WASHINGTON, Nov. 4, 2021 /PRNewswire/ —
Financial and Business Highlights
- Cogent approved an increase of $0.025 per share to its regular quarterly dividend for a total of $0.830 per share for Q4 2021 as compared to $0.805 per share for Q3 2021 – Cogent’s thirty-seventh consecutive quarterly dividend increase.
- The Q4 2021 $0.830 dividend per share represents an annual increase of 13.7% from the dividend per share of $0.730 for Q4 2020.
- Service revenue increased from Q2 2021 to Q3 2021 by 0.03% and increased from Q3 2020 to Q3 2021 by 4.0%.
- Service revenue, on a constant currency basis, increased from Q2 2021 to Q3 2021 by 0.5% and increased from Q3 2020 to Q3 2021 by 3.6%.
- GAAP gross profit increased by 3.8% from Q3 2020 to $68.7 million for Q3 2021.
- Non-GAAP gross profit increased by 3.8% from Q3 2020 to $91.4 million for Q3 2021.
- Net cash provided by operating activities increased by 19.3% from Q2 2021 to $47.4 million for Q3 2021 and increased from Q3 2020 to Q3 2021 by 43.8%.
- Sales rep productivity – units per full time equivalent sales rep per month – increased from 3.7 for Q3 2020 to 4.3 for Q3 2021.
- Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 1.0% from Q2 2021 to $57.8 million for Q3 2021 and increased by 5.8% from Q3 2020.
- EBITDA margin increased by 30 basis points from Q2 2021 to 39.0% for Q3 2021 and increased by 60 basis points from Q3 2020.
- Cogent lit its 3,000th on-net building in Q3 2021 and now delivers its services in 50 countries.
Cogent Communications Holdings, Inc. (NASDAQ: CCOI) (“Cogent”) today announced service revenue of $147.9 million for the three months ended September 30, 2021, an increase of 0.03% from the three months ended June 30, 2021 and an increase of 4.0% from the three months ended September 30, 2020. Foreign exchange negatively impacted service revenue growth from the three months ended June 30, 2021 to the three months ended September 30, 2021 by $0.7 million and positively impacted service revenue growth from the three months ended September 30, 2020 to the three months ended September 30, 2021 by $0.6 million. On a constant currency basis, service revenue increased by 0.5% from the three months ended June 30, 2021 to the three months ended September 30, 2021 and grew by 3.6% from the three months ended September 30, 2020 to the three months ended September 30, 2021.
The Q4 2021 $0.830 dividend per share represents an annual increase of 13.7% from the dividend per share of $0.730 for Q4 2020.
Service revenue, on a constant currency basis, increased from Q2 2021 to Q3 2021 by 0.5% and increased from Q3 2020 to Q3 2021 by 3.6%.
Non-GAAP gross profit increased by 3.8% from Q3 2020 to $91.4 million for Q3 2021.
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 $111.1 million for the three months ended September 30, 2021; an increase of 0.1% from the three months ended June 30, 2021 and an increase of 5.7% over the three months ended September 30, 2020.
Off-net customers are located in buildings directly connected to Cogent’s network using other carriers’ lit fiber optic facilities and services to provide the last mile portion of the link from the customers’ premises to Cogent’s network. Off-net revenue was $36.7 million for the three months ended September 30, 2021; a decrease of 0.1% from the three months ended June 30, 2021 and a decrease of 1.2% from the three months ended September 30, 2020.
Non-core services are legacy services, which Cogent acquired and continues to support but does not actively sell.
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 3.8% from the three months ended September 30, 2020 to $68.7 million for the three months ended September 30, 2021 and decreased by 1.3% from the three months ended June 30, 2021. GAAP gross margin was 46.4% for the three months ended September 30, 2021, 46.5% for the three months ended September 30, 2020 and 47.1% for the three months ended June 30, 2021.
Excise taxes, including Universal Service Fund fees, recorded on a gross basis and included in service revenue and cost of network operations expense were $4.8 million for the three months ended September 30, 2021, $3.9 million for the three months ended September 30, 2020 and $4.8 million for the three months ended June 30, 2021.
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 3.8% from the three months ended September 30, 2020 to $91.4 million for the three months ended September 30, 2021 and decreased by 0.4% from the three months ended June 30, 2021. Non-GAAP gross profit margin was 61.8% for the three months ended September 30, 2021, 61.9% for the three months ended September 30, 2020 and 62.1% for the three months ended June 30, 2021.
Net cash provided by operating activities increased by 43.8% from the three months ended September 30, 2020 to $47.4 million for the three months ended September 30, 2021 and increased by 19.3% from the three months ended June 30, 2021.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 5.8% from the three months ended September 30, 2020 to $57.8 million for the three months ended September 30, 2021 and increased by 1.0% from the three months ended June 30, 2021. EBITDA margin was 39.0% for the three months ended September 30, 2021, 38.4% for the three months ended September 30, 2020 and 38.7% for the three months ended June 30, 2021.
Basic and diluted net income (loss) per share was $0.29 and $0.28 for the three months ended September 30, 2021, $(0.11) for the three months ended September 30, 2020 and $(0.05) for the three months ended June 30, 2021.
Unrealized and realized foreign exchange gains (losses) on Cogent’s 2024 Senior Euro Unsecured Notes were $10.2 million for the three months ended September 30, 2021, $(17.3) million for the three months ended September 30, 2020 and $(5.3) million for the three months ended June 30, 2021.
Total customer connections increased by 5.1% from September 30, 2020 to 92,991 as of September 30, 2021 and increased by 1.2% from June 30, 2021. On-net customer connections increased by 5.0% from September 30, 2020 to 80,162 as of September 30, 2021 and increased by 1.3% from June 30, 2021. Off-net customer connections increased by 5.5% from September 30, 2020 to 12,495 as of September 30, 2021 and increased by 0.9% from June 30, 2021.
The number of on-net buildings increased by 124 from September 30, 2020 to 3,008 as of September 30, 2021 and increased by 33 from June 30, 2021.
Quarterly Dividend Increase Approved On November 2, 2021, Cogent’s Board approved a regular quarterly dividend of $0.830 per common share payable on December 3, 2021 to shareholders of record on November 19, 2021. This fourth quarter 2021 regular dividend represents a 3.1% increase of $0.025 per share from the third quarter 2021 regular dividend of $0.805 per share and an annual increase of 13.7% from the Q4 2020 dividend of $0.730 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-19Cogent continues to be impacted by the COVID-19 pandemic and the accompanying responses by governments around the world. The recent spread of the Delta variant of COVID-19 has introduced new uncertainty.
The ongoing impact of the COVID-19 pandemic, including the spread of variant strains, and related government restrictions on Cogent’s business is unknown as a significant amount of uncertainty and volatility remains. Cogent does not know the ultimate scope and duration of the pandemic, the availability, efficacy and uptake of vaccines and therapeutic treatments, government actions that have been taken, or may be taken in the future in response to the pandemic and global economic conditions during and after the pandemic. Cogent has experienced a slight slowdown in the availability and delivery of networking equipment but Cogent believes it can adequately manage the operation, maintenance, upgrading and growth of its network. A worsening or prolonged slowdown may impact our ability to expand and augment our network. Cogent recently returned its employees in the United States back to its offices on a full-time basis and is planning on returning the rest of its employees outside of the United States to its offices on a full-time basis in the fourth quarter of 2021. Cogent is implementing measures to protect its workforce, but it can provide no assurance that these measures will be sufficient. Cogent’s decisions to require its employees to return to its offices on a full-time basis and to implement a COVID-19 vaccine mandate, where legally permitted, may impede its ability to retain existing employees or attract new employees. Moreover, Cogent’s results of operations may be adversely affected in the future as the pandemic and the related government restrictions continue or are reintroduced. Cogent may also experience slowdowns in new customer orders, find it difficult to collect from customers who are experiencing financial distress, undergo an increase in customer churn, encounter difficulties accessing the buildings and locations where Cogent installs new services and serves existing customers, or have difficulties procuring, shipping or installing necessary equipment on its network. Cogent may also find that its largest customer base, which is served primarily in its multi-tenant office buildings, may be adversely affected by falling demand for commercial office space in central business districts as companies located in these buildings elect not to return to their office space either on a temporary or even permanent basis or slow the pace of opening new offices. In addition, Cogent’s corporate customer base may reduce their overall number of locations due to adverse economic conditions or new working configurations which may adversely affect Cogent’s number of corporate connections and service revenues. As a result, the global economic impact of the COVID-19 pandemic may have prolonged effects that impact Cogent’s business well into the future. These and other risks are described in more detail in Cogent’s Annual Report on Form 10-K for the year ended December 31, 2020 and our Form 10-Q for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021.
Conference Call and Website InformationCogent will host a conference call with financial analysts at 8:30 a.m. (ET) on November 4, 2021 to discuss Cogent’s operating results for the third quarter of 2021 and to discuss Cogent’s expectations for full year 2021. 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. A downloadable file of Cogent’s “Summary of Financial and Operational Results” and a transcript of its conference call will also be available on Cogent’s website following the conference call.
About Cogent CommunicationsCogent 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 215 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 [email protected]
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES
Summary of Financial and Operational Results
Q1 2020
Q2 2020
Q3 2020
Q4 2020
Q1 2021
Q2 2021
Q3 2021
Metric ($ in 000’s, except share and per share data) – unaudited
On-Net revenue
$103,457
$103,800
$105,091
$107,109
$109,947
$111,041
$111,099
% Change from previous Qtr.
0.8%
0.3%
1.2%
1.9%
2.6%
1.0%
0.1%
Off-Net revenue
$37,321
$37,044
$37,092
$36,672
$36,723
$36,699
$36,656
-0.4%
-0.7%
-1.1%
-0.1%
Non-Core revenue (1)
$137
$146
$119
$120
$107
$139
$172
5.4%
6.6%
-18.5%
-10.8%
29.9%
23.7%
Service revenue – total
$140,915
$140,990
$142,302
$143,901
$146,777
$147,879
$147,927
0.4%
0.9%
1.1%
2.0%
0.0%
Constant currency total revenue quarterly growth rate – sequential quarters (6)
0.6%
0.2%
-0.2%
0.7%
1.7%
0.5%
Constant currency total revenue quarterly growth rate – year over year quarters (6)
5.6%
5.1%
3.1%
2.3%
2.8%
3.6%
Excise Taxes included in service revenue
$3,743
$3,298
$3,902
$4,144
$4,528
$4,811
$4,813
-13.6%
-11.9%
18.3%
6.2%
9.3%
6.3%
Network operations expenses (2)
$55,669
$53,581
$54,173
$54,513
$55,016
$56,044
$56,482
-%
-3.8%
GAAP gross profit (3)
$65,486
$67,208
$66,164
$66,617
$67,715
$69,603
$68,673
1.8%
-1.6%
1.6%
-1.3%
GAAP gross margin (3)
46.5%
47.7%
46.3%
46.1%
47.1%
46.4%
Non-GAAP gross profit (4) (6)
$85,246
$87,409
$88,129
$89,388
$91,761
$91,835
$91,445
2.5%
1.4%
2.7%
Non-GAAP gross margin (4) (6)
60.5%
62.0%
61.9%
62.1%
62.5%
61.8%
Selling, general and administrative expenses (5)
$34,852
$34,061
$33,546
$33,713
$36,211
$34,654
$33,692
-2.3%
-1.5%
7.4%
-4.3%
-2.8%
Depreciation and amortization expense
$19,508
$19,896
$21,619
$22,455
$21,970
$22,096
$22,609
-2.5%
8.7%
3.9%
-2.2%
Equity-based compensation expense
$5,075
$6,083
$6,522
$5,846
$7,307
$6,874
$6,588
19.9%
7.2%
-10.4%
25.0%
-5.9%
-4.2%
Operating income
$25,850
$27,574
$26,036
$27,384
$26,291
$28,211
$28,556
-7.8%
6.7%
-5.6%
5.2%
-4.0%
7.3%
Interest expense
$15,220
$15,499
$15,760
$16,007
$15,836
$14,236
$17,349
-10.1%
21.9%
Net income (loss)
$9,227
$8,564
$(4,955)
$(6,620)
$18,851
$(2,493)
$13,320
Realized and unrealized gains (losses) on 2024 Euro Notes
$2,908
$(873)
$(17,315)
$(19,170)
$18,870
$(5,280)
$10,169
Basic net income (loss) per common share
$0.20
$0.19
$(0.11)
$(0.14)
$0.41
$(0.05)
$0.29
Diluted net income (loss) per common share
$0.18
$0.28
Weighted average common shares – basic
45,658,565
45,754,880
45,815,718
45,904,943
46,067,096
46,229,603
46,293,524
Weighted average common shares – diluted
46,391,066
46,686,665
46,507,258
46,866,929
-1.9%
1.3%
-0.6%
EBITDA (6)
$50,394
$53,348
$54,583
$55,675
$55,550
$57,181
$57,753
-4.4%
5.9%
2.9%
EBITDA margin
35.8%
37.8%
38.4%
38.7%
39.0%
Gains on asset related transactions
$39
$205
$99
$10
$18
$-
EBITDA, as adjusted (6)
$50,433
$53,553
$54,682
$55,685
$55,568
-4.8%
2.1%
EBITDA, as adjusted, margin
38.0%
37.9%
Net cash provided by operating activities
$28,458
$41,311
$32,980
$37,571
$47,106
$39,749
$47,418
-38.3%
45.2%
-20.2%
13.9%
25.4%
-15.6%
19.3%
Capital expenditures
$12,866
$13,930
$13,296
$15,860
$15,444
$17,217
$21,959
30.0%
8.3%
-4.6%
-2.6%
11.5%
27.5%
Principal payments of capital (finance) lease obligations
$6,167
$3,716
$9,509
$4,598
$5,744
$6,192
$4,890
200.0%
-39.7%
155.9%
-51.6%
24.9%
7.8%
-21.0%
Dividends paid
$30,557
$31,738
$32,657
$34,460
$36,081
$37,001
$37,654
Purchases of common stock
$ –
$270
$4,225
Gross Leverage Ratio
4.78
5.08
5.10
5.14
4.39
5.13
5.07
Net Leverage Ratio
2.92
3.07
3.24
3.40
3.31
3.45
3.50
Customer Connections – end of period
On-Net
75,163
75,927
76,338
77,305
78,389
79,146
80,162
Off-Net
11,721
11,846
11,849
11,970
12,216
12,386
12,495
Non-Core (1)
329
339
322
325
320
336
334
3.0%
-5.0%
5.0%
Total customer connections
87,213
88,112
88,509
89,600
90,925
91,868
92,991
1.5%
On-Net Buildings – end of period
Multi-Tenant office buildings
1,769
1,771
1,783
1,792
1,796
1,802
1,816
Carrier neutral data center buildings
1,000
1,029
1,047
1,068
1,089
1,119
1,138
Cogent data centers
54
Total on-net buildings
2,823
2,854
2,884
2,914
2,939
2,975
3,008
Total carrier neutral data center nodes
1,175
1,203
1,225
1,252
1,274
1,309
1,332
Square feet – multi-tenant office buildings – on-net
961,154,384
962,049,183
968,355,695
976,813,678
978,095,164
979,876,141
984,753,702
Network – end of period
Intercity route miles
58,009
58,142
58,285
58,761
59,741
Metro fiber miles
36,079
36,438
36,725
37,567
38,058
38,351
38,825
Connected networks – AS’s
7,042
7,133
7,222
7,338
7,471
7,530
7,597
Headcount – end of period
Sales force – quota bearing
542
572
597
569
547
565
516
Sales force – total
684
716
740
712
693
710
662
Total employees
1,052
1,083
1,110
1,066
1,087
1,031
Sales rep productivity – units per full time equivalent sales rep (“FTE”) per month
4.5
4.0
3.7
4.2
4.3
FTE – sales reps
522
533
563
511
521
(1)
Consists of legacy services of companies whose assets or businesses were acquired by Cogent.
(2)
Network operations expense excludes equity-based compensation expense of $252, $305, $346, $316, $2,076, $136 and $163 in the three month periods ended March 31, 2020 through September 30, 2021, respectively. Network operations expense includes excise taxes, including Universal Service Fund fees of $3,743, $3,298, $3,902, $4,144, $4,528, $4,811 and $4,813 in the three month periods ended March 31, 2020 through September 30, 2021, 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 $4,823, $5,778, $6,176, $5,530, $5,231, $6,738 and $6,425 in the three month periods ended March 31, 2020 through September 30, 2021, 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.
($ in 000’s) – unaudited
Changes in operating assets and liabilities
5,325
$(3,232)
$6,255
$1,920
$(9,060)
$2,352
$(6,267)
Cash interest expense and income tax expense
16,611
15,269
15,348
16,184
17,504
15,080
16,602
EBITDA
PLUS: Gains on asset related transactions
39
205
99
10
18
–
EBITDA, as adjusted
EBITDA margin
EBITDA, as adjusted, margin
Constant currency revenue is reconciled to service revenue as reported in the tables below.Constant currency impact on revenue changes – sequential periods
Service revenue, as reported – current period
Impact of foreign currencies on service revenue
184
202
(1,616)
(621)
(447)
(150)
709
Service revenue – as adjusted for currency impact (1)
$141,099
$141,192
$140,686
$143,280
$146,330
$147,729
$148,636
Service revenue, as reported – prior sequential period
$140,292
Constant currency (decrease) increase
$807
$277
$(304)
$978
$2,429
$952
$757
Constant currency percent (decrease) increase
(0.2)%
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 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
Non-GAAP gross profit and Non-GAAP gross marginNon-GAAP gross profit and Non-GAAP gross margin are reconciled to GAAP gross profit and GAAP gross margin in the table below.
746
674
(1,141)
(1,891)
(2,608)
(2,965)
(555)
Service revenue – as adjusted for currency impact (2)
$141,661
$141,664
$141,161
$142,010
$144,169
$144,914
$147,372
Service revenue, as reported – prior year period
$134,137
$134,789
$136,942
Constant currency increase
$7,524
$6,875
$4,219
$1,718
$3,254
$3,924
$5,070
Percent increase
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.
Gross and Net Leverage Ratios
Service revenue total
Minus – Network operations expense including equity-based compensation and including depreciation and amortization expense
75,429
73,782
76,138
77,284
79,062
78,276
79,254
GAAP Gross Profit (1)
Plus – Equity-based compensation – network operations expense
252
305
346
316
2,076
136
163
Plus – Depreciation and amortization expense
19,508
19,896
21,619
22,455
21,970
22,096
22,609
Non-GAAP Gross Profit (2)
GAAP Gross Margin (1)
Non-GAAP Gross Margin (2)
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.
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 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.
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.
As of June 30, 2021
As of September 30, 2021
Cash and cash equivalents & restricted cash
$373,963
$354,955
Debt
Capital (finance) leases – current portion
16,004
16,685
Capital (finance) leases – long term
208,588
222,854
Senior Secured 2022 Notes
Senior Secured 2026 Notes
500,000
Senior Unsecured Euro 2024 Notes
415,751
405,637
Note payable
3,365
1,868
Total debt
1,143,708
1,147,044
Total net debt
769,745
792,089
Trailing 12 months EBITDA, as adjusted
223,116
226,187
Gross leverage ratio
Net leverage ratio
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
AS OF SEPTEMBER 30, 2021 AND DECEMBER 31, 2020
(IN THOUSANDS, EXCEPT SHARE DATA)
September 30, 2021
December 31, 2020
(Unaudited)
Assets
Current assets:
Cash and cash equivalents
$
351,879
371,301
Restricted cash
3,076
—
Accounts receivable, net of allowance for credit losses of $1,413 and $1,921, respectively
43,672
44,185
Prepaid expenses and other current assets
37,491
40,851
Total current assets
436,118
456,337
Property and equipment, net
454,710
430,335
Right-of-use leased assets
103,666
99,666
Deposits and other assets
14,255
14,139
Total assets
1,008,749
1,000,477
Liabilities and stockholders’ equity
Current liabilities:
Accounts payable
11,639
9,775
Accrued and other current liabilities
57,510
51,029
Installment payment agreement, current portion, net of discounts of $18 and $136, respectively
1,850
6,786
Current maturities, operating lease liabilities
11,312
11,151
Current maturities, finance lease obligations
15,702
Total current liabilities
98,996
94,443
Senior secured 2022 notes, net of unamortized debt costs of $1,052 and including premium of $544
444,492
Senior unsecured 2024 Euro notes, net of unamortized debt costs of $2,327 and $2,961, respectively, and net of discounts of $863 and $1,142, respectively
402,447
425,160
Senior secured 2026 notes, net of unamortized debt costs of $1,217 and discount of $1,618
497,165
Operating lease liabilities, net of current maturities
115,065
111,318
Finance lease obligations, net of current maturities
203,438
Other long-term liabilities
28,989
14,792
Total liabilities
1,365,516
1,293,643
Commitments and contingencies:
Stockholders’ equity:
Common stock, $0.001 par value; 75,000,000 shares authorized; 47,663,276 and 47,214,077 shares issued and outstanding, respectively
48
47
Additional paid-in capital
540,575
515,867
Accumulated other comprehensive income — foreign currency translation
(8,558)
(1,306)
Accumulated deficit
(888,832)
(807,774)
Total stockholders’ deficit
(356,767)
(293,166)
Total liabilities and stockholders’ deficit
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)
Three MonthsEndedSeptember 30, 2021
Three MonthsEndedSeptember 30, 2020
Service revenue
147,927
142,302
Operating expenses:
Network operations (including $163 and $346 of equity-based compensation expense, respectively, exclusive of depreciation and amortization shown separately below)
56,645
54,519
Selling, general, and administrative (including $6,425 and $6,176 of equity-based compensation expense, respectively)
40,117
39,722
Depreciation and amortization
Total operating expenses
119,371
115,860
Loss on finance lease amendment
(505)
Gains on equipment transactions
28,556
26,036
(17,349)
(15,760)
Unrealized foreign exchange gain (loss) on 2024 Euro Notes
10,169
(17,315)
Interest income and other, net
648
484
Income (loss) before income taxes
22,024
(6,555)
Income tax (provision) benefit
(8,704)
1,600
Net income (loss)
13,320
(4,955)
Comprehensive income:
Foreign currency translation adjustment
(3,818)
5,408
Comprehensive income
9,502
453
Net income (loss) per common share:
0.29
(0.11)
0.28
Dividends declared per common share
0.805
0.705
Weighted-average common shares – basic
Weighted-average common shares – diluted
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND SEPTEMBER 30, 2020
Nine MonthsEndedSeptember 30, 2021
Nine MonthsEndedSeptember 30, 2020
442,584
424,205
Network operations (including $2,375 and $903 of equity-based compensation expense, respectively, exclusive of depreciation and amortization shown separately below)
169,920
164,326
Selling, general, and administrative (including $18,394 and $16,776 of equity-based compensation expense, respectively)
122,952
119,232
66,675
61,022
359,547
344,580
Losses on finance lease amendments
(423)
343
83,055
79,545
(47,421)
(46,481)
Realized foreign exchange gain on issuance of 2024 Euro Notes
2,547
Unrealized gain (loss) on foreign exchange on 2024 Euro Notes
23,759
(17,827)
Loss on debt extinguishment and redemption – 2021 Notes
(638)
Loss on debt extinguishment and redemption – 2022 Notes
(14,698)
1,460
430
Income before income taxes
46,155
17,576
Income tax provision
(16,477)
(4,740)
Net income
29,678
12,836
(7,252)
4,828
22,426
17,664
Net income per common share:
Basic net income per common share
0.64
Diluted net income per common share
0.63
2.340
2.045
46,290,452
45,818,677
46,825,948
46,598,870
COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(IN THOUSANDS)
Three monthsEndedSeptember 30, 2021
Three monthsEndedSeptember 30, 2020
Cash flows from operating activities:
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Amortization of debt costs, discounts and premiums
439
496
Equity-based compensation expense (net of amounts capitalized)
6,588
6,522
Unrealized (gain) loss on foreign exchange – 2024 Notes
(10,169)
17,378
Gains – equipment transactions and other, net
(589)
406
Deferred income taxes
8,364
(2,153)
Changes in operating assets and liabilities:
Accounts receivable
(249)
(1,009)
(962)
(788)
Accounts payable, accrued liabilities and other long-term liabilities
7,949
(4,305)
118
(231)
47,418
32,980
Cash flows from investing activities:
Purchases of property and equipment
(21,959)
(13,296)
Net cash used in investing activities
Cash flows from financing activities:
(37,654)
(32,657)
(270)
Principal payments on installment payment agreement
(1,498)
(2,727)
Principal payments of finance lease obligations
(4,890)
(9,509)
Proceeds from exercises of stock options
362
186
Net cash used in financing activities
(43,680)
(44,977)
Effect of exchange rates changes on cash
(787)
1,560
Net decrease in cash and cash equivalents & restricted cash
(19,008)
(23,733)
Cash and cash equivalents & restricted cash, beginning of period
373,963
417,026
Cash and cash equivalents & restricted cash, end of period
354,955
393,293
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; cyber-attacks or security breaches of our network; 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, 2020 and our Form 10-Q for the quarters ended March 31, 2021, June 30, 2021 and September 30, 2021. 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.
Nine monthsEndedSeptember 30, 2021
Nine monthsEndedSeptember 30, 2020
Adjustments to reconcile net income to net cash provided by operating activities:
Amortization of debt costs, discounts and premium
1,333
1,426
20,769
17,679
638
14,698
(23,759)
17,281
Realized foreign exchange gain on issuance of 2024 Notes
(2,547)
(347)
80
11,922
2,100
(159)
(1,102)
1,734
(3,253)
11,752
(2,783)
(23)
(628)
134,273
102,749
(54,620)
(40,092)
(110,736)
(94,952)
Extinguishment and redemption of 2021 Notes
(189,225)
Extinguishment and redemption of 2022 Notes
(459,317)
Net proceeds from issuance of senior unsecured 2024 Euro Notes – net of debt costs of $2,137
240,285
Net proceeds from issuance of senior secured 2026 Notes – net of debt costs of $1,317
496,933
(5,845)
(7,855)
(16,826)
(19,392)
1,237
(94,554)
(70,234)
(1,445)
1,448
(16,346)
(6,129)
399,422
View original content to download multimedia:https://www.prnewswire.com/news-releases/cogent-communications-reports-third-quarter-results-and-increases-its-regular-quarterly-dividend-on-its-common-stock-by-0-025–301415638.html
SOURCE Cogent Communications Holdings, Inc.
Disclaimer: The above press release comes to you under an arrangement with PR Newswire. TheTechOutlook.com takes no editorial responsibility for the same.
