. The monthly churn rate was 6.2% compared with 5.9% reported in the year-ago quarter.
As of Dec 31, 2023, the postpaid wireless subscriber base totaled 10.498 million, reflecting net additions of 1.1 million subscribers year over year. The monthly churn rate was 1.67% compared with 1.24% in the year-ago quarter.
Segment operating expenses increased 12.2% year over year to C$1.57 billion.
Adjusted EBITDA increased 10.1% year over year to C$1.29 billion. Adjusted EBITDA margin contracted 50 basis points (bps) on a year-over-year basis to 45%.
Cable Details
Cable revenues (37.2% of total revenues) surged 94.5% year over year to C$1.98 billion, primarily driven by the Shaw Communications acquisition, which contributed approximately $1 billion for the quarter.
Service revenues jumped 94.4% year over year to C$1.96 billion. Equipment revenues increased 112.5% on a year-over-year basis to $17 million.
As of Dec 31, 2023, the retail Internet subscriber count was nearly 4.162 million, reflecting net additions of 1.87 million year over year.
As of Dec 31, 2023, total Smart Home Monitoring subscribers reached 89K, highlighting a loss of 12K subscribers. The total Home Phone subscriber count was nearly 1.62 million, reflecting a loss of 793K customers in the reported quarter.
ARPA was C$141.96, higher than the C$129.02 reported in the year-ago quarter.
Segment operating expenses surged 75.3% year over year at C$871 million.
Adjusted EBITDA soared 112.8% year over year to C$1.11 billion.
Media Details
Media (10.5% of total revenues) revenues decreased 7.9% year over year to C$558 million due to lower sports-related revenue associated with the impact of a distribution from Major League Baseball in 2022.
Segment operating expenses increased 0.9% year over year to C$554 million.
The company reported adjusted EBITDA of $4 million, down 93% year over year to C$4 million, primarily due to lower sports-related revenues.
Consolidated Results
Operating costs increased 20.9% to C$3 billion. As a percentage of revenues, operating costs contracted 340 bps to 56.3%.
Adjusted EBITDA surged 38.7% year over year to C$2.32 billion. Adjusted EBITDA margin expanded 340 bps to 43.7%.
Balance Sheet & Cash Flow Details
As of Dec 31, 2023, Rogers had C$5.9 billion of available liquidity, including $0.8 billion in cash and cash equivalents and a combined C$5.1 billion available under the bank credit facility.
In comparison, as of Sep 30, 2023, Rogers had C$7.3 billion of available liquidity, including $2.5 billion in cash and cash equivalents and a combined C$4.8 billion available under the bank credit facility.
Rogers' debt leverage ratio increased to 4.7 times as of Dec 31, 2023, as a result of cost reductions, earnings growth, proceeds from asset sales, and commencing the payback of acquisition-related debt.
Cash flow from operating activities was C$1.37 billion compared with C$1.75 billion generated in the previous quarter. Free cash flow was C$823 million compared with C$745 million generated in the previous quarter.
Rogers paid dividends worth C$265 million and declared a C$0.50 per share dividend.
Guidance
For 2024, Rogers expects total service revenues to grow between 8% and 10%. Adjusted EBITDA is expected to grow in the range of 12-15%.
Capital expenditure is still expected to be between C$3.8 billion and C$4 billion. Free cash flow is expected to be in the range of C$2.9-C$31 billion.
Zacks Rank & Stocks to Consider
Rogers currently has a Zacks Rank #3 (Hold).
Some better-ranked stocks in the Consumer Discretionary sector are Universal Technical Institute UTI, Sphere Entertainment Co. SPHR and Flexsteel Industries FLXS, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today's Zacks #1 Rank stocks here.
Flexsteel Industries and Sphere Entertainment are slated to report their quarterly results on Feb 5, while Universal Technical Institute will report on Feb 7.
The Zacks Consensus Estimate for UTI's fourth-quarter 2023 earnings per share is pegged at 6 cents, unchanged over the past 30 days.
The Zacks Consensus Estimate for SPHR's fourth-quarter 2023 earnings is pegged at a loss of 73 cents per share, unchanged over the past 30 days.
The Zacks Consensus Estimate for FLXS's fourth-quarter 2023 earnings is pegged at 57 cents per share, up 111.1% over the past 30 days.
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