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WASHINGTON, April 28, 2021 /PRNewswire/ --
Financial and Business Highlights
Cogent Communications Holdings, Inc. (NASDAQ: CCOI) ("Cogent") today announced service revenue of $146.8 million for the three months ended March 31, 2021, an increase of 2.0% from the three months ended December 31, 2020 and an increase of 4.2% from the three months ended March 31, 2020. Foreign exchange positively impacted service revenue growth from the three months ended December 31, 2020 to the three months ended March 31, 2021 by $0.4 million and positively impacted service revenue growth from the three months ended March 31, 2020 to the three months ended March 31, 2021 by $2.6 million. On a constant currency basis, service revenue increased by 1.7% from the three months ended December 31, 2020 to the three months ended March 31, 2021 and grew by 2.3% from the three months ended March 31, 2020 to the three months ended March 31, 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 $109.9 million for the three months ended March 31, 2021; an increase of 2.6% from the three months ended December 31, 2020 and an increase of 6.3% over the three months ended March 31, 2020.
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 $36.7 million for the three months ended March 31, 2021; an increase of 0.1% from the three months ended December 31, 2020 and a decrease of 1.6% from the three months ended March 31, 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 3.4% from the three months ended March 31, 2020 to $67.7 million for the three months ended March 31, 2021 and increased by 1.6% from the three months ended December 31, 2020. GAAP gross margin was 46.1% for the three months ended March 31, 2021, 46.5% for the three months ended March 31, 2020 and 46.3% for the three months ended December 31, 2020.
Excise taxes, including Universal Service Fund fees, recorded on a gross basis and included in service revenue and cost of network operations expense were $4.5 million for the three months ended March 31, 2021, $3.7 million for the three months ended March 31, 2020 and $4.1 million for the three months ended December 31, 2020.
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 7.6% from the three months ended March 31, 2020 to $91.8 million for the three months ended March 31, 2021 and increased by 2.7% from the three months ended December 31, 2020. Non-GAAP gross profit margin was 62.5% for the three months ended March 31, 2021, 60.5% for the three months ended March 31, 2020 and 62.1% for the three months ended December 31, 2020.
Net cash provided by operating activities increased by 65.5% from the three months ended March 31, 2020 to $47.1 million for the three months ended March 31, 2021 and increased by 25.4% from the three months ended December 31, 2020.
Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 10.2% from the three months ended March 31, 2020 to $55.6 million for the three months ended March 31, 2021 and decreased by 0.2% from the three months ended December 31, 2020. EBITDA margin was 37.8% for the three months ended March 31, 2021, 35.8% for the three months ended March 31, 2020 and 38.7% for the three months ended December 31, 2020.
Basic and diluted net income (loss) per share was $0.41 for the three months ended March 31, 2021, $0.20 for the three months ended March 31, 2020 and $(0.14) for the three months ended December 31, 2020.
Unrealized foreign exchange gains (losses) on Cogent's 2024 Senior Euro Unsecured Notes were $18.9 million for the three months ended March 31, 2021, $2.9 million for the three months ended March 31, 2020 and $(19.2) million for the three months ended December 31, 2020.
Total customer connections increased by 4.3% from March 31, 2020 to 90,925 as of March 31, 2021 and increased by 1.5% from December 31, 2020. On-net customer connections increased by 4.3% from March 31, 2020 to 78,389 as of March 31, 2021 and increased by 1.4% from December 31, 2020. Off-net customer connections increased by 4.2% from March 31, 2020 to 12,216 as of March 31, 2021 and increased by 2.1% from December 31, 2020.
The number of on-net buildings increased by 116 from March 31, 2020 to 2,939 as of March 31, 2021 and increased by 25 from December 31, 2020.
Quarterly Dividend Increase Approved
On April 28, 2021, Cogent's Board approved a regular quarterly dividend of $0.780 per common share payable on May 28, 2021 to shareholders of record on May 14, 2021. This second quarter 2021 regular dividend represents a 3.3% increase of $0.025 per share from the first quarter 2021 regular dividend of $0.755 per share and an annual increase of 14.7% from the Q2 2020 dividend of $0.680 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
Cogent continues to be impacted by the COVID-19 pandemic and the accompanying responses by governments around the world. Cogent's workforce continues to work remotely with dedication.
The ongoing impact of the COVID-19 pandemic 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 and efficacy 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. While Cogent's workforce is working remotely, Cogent provides no assurance that this will be sufficient to protect its workforce or its key employees. Moreover, Cogent's results of operations may be adversely affected in the future as the pandemic and the related government restrictions continue. 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 quarter ended March 31, 2021.
Conference Call and Website Information
Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on April 29, 2021 to discuss Cogent's operating results for the first 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 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 SUBSIDIARIESSummary of Financial and Operational Results | |||||
Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 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 |
% Change from previous Qtr. | 0.8% | 0.3% | 1.2% | 1.9% | 2.6% |
Off-Net revenue | $37,321 | $37,044 | $37,092 | $36,672 | $36,723 |
% Change from previous Qtr. | -0.4% | -0.7% | 0.1% | -1.1% | 0.1% |
Non-Core revenue (1) | $137 | $146 | $119 | $120 | $107 |
% Change from previous Qtr. | 5.4% | 6.6% | -18.5% | 0.8% | -10.8% |
Service revenue – total | $140,915 | $140,990 | $142,302 | $143,901 | $146,777 |
% Change from previous Qtr. | 0.4% | 0.1% | 0.9% | 1.1% | 2.0% |
Constant currency total revenue quarterly growth rate – sequential quarters (6) | 0.6% | 0.2% | -0.2% | 0.7% | 1.7% |
Constant currency total revenue quarterly growth rate – year over year quarters (6) | 5.6% | 5.1% | 3.1% | 1.2% | 2.3% |
Excise Taxes included in service revenue | $3,743 | $3,298 | $3,902 | $4,144 | $4,528 |
% Change from previous Qtr. | -13.6% | -11.9% | 18.3% | 6.2% | 9.3% |
Network operations expenses (2) | $55,669 | $53,581 | $54,173 | $54,513 | $55,016 |
% Change from previous Qtr. | -% | -3.8% | 1.1% | 0.6% | 0.9% |
GAAP gross profit (3) | $65,486 | $67,208 | $66,164 | $66,617 | $67,715 |
% Change from previous Qtr. | 1.8% | 2.6% | -1.6% | 0.7% | 1.6% |
GAAP gross margin (3) | 46.5% | 47.7% | 46.5% | 46.3% | 46.1% |
Non-GAAP gross profit (4) (6) | $85,246 | $87,409 | $88,129 | $89,388 | $91,761 |
% Change from previous Qtr. | 0.8% | 2.5% | 0.8% | 1.4% | 2.7% |
Non-GAAP gross margin (4) (6) | 60.5% | 62.0% | 61.9% | 62.1% | 62.5% |
Selling, general and administrative expenses (5) | $34,852 | $34,061 | $33,546 | $33,713 | $36,211 |
% Change from previous Qtr. | 9.3% | -2.3% | -1.5% | 0.5% | 7.4% |
Depreciation and amortization expense | $19,508 | $19,896 | $21,619 | $22,455 | $21,970 |
% Change from previous Qtr. | -2.5% | 2.0% | 8.7% | 3.9% | -2.2% |
Equity-based compensation expense | $5,075 | $6,083 | $6,522 | $5,846 | $7,307 |
% Change from previous Qtr. | 2.7% | 19.9% | 7.2% | -10.4% | 25.0% |
Operating income | $25,850 | $27,574 | $26,036 | $27,384 | $26,291 |
% Change from previous Qtr. | -7.8% | 6.7% | -5.6% | 5.2% | -4.0% |
Interest expense | $15,220 | $15,499 | $15,760 | $16,007 | $15,836 |
% Change from previous Qtr. | 0.1% | 1.8% | 1.7% | 1.6% | -1.1% |
Net income (loss) | $9,227 | $8,564 | $(4,955) | $(6,620) | $18,851 |
Realized and unrealized gains (losses) on 2024 Euro Notes | $2,908 | $(873) | $(17,315) | $(19,170) | $18,870 |
Basic net income (loss) per common share | $0.20 | $0.19 | $(0.11) | $(0.14) | $0.41 |
Diluted net income (loss) per common share | $0.20 | $0.18 | $(0.11) | $(0.14) | $0.41 |
Weighted average common shares – basic | 45,658,565 | 45,754,880 | 45,815,718 | 45,904,943 | 46,067,096 |
% Change from previous Qtr. | 0.2% | 0.2% | 0.1% | 0.2% | 0.4% |
Weighted average common shares – diluted | 46,391,066 | 46,686,665 | 45,815,718 | 45,904,943 | 46,507,258 |
% Change from previous Qtr. | 0.5% | 0.6% | -1.9% | 0.2% | 1.3% |
EBITDA (6) | $50,394 | $53,348 | $54,583 | $55,675 | $55,550 |
% Change from previous Qtr. | -4.4% | 5.9% | 2.3% | 2.0% | -0.2% |
EBITDA margin | 35.8% | 37.8% | 38.4% | 38.7% | 37.8% |
Gains on asset related transactions | $39 | $205 | $99 | $10 | $18 |
EBITDA, as adjusted (6) | $50,433 | $53,553 | $54,682 | $55,685 | $55,568 |
% Change from previous Qtr. | -4.8% | 6.2% | 2.1% | 1.8% | -0.2% |
EBITDA, as adjusted, margin | 35.8% | 38.0% | 38.4% | 38.7% | 37.9% |
Net cash provided by operating activities | $28,458 | $41,311 | $32,980 | $37,571 | $47,106 |
% Change from previous Qtr. | -38.3% | 45.2% | -20.2% | 13.9% | 25.4% |
Capital expenditures | $12,866 | $13,930 | $13,296 | $15,860 | $15,444 |
% Change from previous Qtr. | 30.0% | 8.3% | -4.6% | 19.3% | -2.6% |
Principal payments of capital (finance) lease obligations | $6,167 | $3,716 | $9,509 | $4,598 | $5,744 |
% Change from previous Qtr. | 200.0% | -39.7% | 155.9% | -51.6% | 24.9% |
Dividends paid | $30,557 | $31,738 | $32,657 | $34,460 | $36,081 |
Purchases of common stock | $ - | $- | $270 | $4,225 | $- |
Gross Leverage Ratio | 4.78 | 5.08 | 5.10 | 5.14 | 4.39 |
Net Leverage Ratio | 2.92 | 3.07 | 3.24 | 3.40 | 3.31 |
Customer Connections – end of period | |||||
On-Net | 75,163 | 75,927 | 76,338 | 77,305 | 78,389 |
% Change from previous Qtr. | 0.8% | 1.0% | 0.5% | 1.3% | 1.4% |
Off-Net | 11,721 | 11,846 | 11,849 | 11,970 | 12,216 |
% Change from previous Qtr. | 0.5% | 1.1% | 0.0% | 1.0% | 2.1% |
Non-Core (1) | 329 | 339 | 322 | 325 | 320 |
% Change from previous Qtr. | 1.2% | 3.0% | -5.0% | 0.9% | -1.5% |
Total customer connections | 87,213 | 88,112 | 88,509 | 89,600 | 90,925 |
% Change from previous Qtr. | 0.8% | 1.0% | 0.5% | 1.2% | 1.5% |
On-Net Buildings – end of period | |||||
Multi-Tenant office buildings | 1,769 | 1,771 | 1,783 | 1,792 | 1,796 |
Carrier neutral data center buildings | 1,000 | 1,029 | 1,047 | 1,068 | 1,089 |
Cogent data centers | 54 | 54 | 54 | 54 | 54 |
Total on-net buildings | 2,823 | 2,854 | 2,884 | 2,914 | 2,939 |
Total carrier neutral data center nodes | 1,175 | 1,203 | 1,225 | 1,252 | 1,274 |
Square feet – multi-tenant office buildings – on-net | 961,154,384 | 962,049,183 | 968,355,695 | 976,813,678 | 978,095,164 |
Network – end of period | |||||
Intercity route miles | 58,009 | 58,009 | 58,142 | 58,285 | 58,761 |
Metro fiber miles | 36,079 | 36,438 | 36,725 | 37,567 | 38,058 |
Connected networks – AS's | 7,042 | 7,133 | 7,222 | 7,338 | 7,471 |
Headcount – end of period | |||||
Sales force – quota bearing | 542 | 572 | 597 | 569 | 547 |
Sales force - total | 684 | 716 | 740 | 712 | 693 |
Total employees | 1,052 | 1,083 | 1,110 | 1,083 | 1,066 |
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 | 542 | 522 |
(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 and $2,076 in the three month periods ended March 31, 2020 through March 31, 2021, respectively. Network operations expense includes excise taxes, including Universal Service Fund fees of $3,743, $3,298, $3,902, $4,144 and $4,528 in the three month periods ended March 31, 2020 through March 31, 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 and $5,231 in the three month periods ended March 31, 2020 through March 31, 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. | |||||||
Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | |||
($ in 000's) – unaudited | |||||||
Net cash provided by operating activities | $28,458 | $41,311 | $32,980 | $37,571 | $47,106 | ||
Changes in operating assets and liabilities | 5,325 | $(3,232) | $6,255 | $1,920 | $(9,060) | ||
Cash interest expense and income tax expense | 16,611 | 15,269 | 15,348 | 16,184 | 17,504 | ||
EBITDA | $50,394 | $53,348 | $54,583 | $55,675 | $55,550 | ||
PLUS: Gains on asset related transactions | 39 | 205 | 99 | 10 | 18 | ||
EBITDA, as adjusted | $50,433 | $53,553 | $54,682 | $55,685 | $55,568 | ||
EBITDA margin | 35.8% | 37.8% | 38.4% | 38.7% | 37.8% | ||
EBITDA, as adjusted, margin | 35.8% | 38.0% | 38.4% | 38.7% | 37.9% | ||
Constant currency revenue is reconciled to service revenue as reported in the tables below. | |||||||
Constant currency impact on revenue changes – sequential periods | |||||||
($ in 000's) – unaudited | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | ||
Service revenue, as reported – current period | $140,915 | $140,990 | $142,302 | $143,901 | $146,777 | ||
Impact of foreign currencies on service revenue | 184 | 202 | (1,616) | (621) | (447) | ||
Service revenue - as adjusted for currency impact (1) | $141,099 | $141,192 | $140,686 | $143,280 | $146,330 | ||
Service revenue, as reported – prior sequential period | $140,292 | $140,915 | $140,990 | $142,302 | $143,901 | ||
Constant currency (decrease) increase | $807 | $277 | $(304) | $978 | $2,429 | ||
Constant currency percent (decrease) increase | 0.6% | 0.2% | (0.2)% | 0.7% | 1.7% | ||
(1) | Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the prior sequential period. The Company believes that disclosing quarterly sequential revenue growth without the impact of foreign currencies on service revenue is a useful measure of sequential revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. |
Constant currency impact on revenue changes – prior year periods | |||||
($ in 000's) – unaudited | Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 |
Service revenue, as reported – current period | $140,915 | $140,990 | $142,302 | $143,901 | $146,777 |
Impact of foreign currencies on service revenue | 746 | 674 | (1,141) | (1,891) | (2,608) |
Service revenue - as adjusted for currency impact (2) | $141,661 | $141,664 | $141,161 | $142,010 | $144,169 |
Service revenue, as reported – prior year period | $134,137 | $134,789 | $136,942 | $140,292 | $140,915 |
Constant currency increase | $7,524 | $6,875 | $4,219 | $1,718 | $3,254 |
Percent increase | 5.6% | 5.1% | 3.1% | 1.2% | 2.3% |
(2) | Service revenue, as adjusted for currency impact, is determined by translating the service revenue for the current period at the average foreign currency exchange rates for the comparable prior year period. The Company believes that disclosing year over year revenue growth without the impact of foreign currencies on service revenue is a useful measure of revenue growth. Service revenue, as adjusted for currency impact, is an integral part of the internal reporting and planning system used by management as a supplement to GAAP financial information. |
Non-GAAP gross profit and Non-GAAP gross margin | |||||
Non-GAAP gross profit and Non-GAAP gross margin are reconciled to GAAP gross profit and GAAP gross margin in the table below. | |||||
Q1 2020 | Q2 2020 | Q3 2020 | Q4 2020 | Q1 2021 | |
($ in 000's) – unaudited | |||||
Service revenue total | $140,915 | $140,990 | $142,302 | $143,901 | $146,777 |
Minus - Network operations expense including equity-based compensation and including depreciation and amortization expense | 75,429 | 73,782 | 76,138 | 77,284 | 79,062 |
GAAP Gross Profit (1) | $65,486 | $67,208 | $66,164 | $66,617 | $67,715 |
Plus - Equity-based compensation – network operations expense | 252 | 305 | 346 | 316 | 2,076 |
Plus – Depreciation and amortization expense | 19,508 | 19,896 | 21,619 | 22,455 | 21,970 |
Non-GAAP Gross Profit (2) | $85,246 | $87,409 | $88,129 | $89,388 | $91,761 |
GAAP Gross Margin (1) | 46.5% | 47.7% | 46.5% | 46.3% | 46.1% |
Non-GAAP Gross Margin (2) | 60.5% | 62.0% | 61.9% | 62.1% | 62.5% |
(1) | GAAP gross profit is defined as total service revenue less network operations expense, depreciation and amortization and equity-based compensation included in network operations expense. GAAP gross margin is defined as GAAP gross profit divided by total service revenue. |
(2) | Non-GAAP gross profit represents service revenue less network operations expense, excluding equity-based compensation and amounts shown separately (depreciation and amortization expense). Non-GAAP gross margin is defined as non-GAAP gross profit divided by total service revenue. Management believes that non-GAAP gross profit and non-GAAP gross margin are relevant metrics to provide to investors, as they are metrics that management uses to measure the margin and amount available to the Company after network service costs, in essence these are measures of the efficiency of the Company's network. |
Gross and Net Leverage Ratios
Gross leverage ratio is defined as total debt divided by the trailing last 12 months EBITDA, as adjusted. Net leverage ratio is defined as total net debt (total debt minus cash and cash equivalents) divided by the trailing last 12 months EBITDA, as adjusted. Cogent's gross leverage ratio and net leverage ratio are shown below.
($ in 000's) – unaudited | As of December 31, 2020 | As of March 31, 2021 |
Cash and cash equivalents | $371,301 | $237,980 |
Debt | ||
Capital (finance) leases – current portion | 15,702 | 15,996 |
Capital (finance) leases – long term | 203,438 | 202,514 |
Senior Secured 2022 Notes | 445,000 | 329,080 |
Senior Unsecured Euro 2024 Notes | 429,264 | 410,471 |
Note payable | 7,712 | 5,334 |
Total debt | 1,101,116 | 963,395 |
Total net debt | 729,815 | 725,415 |
Trailing 12 months EBITDA, as adjusted | 214,353 | 219,488 |
Gross leverage ratio | 5.14 | 4.39 |
Net leverage ratio | 3.40 | 3.31 |
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 SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETSAS OF MARCH 31, 2021 AND DECEMBER 31, 2020(IN THOUSANDS, EXCEPT SHARE DATA) | ||||||
March 31, 2021 | December 31, 2020 | |||||
(Unaudited) | ||||||
Assets | ||||||
Current assets: | ||||||
Cash and cash equivalents | $ | 237,980 | $ | 371,301 | ||
Accounts receivable, net of allowance for credit losses of $1,457 and $1,921, respectively | 41,234 | 44,185 | ||||
Prepaid expenses and other current assets | 37,056 | 40,851 | ||||
Total current assets | 316,270 | 456,337 | ||||
Property and equipment, net | 425,492 | 430,335 | ||||
Right-of-use leased assets | 97,365 | 99,666 | ||||
Deposits and other assets | 13,835 | 14,139 | ||||
Total assets | $ | 852,962 | $ | 1,000,477 | ||
Liabilities and stockholders' equity | ||||||
Current liabilities: | ||||||
Accounts payable | $ | 12,190 | $ | 9,775 | ||
Accrued and other current liabilities | 49,656 | 51,029 | ||||
Senior secured 2022 notes, net of unamortized debt costs of $733 and including premium of $430 | 328,777 | — | ||||
Installment payment agreement, current portion, net of discount of $80 and $136, respectively | 5,035 | 6,786 | ||||
Current maturities, operating lease liabilities | 11,055 | 11,151 | ||||
Current maturities, finance lease obligations | 15,996 | 15,702 | ||||
Total current liabilities | 422,709 | 94,443 | ||||
Senior unsecured 2024 Euro notes, net of unamortized debt costs of $2,751and$2,961, respectively, and net of discount of $1,020 and $1,142, respectively | 406,700 | 425,160 | ||||
Senior secured 2022 notes, net of unamortized debt costs of $1,052and including premium of$544 | — | 444,492 | ||||
Operating lease liabilities, net of current maturities | 109,377 | 111,318 | ||||
Finance lease obligations, net of current maturities | 202,514 | 203,438 | ||||
Other long term liabilities | 19,221 | 14,792 | ||||
Total liabilities | 1,160,521 | 1,293,643 | ||||
Commitments and contingencies: | ||||||
Stockholders' equity: | ||||||
Common stock, $0.001 par value; 75,000,000 shares authorized; 47,522,672 and 47,214,077 shares issued and outstanding, respectively | 48 | 47 | ||||
Additional paid-in capital | 523,913 | 515,867 | ||||
Accumulated other comprehensive income — foreign currency translation | (6,516) | (1,306) | ||||
Accumulated deficit | (825,004) | (807,774) | ||||
Total stockholders' deficit | (307,559) | (293,166) | ||||
Total liabilities and stockholders' deficit | $ | 852,962 | $ | 1,000,477 | ||
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOMEFOR THE THREE MONTHS ENDED MARCH 31, 2021 AND MARCH 31, 2020(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS) | ||||||
Three Months Ended March 31, 2021 | Three Months Ended March 31, 2020 | |||||
(Unaudited) | (Unaudited) | |||||
Service revenue | $ | 146,777 | $ | 140,915 | ||
Operating expenses: | ||||||
Network operations (including $2,076 and $252 of equity-based compensation expense, respectively, exclusive of depreciation and amortization shown separately below) | 57,092 | 55,921 | ||||
Selling, general, and administrative (including $5,231 and $4,823 of equity-based compensation expense, respectively) | 41,442 | 39,675 | ||||
Depreciation and amortization | 21,970 | 19,508 | ||||
Total operating expenses | 120,504 | 115,104 | ||||
Gains on equipment transactions | 18 | 39 | ||||
Operating income | 26,291 | 25,850 | ||||
Interest expense | (15,836) | (15,220) | ||||
Unrealized foreign exchange gain on 2024 Euro Notes | 18,870 | 2,904 | ||||
Loss on debt extinguishment and repurchase – 2022 Notes | (3,868) | — | ||||
Interest income and other, net | 744 | (699) | ||||
Income before income taxes | 26,201 | 12,835 | ||||
Income tax provision | (7,350) | (3,608) | ||||
Net income | $ | 18,851 | $ | 9,227 | ||
Comprehensive income: | ||||||
Net income | $ | 18,851 | $ | 9,227 | ||
Foreign currency translation adjustment | (5,210) | (3,493) | ||||
Comprehensive income | $ | 13,641 | $ | 5,734 | ||
Net income per common share: | ||||||
Basic and diluted net income per common share | $ | 0.41 | $ | 0.20 | ||
Dividends declared per common share | $ | 0.755 | $ | 0.660 | ||
Weighted-average common shares - basic | 46,067,096 | 45,658,565 | ||||
Weighted-average common shares - diluted | 46,507,258 | 46,391,066 | ||||
COGENT COMMUNICATIONS HOLDINGS, INC. AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWSFOR THE THREE MONTHS ENDED MARCH 31, 2021 AND MARCH 31, 2020(IN THOUSANDS) | ||||||
Three months Ended March 31, 2021 | Three months Ended March 31, 2020 | |||||
(Unaudited) | (Unaudited) | |||||
Cash flows from operating activities: | ||||||
Net income | $ | 18,851 | $ | 9,227 | ||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 21,970 | 19,508 | ||||
Amortization of debt discount and premium | 441 | 477 | ||||
Equity-based compensation expense (net of amounts capitalized) | 7,307 | 5,075 | ||||
Gains - equipment transactions and other, net | 371 | (454) | ||||
Unrealized foreign currency exchange gain on 2024 Euro Notes | (18,870) | (2,904) | ||||
Loss on extinguishment of 2022 Notes | 3,868 | — | ||||
Deferred income taxes | 4,497 | 2,439 | ||||
Changes in operating assets and liabilities: | ||||||
Accounts receivable | 2,420 | (2,790) | ||||
Prepaid expenses and other current assets | 2,826 | (3,093) | ||||
Accounts payable, accrued liabilities and other long-term liabilities | 2,951 | 1,067 | ||||
Deposits and other assets | 474 | (94) | ||||
Net cash provided by operating activities | 47,106 | 28,458 | ||||
Cash flows from investing activities: | ||||||
Purchases of property and equipment | (15,444) | (12,866) | ||||
Net cash used in investing activities | (15,444) | (12,866) | ||||
Cash flows from financing activities: | ||||||
Dividends paid | (36,081) | (30,557) | ||||
Repurchase and extinguishment of 2022 Notes | (119,679) | — | ||||
Proceeds from exercises of stock options | 215 | 718 | ||||
Principal payments on installment payment agreement | (2,378) | (2,566) | ||||
Principal payments of finance lease obligations | (5,744) | (6,167) | ||||
Net cash used in financing activities | (163,667) | (38,572) | ||||
Effect of exchange rates changes on cash | (1,316) | (1,326) | ||||
Net decrease in cash and cash equivalents | (133,321) | (24,306) | ||||
Cash and cash equivalents, beginning of period | 371,301 | 399,422 | ||||
Cash and cash equivalents, end of period | $ | 237,980 | $ | 375,116 | ||
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 quarter ended March 31, 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.
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SOURCE Cogent Communications Holdings, Inc.
