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Cogent Communications Reports First Quarter 2018 Results and Increases Regular Quarterly Dividend on Common Stock
[May 03, 2018]

Cogent Communications Reports First Quarter 2018 Results and Increases Regular Quarterly Dividend on Common Stock


WASHINGTON, May 3, 2018 /PRNewswire/ --

Cogent Communications Logo. (PRNewsFoto/Cogent Communications) (PRNewsfoto/Cogent Communications Holdings,)

Financial and Business Highlights

  • Cogent approves a 4.0% increase of $0.02 per share to its regular quarterly dividend to $0.52
  • Service revenue increased by 2.8% from Q4 2017 to Q1 2018 to $128.7 million and increased from Q1 2017 to Q1 2018 by 9.8%
    • On-net revenue increased by 3.4% from Q4 2017 to Q1 2018 to $92.4 million and increased from Q1 2017 to Q1 2018 by 10.5%
    • Off-net revenue increased by 1.4% from Q4 2017 to Q1 2018 to $36.1 million and increased from Q1 2017 to Q1 2018 by 8.3%
  • Cash flow from operations for Q1 2018 increased by 28.3% from Q1 2017 to $30.2 million
  • EBITDA for Q1 2018 increased by 16.9% from Q1 2017 to $44.1 million
  • EBITDA margin for Q1 2018 increased by 210 basis points to 34.3% from Q1 2017

Cogent Communications Holdings, Inc. (NASDAQ: CCOI) today announced service revenue of $128.7 million for the three months ended March 31, 2018, an increase of 9.8% from the three months ended March 31, 2017 and an increase of 2.8% from the three months ended December 31, 2017. Foreign exchange positively impacted service revenue growth from the three months ended December 31, 2017 to the three months ended March 31, 2018 by $1.0 million and positively impacted service revenue growth from the three months ended March 31, 2017 to the three months ended March 31, 2018 by $3.3 million.  On a constant currency basis, service revenue grew by 2.0% from the three months ended December 31, 2017 to the three months ended March 31, 2018 and grew by 7.0% from the three months ended March 31, 2017 to the three months ended March 31, 2018.

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 $92.4 million for the three months ended March 31, 2018; an increase of 3.4% from the three months ended December 31, 2017 and an increase of 10.5% over the three months ended March 31, 2017.

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 $36.1 million for the three months ended March 31, 2018; an increase of 1.4% over the three months ended December 31, 2017 and an increase of 8.3% over the three months ended March 31, 2017.

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 12.6% from the three months ended March 31, 2017 to $54.0 million for the three months ended March 31, 2018 and increased by 4.0% from the three months ended December 31, 2017. GAAP gross margin was 42.0% for the three months ended March 31, 2018, 41.0% for the three months ended March 31, 2017 and 41.5% for the three months ended December 31, 2017.  Excise taxes, including Universal Service Fund fees, recorded on a gross basis and included in service revenue and cost of network operations expense were $3.2 million for the three months ended March 31, 2018, $2.9 million for the three months ended December 31, 2017 and $2.6 million for the three months ended March 31, 2017.

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 11.1% from the three months ended March 31, 2017 to $74.0 million for the three months ended March 31, 2018 and increased by 3.6% from the three months ended December 31, 2017. Non-GAAP gross profit margin was 57.5% for the three months ended March 31, 2018, 56.9% for the three months ended March 31, 2017 and 57.1% for the three months ended December 31, 2017. 

Cash flow from operating activities increased by 28.3% from the three months ended March 31, 2017 to $30.2 million for the three months ended March 31, 2018 and decreased by 3.8% from the three months ended December 31, 2017.

Earnings before interest, taxes, depreciation and amortization (EBITDA) increased by 16.9% from the three months ended March 31, 2017 to $44.1 million for the three months ended March 31, 2018 and increased by 2.0% from the three months ended December 31, 2017. EBITDA margin was 34.3% for the three months ended March 31, 2018, 32.2% for the three months ended March 31, 2017 and 34.5% for the three months ended December 31, 2017. 

EBITDA, as adjusted, increased by 10.9% from the three months ended March 31, 2017 to $44.2 million for the three months ended March 31, 2018 and increased by 1.5% from the three months ended December 31, 2017. EBITDA, as adjusted, margin was 34.3% for the three months ended March 31, 2018, 34.0% for the three months ended March 31, 2017 and 34.8% for the three months ended December 31, 2017.

Basic and diluted net income (loss) per share was $0.15 for the three months ended March 31, 2018, $0.09 for the three months ended March 31, 2017 and $(0.14) for the three months ended December 31, 2017.

Total customer connections increased by 15.1% from March 31, 2017 to 73,914 as of March 31, 2018 and increased by 3.2% from December 31, 2017. On-net customer connections increased by 15.6% from March 31, 2017 to 63,366 as of March 31, 2018 and increased by 3.3% from December 31, 2017. Off-net customer connections increased by 13.1% from March 31, 2017 to 10,241 as of March 31, 2018 and increased by 2.9% from December 31, 2017.

The number of on-net buildings increased by 135 on-net buildings from March 31, 2017 to 2,541 on-net buildings as of March 31, 2018 and increased by 35 on-net buildings from December 31, 2017.

Quarterly Dividend Increase Approved
On May 2, 2018, Cogent's board approved a regular quarterly dividend of $0.52 per common share payable on June 1, 2018 to shareholders of record on May 17, 2018. This second quarter 2018 regular dividend represents a 4.0% increase of $0.02 per share from the first quarter 2018 regular dividend of $0.50 per share. 

The payment of any future dividends and any other returns of capital will be at the discretion of Cogent's board of directors 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 Cogent's board of directors.

Conference Call and Website Information
Cogent will host a conference call with financial analysts at 8:30 a.m. (ET) on May 3, 2018 to discuss Cogent's operating results for the first quarter of 2018 and to discuss Cogent's expectations for full year 2018. 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 195 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 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

Metric ($ in 000's, except
share and per share data) –
unaudited






On-Net revenue

$83,586

$85,586

$87,898

$89,374

$92,387

  % Change from previous Qtr.

0.1%

2.4%

2.7%

1.7%

3.4%

Off-Net revenue

$33,386

$33,980

$34,865

$35,662

$36,144

  % Change from previous Qtr.

4.8%

1.8%

2.6%

2.3%

1.4%

Non-Core revenue (1)

$231

$211

$206

$190

$175

  % Change from previous Qtr.

3.1%

-8.7%

-2.4%

-7.8%

-7.9%

Service revenue – total

$117,203

$119,777

$122,969

$125,226

$128,706

  % Change from previous Qtr.

1.4%

2.2%

2.7%

1.8%

2.8%

Constant currency total
revenue quarterly growth
rate – sequential quarters (4)

1.6%

1.7%

1.2%

1.8%

2.0%

Constant currency total
revenue quarterly growth
rate – year over year quarters
(4)

8.7%

9.6%

7.7%

6.6%

7.0%

Network operations
expenses (2)

$50,551

$50,974

$53,405

$53,745

$54,686

  % Change from previous Qtr.

1.2%

0.8%

4.8%

0.6%

1.8%

GAAP gross profit (3)

$48,003

$49,765

$50,238

$51,964

$54,043

  % Change from previous Qtr.

5.7%

3.7%

1.0%

3.4%

4.0%

GAAP gross margin (3)

41.0%

41.5%

40.9%

41.5%

42.0%

Non-GAAP gross profit (4) (6)

$66,652

$68,803

$69,564

$71,481

$74,020

  % Change from previous Qtr.

1.5%

3.2%

1.1%

2.8%

3.6%

Non-GAAP gross margin (4) (6)

56.9%

57.4%

56.6%

57.1%

57.5%

Selling, general and administrative expenses (5)

$28,925

$28,704

$29,360

$28,238

$29,928

  % Change from previous Qtr.

1.2%

-0.8%

2.3%

-3.8%

6.0%

Depreciation and
amortization expense

$18,538

$18,897

$19,147

$19,344

$19,788

  % Change from previous Qtr.

-7.6%

1.9%

1.3%

1.0%

2.3%

Equity-based compensation expense

$2,647

$3,225

$3,734

$3,684

$3,784

  % Change from previous Qtr.

-8.0%

21.8%

15.8%

-1.3%

2.7%

Operating income

$18,666

$19,000

$17,891

$20,534

$20,637

  % Change from previous Qtr.

26.2%

1.8%

-5.8%

14.8%

0.5%

Interest expense

$11,891

$12,090

$12,266

$12,222

$12,408

  % Change from previous Qtr.

12.2%

1.7%

1.5%

-0.4%

1.5%

Net income (loss)

$4,136

$4,317

$3,650

$(6,227)

$6,784

Basic net income (loss) per common share

$0.09

$0.10

$0.08

$(0.14)

$0.15

Diluted net income (loss) per common share

$0.09

$0.10

$0.08

$(0.14)

$0.15

Weighted average common shares – basic

44,649,645

44,717,372

44,767,163

44,844,469

44,923,973

  % Change from previous Qtr.

0.2%

0.2%

0.1%

0.2%

0.2%

Weighted average common shares – diluted

44,917,014

44,988,655

45,118,607

44,844,469

45,294,697

  % Change from previous Qtr.

0.3%

0.2%

0.3%

-0.6%

1.0%

EBITDA (6)

$37,727

$40,099

$40,204

$43,243

$44,092

  % Change from previous Qtr.

1.8%

6.3%

0.3%

7.6%

2.0%

EBITDA margin

32.2%

33.5%

32.7%

34.5%

34.3%

Gains on asset related transactions

$2,124

$1,023

$397

$319

$117

EBITDA, as adjusted (6)

$39,851

$41,122

$40,601

$43,562

$44,209

  % Change from previous Qtr.

5.6%

3.2%

-1.3%

7.3%

1.5%

EBITDA, as adjusted, margin

34.0%

34.3%

33.0%

34.8%

34.3%

 Fees – net neutrality

$2

$188

$824

$260

$14

Net cash provided by operating activities

$23,514

$28,045

$28,783

$31,360

$30,179

  % Change from previous Qtr.

-30.6%

19.3%

2.6%

9.0%

-3.8%

Capital expenditures

$12,249

$12,007

$10,927

$10,618

$14,905

  % Change from previous Qtr.

70.2%

-2.0%

-9.0%

-2.8%

40.4%

Principal payments on capital leases

$3,854

$2,194

$3,320

$1,833

$2,304

  % Change from previous Qtr.

37.3%

-43.1%

51.3%

-44.8%

25.7%

Dividends paid

$18,999

$19,946

$20,879

$21,833

$22,819

Purchases of common stock

$ -

$ 1,829

$ -

$ -

$ -

Gross Leverage Ratio

4.64

4.62

4.57

4.44

4.33

Net Leverage Ratio

2.94

2.98

3.00

2.94

2.94

Customer Connections – end of period






On-Net

54,805

57,307

59,357

61,334

63,366

  % Change from previous Qtr.

3.7%

4.6%

3.6%

3.3%

3.3%

Off-Net

9,055

9,355

9,724

9,953

10,241

  % Change from previous Qtr.

5.3%

3.1%

4.2%

2.4%

2.9%

Non-Core (1)

383

340

336

326

307

  % Change from previous Qtr.

9.4%

-11.2%

-1.2%

-3.0%

-5.8%

Total customer connections

64,243

66,982

69,417

71,613

73,194

  % Change from previous Qtr.

3.9%

4.3%

3.6%

3.2%

3.2%

On-Net Buildings – end of period






Multi-Tenant office buildings

1,601

1,618

1,635

1,653

1,672

Carrier neutral data center buildings

752

767

784

800

816

Cogent data centers

53

53

53

53

53

Total on-net buildings

2,406

2,438

2,472

2,506

2,541

Square feet – multi-tenant office buildings – on-net

864,432,176

872,293,092

881,184,145

893,580,297

911,283,287

Network  – end of period






Intercity route miles

57,213

57,403

57,403

57,403

57,403

Metro fiber miles

30,190

30,516

31,071

31,254

31,850

Connected networks – AS's

5,949

5,983

6,076

6,152

6,247

Headcount – end of period






Sales force – quota bearing

432

434

444

455

432

Sales force - total

554

559

565

574

555

Total employees

900

909

919

929

908

Sales rep productivity – units per full time equivalent sales rep ("FTE") per month

6.1

6.5

5.7

5.8

5.7

FTE – sales reps

416

410

420

429

427




(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 $111, $141, $179, $173 and $189 in the three month periods ended March 31, 2017 through March 31, 2018, respectively.  Network operations expense includes excise taxes, including Universal Service Fund fees of $2,604, $2,672, $2,691, $2,943 and $3,157 in the three month periods ended March 31, 2017 through March 31, 2018, 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 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 $2,536, $3,084, $3,555, $3,511 and $3,595 in the three month periods ended March 31, 2017 through March 31, 2018, respectively. 

(6)

See schedule of non-GAAP metrics below for definitions and reconciliations to GAAP measures below.

 

Schedules of Non-GAAP Measures 

EBITDA and EBITDA, as adjusted

EBITDA represents net cash flows from 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 cash flows 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 cash flows provided by operating activities in the table below.


Q1

2017

Q2

2017

Q3

2017

Q4

2017

Q1
2018

($ in 000's) – unaudited






Net cash flows provided by operating
activities

$23,514

$28,045

$28,783

$31,360

$30,179

Changes in operating assets and
liabilities

3,192

950

721

300

2,919

Cash interest expense and income tax
expense

11,021

11,104

10,700

11,583

10,994

EBITDA

$37,727

$40,099

$40,204

$43,243

$44,092

PLUS: Gains on asset related transactions

2,124

1,023

397

319

117

EBITDA, as adjusted

$39,851

$41,122

$40,601

$43,562

$44,209

EBITDA margin

32.2%

33.5%

32.7%

34.5%

34.3%

EBITDA, as adjusted, margin

34.0%

34.3%

33.0%

34.8%

34.3%

 

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

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Service revenue, as reported –
current period

$117,203

$119,777

$122,969

$125,226

$128,706

Impact of foreign currencies on

service revenue

195

(531)

(1,701)

16

(981)

Service revenue - as adjusted
for currency impact (1)

$117,398

$119,246

$121,268

$125,242

$127,725

Service revenue, as reported –
prior sequential period

$115,596

$117,203

$119,777

$122,969

$125,226

Constant currency increase

$1,802

$2,043

$1,491

$2,273

$2,499

Constant currency percent
increase

1.6%

1.7%

1.2%

1.8%

2.0%



(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

2017

Q2

2017

Q3

2017

Q4

2017

Q1

2018

Service revenue, as reported
– current period

$117,203

$119,777

$122,969

$125,226

$128,706

Impact of foreign currencies
on service revenue

503

743

(1,257)

(2,055)

(3,280)

Service revenue - as adjusted
for currency impact  (2)

$117,706

$120,520

$121,712

$123,171

$125,426

Service revenue, as reported
– prior year period

$108,291

$109,955

$113,057

$115,596

$117,203

Constant currency increase

$9,415

$10,565

$8,655

$7,575

$8,223

Percent increase

8.7%

9.6%

7.7%

6.6%

7.0%



(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 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 2017

Q2 2017

Q3 2017

Q4 2017

Q1 2018

($ in 000's) – unaudited






Service revenue total

$117,203

$119,777

$122,969

$125,226

$128,706

Minus - Network operations expense including equity-based compensation and including depreciation and amortization expense

69,200

70,012

72,731

73,262

74,663

GAAP Gross Profit (1)

$48,003

$49,765

$50,238

$51,964

$54,043

Plus  - Equity-based compensation – network operations expense

111

141

179

173

189

Plus – Depreciation and amortization expense

18,538

18,897

19,147

19,344

19,788

Non-GAAP Gross Profit (2)

$66,652

$68,803

$69,564

$71,481

$74,020

GAAP Gross Margin (1)

41.0%

41.5%

40.9%

41.5%

42.0%

Non-GAAP Gross Margin (2)

56.9%

57.4%

56.6%

57.1%

57.5%



(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 was 4.44 at December 31, 2017 and 4.33 at March 31, 2018 and Cogent's net leverage ratio was 2.94 at December 31, 2017 and 2.94 at March 31, 2018 and as shown below.

($ in 000's) – unaudited

As of December 31, 2017

As of March 31, 2018

Cash and cash equivalents

$247,011

$236,026

Debt



Capital leases – current portion

7,171

7,003

Capital leases – long term

150,333

150,939

Senior unsecured notes

189,225

189,225

Senior secured notes

375,000

375,000

Note payable

10,748

11,349

Total debt

732,477

733,516

Total net debt

485,466

497,490

Trailing 12 months EBITDA, as adjusted

165,136

169,494

Gross leverage ratio

4.44

4.33

Net leverage ratio

2.94

2.94

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, 2018 AND DECEMBER 31, 2017

(IN THOUSANDS, EXCEPT SHARE DATA)




March 31,
2018


December 31,
2017




(Unaudited)




Assets






Current assets:






Cash and cash equivalents


$

236,026


$

247,011


Accounts receivable, net of allowance for doubtful accounts of $1,110 and $1,499,
     respectively


38,015


39,096


Prepaid expenses and other current assets


33,508


20,011


Total current assets


307,549


306,118


Property and equipment, net


385,770


381,282


Deferred tax assets


11,241


17,616


Deposits and other assets - $756 and $736 restricted, respectively


11,893


5,572


Total assets


$

716,453


$

710,588








Liabilities and stockholders' equity






Current liabilities:






Accounts payable


$

12,964


$

11,592


Accrued and other current liabilities


46,198


47,947


Installment payment agreement, current portion, net of discount of $355 and $337, 
     respectively


8,309


7,816


Current maturities, capital lease obligations


7,003


7,171


Total current liabilities


74,474


74,526


Senior secured 2022 notes, net of unamortized debt costs of $1,769 and $1,870,
     respectively and including premium of $360 and $382, respectively


373,591


373,512


Senior unsecured 2021 notes, net of unamortized debt costs of $1,917 and $2,060, 
     respectively


187,308


187,165


Capital lease obligations, net of current maturities


150,939


150,333


Other long term liabilities


27,196


27,596


Total liabilities


813,508


813,132


Commitments and contingencies:






Stockholders' equity:






Common stock, $0.001 par value; 75,000,000 shares authorized; 46,283,140 and 
     45,960,799 shares issued and outstanding, respectively


46


46


Additional paid-in capital


461,154


456,696


Accumulated other comprehensive income — foreign currency translation


(1,989)


(4,600)


Accumulated deficit


(556,266)


(554,686)


Total stockholders' deficit


(97,055)


(102,544)


Total liabilities and stockholders' deficit


$

716,453


$

710,588








COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND MARCH 31, 2017

(IN THOUSANDS, EXCEPT SHARE AND PER SHARE AMOUNTS)





Three Months
Ended
March 31, 2018


Three Months
Ended
March 31, 2017




(Unaudited)


(Unaudited)


Service revenue


$

128,706


$

117,203


Operating expenses:






Network operations (including $189 and $111 of equity-based compensation
     expense, respectively, exclusive of depreciation and amortization shown
     separately below)


54,875


50,662


Selling, general, and administrative (including $3,595 and $2,536 of equity-based
     compensation expense, respectively)


33,523


31,461


Depreciation and amortization


19,788


18,538


Total operating expenses


108,186


100,661


Gains on equipment transactions


117


2,124


Operating income


20,637


18,666


Interest income and other, net


1,694


854


Interest expense


(12,408)


(11,891)


Income before income taxes


9,923


7,629


Income tax provision


(3,139)


(3,493)


Net income


$

6,784


$

4,136








Comprehensive income:






Net income


$

6,784


$

4,136


Foreign currency translation adjustment


2,611


1,328


Comprehensive income


$

9,395


$

5,464








Net income per common share:






Basic and diluted net income per common share


$

0.15


$

0.09








Dividends declared per common share


$

0.50


$

0.42








Weighted-average common shares - basic


44,923,973


44,649,645








Weighted-average common shares - diluted


45,294,697


44,917,014














COGENT COMMUNICATIONS HOLDINGS, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND MARCH 31, 2017

(IN THOUSANDS)





Three months
Ended
March 31, 2018


Three months
Ended
March 31, 2017




(Unaudited)


(Unaudited)


Cash flows from operating activities:






Net income


$

6,784


$

4,136


Adjustments to reconcile net income to net cash provided by operating activities:






Depreciation and amortization


19,788


18,538


Amortization of debt discount and premium


370


280


Equity-based compensation expense (net of amounts capitalized)


3,784


2,647


Gains — equipment transactions and other, net


(484)


(2,172)


Deferred income taxes


2,623


3,229


Changes in operating assets and liabilities:






Accounts receivable


1,355


43


Prepaid expenses and other current assets


(1,213)


(1,067)


Accounts payable, accrued liabilities and other long-term liabilities


(2,005)


(1,660)


Deposits and other assets


(823)


(460)


Net cash provided by operating activities


30,179


23,514


Cash flows from investing activities:






Purchases of property and equipment


(14,905)


(12,249)


Net cash used in investing activities


(14,905)


(12,249)


Cash flows from financing activities:






Dividends paid


(22,819)


(18,999)


Proceeds from exercises of stock options


297


300


Principal payments on installment payment agreement


(1,965)


(218)


Principal payments of capital lease obligations


(2,304)


(3,854)


Net cash used in financing activities


(26,791)


(22,771)


Effect of exchange rates changes on cash


532


383


Net decrease in cash and cash equivalents


(10,985)


(11,123)


Cash and cash equivalents, beginning of period


247,011


274,319


Cash and cash equivalents, end of period


$

236,026


$

263,196








 

 

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 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 report on Form 10-Q  for the quarter ended March 31, 2018 to be filed with the Securities and Exchange Commission. 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. 

Cision View original content with multimedia:http://www.prnewswire.com/news-releases/cogent-communications-reports-first-quarter-2018-results-and-increases-regular-quarterly-dividend-on-common-stock-300641480.html

SOURCE Cogent Communications Holdings, Inc.


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