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Cogeco Communications Releases its Financial Results for the Second Quarter of Fiscal 2025

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Three-year transformation program fully underway.Canadian wireless launch preparation on track, with customer pre-registration now ongoing.Year-over-year increase in customer satisfaction, in both Canada and the United States.Fiscal 2025 financial guidelines maintained.A quarterly dividend of $0.922 per share was declared, representing an 8.0% increase over the prior year.

MONTRÉAL, April 9, 2025 /CNW/ – Today, Cogeco Communications Inc. (TSX: CCA) (“Cogeco Communications” or the “Corporation”) announced its financial results for the second quarter ended February 28, 2025.

“Our results for the second quarter of fiscal 2025 demonstrate that our new operating model, focused on increasing our agility and competitiveness, is gaining traction,” stated Frédéric Perron, President and CEO. “We are particularly pleased with the progress we are making on our transformation initiatives, leading to increased customer satisfaction, while alleviating industry revenue headwinds with ongoing cost reductions.

“Our Internet subscriber growth in Canada remained strong, driven by both our Cogeco and oxio brands. We continued to see modest sequential improvements in Internet subscriber metrics in the U.S., began scaling up our U.S. wireless sales, and kept our Canadian wireless launch preparation on schedule.

“Our three-year transformation centered on synergies, digitization, advanced analytics, wireless, and network expansion is beginning to bear fruit. We thank our employees for their hard work and dedication, and our customers and stakeholders for their ongoing support.”

Consolidated Financial Highlights

Three months ended

February 28,
2025

February 29,
2024

(1)

Change

Change in

constant
currency

(2)

(In thousands of Canadian dollars, except % and per share data) (unaudited)

$

$

%

%

Revenue

732,426

730,501

0.3

(2.7)

Adjusted EBITDA (2)

356,499

347,112

2.7

(0.1)

Adjusted EBITDA margin (2)

48.7 %

47.5 %

Profit for the period

79,637

96,562

(17.5)

Profit for the period attributable to owners of the Corporation

74,674

93,681

(20.3)

Adjusted profit attributable to owners of the Corporation (2)(3)

80,693

94,054

(14.2)

Cash flows from operating activities

253,212

285,434

(11.3)

Free cash flow (1)(2)

116,603

101,799

14.5

12.8

Free cash flow, excluding network expansion projects (1)(2)

132,176

126,189

4.7

3.3

Acquisition of property, plant and equipment

159,371

180,247

(11.6)

Net capital expenditures (2)(4)

157,895

170,769

(7.5)

(10.7)

Net capital expenditures, excluding network expansion projects (2)

142,322

146,379

(2.8)

(6.4)

Capital intensity (2)

21.6 %

23.4 %

Capital intensity, excluding network expansion projects (2)

19.4 %

20.0 %

Diluted earnings per share

1.76

2.20

(20.0)

Adjusted diluted earnings per share (2)(3)

1.90

2.21

(14.0)

Operating results

For the second quarter of fiscal 2025 ended on February 28, 2025:

Revenue increased by 0.3% to $732.4 million. On a constant currency basis(2), revenue decreased by 2.7%, mainly explained as follows:American telecommunications’ revenue decreased by 4.5% on a constant currency basis (increase of 1.5% as reported), mainly due to a decline in our subscriber base, especially for entry-level services, and to a higher proportion of customers subscribing to Internet-only services. The decline was offset in part by a better product mix.Canadian telecommunications’ revenue decreased by 0.9%, mainly due to a lower revenue per customer as a result of a decline in video and wireline phone service subscribers as an increasing proportion of customers subscribe to Internet-only services, as well as a competitive pricing environment, partly offset by the cumulative effect of high-speed Internet service additions over the past years, including from network expansion projects, as well as from the Niagara Regional Broadband Network acquisition completed on February 5, 2024.Adjusted EBITDA increased by 2.7% to $356.5 million. On a constant currency basis, adjusted EBITDA remained stable, driven by cost reduction initiatives and operating efficiencies across the Corporation as a result of our ongoing transformation program, offset by lower revenue in both the American and Canadian telecommunications segments, and higher operating expenses in the Canadian telecommunications segment, in part to drive subscriber growth.Canadian telecommunications adjusted EBITDA decreased by 3.2%, or 2.8% in constant currency.American telecommunications adjusted EBITDA increased by 6.8%, or 0.5% in constant currency.Profit for the period amounted to $79.6 million, of which $74.7 million, or $1.76 per diluted share, was attributable to owners of the Corporation compared to $96.6 million, $93.7 million, and $2.20 per diluted share, respectively, in the comparable period of fiscal 2024. The decreases in profit for the period and profit attributable to owners of the Corporation resulted mainly from higher depreciation and amortization expense, acquisition, integration, restructuring and other costs and income tax expense, partly offset by lower financial expense and the impact of the appreciation of the US dollar against the Canadian dollar.Adjusted profit attributable to owners of the Corporation(3) was $80.7 million, or $1.90 per diluted share(3), compared to $94.1 million, or $2.21 per diluted share, last year.Net capital expenditures were $157.9 million, a decrease of 7.5% compared to $170.8 million in the same period of the prior year. In constant currency, net capital expenditures(2) were $152.6 million, a decrease of 10.7% compared to last year, mainly due to lower spending in the Canadian telecommunications segment, primarily resulting from lower capital spending related to customer premise equipment and the timing of certain initiatives, offset in part by higher spending in the American telecommunications segment, mainly due to higher costs in relation to customer premise equipment.Excluding network expansion projects, net capital expenditures were $142.3 million, a decrease of 2.8% compared to $146.4 million in the same period of the prior year. In constant currency, net capital expenditures, excluding network expansion projects(2) were $137.1 million, a decrease of 6.4% compared to last year, mainly due to the same factors as above.Fibre-to-the-home network expansion projects continued, mostly in Canada, with the addition of close to 7,000 homes passed during the second quarter of fiscal 2025.Capital intensity was 21.6% compared to 23.4% last year. Excluding network expansion projects, capital intensity was 19.4% compared to 20.0% in the same period of the prior year.Acquisition of property, plant and equipment decreased by 11.6% to $159.4 million, mainly resulting from lower spending.Free cash flow(1) increased by 14.5%, or 12.8% in constant currency, and amounted to $116.6 million, or $114.8 million in constant currency(2), mainly due to lower net capital expenditures and financial expense, offset in part by higher acquisition, integration, restructuring and other costs. Free cash flow, excluding network expansion projects(1) increased by 4.7%, or 3.3% in constant currency, and amounted to $132.2 million, or $130.3 million in constant currency.Cash flows from operating activities decreased by 11.3% to $253.2 million, mostly due to lower cash from other non-cash operating activities, primarily due to the timing of payments of trade and other payables, as well as the timing of grants received in connection with network expansion projects and the collection of trade accounts receivable, and higher income taxes paid, partly offset by lower interest paid.Cogeco Communications maintains its fiscal 2025 financial guidelines as issued on October 31, 2024.At its April 9, 2025 meeting, the Board of Directors of Cogeco Communications declared a quarterly eligible dividend of $0.922 per share, an increase of 8.0% compared to $0.854 per share in the comparable quarter of fiscal 2024.

___________________________

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its calculation of free cash flow and free cash flow, excluding network expansion projects, to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Comparative figures were restated to conform to the current presentation. For further details, please refer to the “Non-IFRS Accounting Standards and other financial measures” section of this press release.

(2)

Adjusted EBITDA and net capital expenditures are total of segments measures. Adjusted EBITDA margin and capital intensity are supplementary financial measures. Constant currency basis, adjusted profit attributable to owners of the Corporation, net capital expenditures, excluding network expansion projects, free cash flow and free cash flow, excluding network expansion projects are non-IFRS Accounting Standards measures. Change in constant currency, capital intensity, excluding network expansion projects and adjusted diluted earnings per share are non-IFRS Accounting Standards ratios. These indicated terms do not have standardized definitions prescribed by IFRS® Accounting Standards, as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and therefore, may not be comparable to similar measures presented by other companies. For more information on these financial measures, please consult the “Non-IFRS Accounting Standards and other financial measures” section of this press release.

(3)

Excludes the impact of acquisition, integration, restructuring and other costs, net of tax and non-controlling interest.

(4)

Net capital expenditures exclude non-cash acquisitions of right-of-use assets and the purchases, and related borrowing costs, of spectrum licences, and are presented net of government subsidies, including the utilization of those received in advance.

Financial highlights

Change in

constant
currency

Change in

constant
currency

Three and six months ended

February 28, 2025

February 29, 2024

(1)

Change

(2)  (3)

February 28, 2025

February 29, 2024

(1)

Change

(2)  (3)

(In thousands of Canadian dollars, except % and per share data)

$

$

%

%

$

$

%

%

Operations

Revenue

732,426

730,501

0.3

(2.7)

1,471,121

1,478,190

(0.5)

(2.1)

Adjusted EBITDA (3)

356,499

347,112

2.7

(0.1)

721,714

706,072

2.2

0.6

Adjusted EBITDA margin (3)

48.7 %

47.5 %

49.1 %

47.8 %

Acquisition, integration, restructuring and other costs (gains) (4)

8,035

885

—

(1,923)

3,501

—

Profit for the period

79,637

96,562

(17.5)

186,797

192,314

(2.9)

Profit for the period attributable to owners of the Corporation

74,674

93,681

(20.3)

175,262

183,174

(4.3)

Adjusted profit attributable to owners of the Corporation (3)(5)

80,693

94,054

(14.2)

171,367

197,780

(13.4)

Cash flow

Cash flows from operating activities

253,212

285,434

(11.3)

472,077

522,416

(9.6)

Free cash flow (1)(3)

116,603

101,799

14.5

12.8

265,461

239,647

10.8

10.0

Free cash flow, excluding network expansion projects (1)(3)

132,176

126,189

4.7

3.3

302,833

295,697

2.4

1.7

Acquisition of property, plant and equipment

159,371

180,247

(11.6)

312,614

333,796

(6.3)

Net capital expenditures (3)(6)

157,895

170,769

(7.5)

(10.7)

308,540

317,196

(2.7)

(4.6)

Net capital expenditures, excluding network expansion projects (3)

142,322

146,379

(2.8)

(6.4)

271,168

261,146

3.8

1.6

Capital intensity (3)

21.6 %

23.4 %

21.0 %

21.5 %

Capital intensity, excluding network expansion projects (3)

19.4 %

20.0 %

18.4 %

17.7 %

Per share data (7)

Earnings per share

Basic

1.77

2.21

(19.9)

4.17

4.23

(1.4)

Diluted

1.76

2.20

(20.0)

4.13

4.21

(1.9)

Adjusted diluted (3)(5)

1.90

2.21

(14.0)

4.04

4.55

(11.2)

Dividends per share

0.922

0.854

8.0

1.844

1.708

8.0

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its calculation of free cash flow and free cash flow, excluding network expansion projects, to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Proceeds from sale and leaseback and other disposals of property, plant and equipment amounted to $0.9 million and $20.5 million for the three and six-month periods ended February 28, 2025, respectively ($1.6 million and $1.9 million, respectively, for the same periods of fiscal 2024). Comparative figures were restated to conform to the current presentation. For further details, please refer to the “Non-IFRS Accounting Standards and other financial measures” section of this press release.

(2)

Key performance indicators presented on a constant currency basis are obtained by translating financial results from the current periods denominated in US dollars at the foreign exchange rates of the comparable periods of the prior year. For the three and six-month periods ended February 29, 2024, the average foreign exchange rates used for translation were 1.3452 USD/CDN and 1.3553 USD/CDN, respectively.

(3)

Adjusted EBITDA and net capital expenditures are total of segments measures. Adjusted EBITDA margin and capital intensity are supplementary financial measures. Adjusted profit attributable to owners of the Corporation, free cash flow, free cash flow, excluding network expansion projects and net capital expenditures, excluding network expansion projects are non-IFRS Accounting Standards measures. Change in constant currency, capital intensity, excluding network expansion projects and adjusted diluted earnings per share are non-IFRS Accounting Standards ratios. These indicated terms do not have standardized definitions prescribed by IFRS Accounting Standards and therefore, may not be comparable to similar measures presented by other companies. For more information on these financial measures, please consult the “Non-IFRS Accounting Standards and other financial measures” section of this press release.

(4)

For the three-month period ended February 28, 2025, acquisition, integration, restructuring and other costs were mainly related to restructuring costs incurred, mostly in connection with additional costs related to the new organizational structure announced in May 2024 and other cost optimization initiatives, as well as costs associated with the configuration and customization related to cloud computing and other arrangements. For the six-month period ended February 28, 2025, acquisition, integration, restructuring and other costs (gains) were mostly related to a $13.8 million non-cash gain recognized during the first quarter of fiscal 2025 in connection with a sale and leaseback transaction of a building in Ontario, offset in part by restructuring costs incurred and costs associated with the configuration and customization related to cloud computing and other arrangements. For the three and six-month periods ended February 29, 2024, acquisition, integration, restructuring and other costs were mostly related to costs associated with the configuration and customization related to cloud computing and other arrangements, partly offset by a $4.2 million reversal of a charge, recognized during the second quarter following the Copyright Board decision issued in January 2024 on the redetermination of the 2014-2018 royalty rates.

(5)

Excludes the impact of acquisition, integration, restructuring and other costs (gains), and gains/losses on debt modification and/or extinguishment, all net of tax and non-controlling interest.

(6)

Net capital expenditures exclude non-cash acquisitions of right-of-use assets and the purchases, and related borrowing costs, of spectrum licences, and are presented net of government subsidies, including the utilization of those received in advance.

(7)

Per multiple and subordinate voting share.

 

As at

February 28, 2025

August 31, 2024

(In thousands of Canadian dollars)

$

$

Financial condition

Cash and cash equivalents

141,073

76,335

Total assets

10,152,322

9,675,009

Long-term debt

Current

353,486

361,808

Non-current

4,688,512

4,448,261

Net indebtedness (1)

4,971,544

4,803,629

Equity attributable to owners of the Corporation

3,176,747

2,979,691

(1)

Net indebtedness is a capital management measure. For more information on this financial measure, please consult the “Non-IFRS Accounting Standards and other financial measures” section of the Corporation’s MD&A for the three and six-month periods ended February 28, 2025, available on SEDAR+ at www.sedarplus.ca.

Forward-looking statements

Certain statements contained in this press release may constitute forward-looking information within the meaning of securities laws. Forward-looking information may relate to Cogeco Communications Inc.’s (“Cogeco Communications” or the “Corporation”) future outlook and anticipated events, business, operations, financial performance, financial condition or results and, in some cases, can be identified by terminology such as “may”; “will”; “should”; “expect”; “plan”; “anticipate”; “believe”; “intend”; “estimate”; “predict”; “potential”; “continue”; “foresee”; “ensure” or other similar expressions concerning matters that are not historical facts. Particularly, statements relating to the Corporation’s financial guidelines, future operating results and economic performance, objectives and strategies are forward-looking statements. These statements are based on certain factors and assumptions including expected growth, results of operations, purchase price allocation, tax rates, weighted average cost of capital, performance and business prospects and opportunities, which Cogeco Communications believes are reasonable as of the current date. Refer in particular to the “Corporate objectives and strategy” and “Fiscal 2025 financial guidelines” sections of the Corporation’s fiscal 2024 annual Management’s Discussion and Analysis (“MD&A”) for a discussion of certain key economic, market and operational assumptions we have made in preparing forward-looking statements. While management considers these assumptions to be reasonable based on information currently available to the Corporation, they may prove to be incorrect. Forward-looking information is also subject to certain factors, including risks and uncertainties that could cause actual results to differ materially from what Cogeco Communications currently expects. These factors include risks such as general market conditions, competitive risks (including changing competitive and technology ecosystems and disruptive competitive strategies adopted by our competitors), business risks, regulatory risks, tax risks, technology risks (including cybersecurity), financial risks (including variations in currency and interest rates), economic conditions (including inflation pressuring revenue, trade tariffs, reduced consumer spending and increasing costs), talent management risks (including the highly competitive market for a limited pool of digitally skilled employees), human-caused and natural threats to the Corporation’s network (including increased frequency of extreme weather events with the potential to disrupt operations), infrastructure and systems, sustainability and sustainability reporting risks, ethical behavior risks, ownership risks, litigation risks and public health and safety, many of which are beyond the Corporation’s control. For more exhaustive information on these risks and uncertainties, the reader should refer to the “Uncertainties and main risk factors” section of the Corporation’s fiscal 2024 annual MD&A and of the fiscal 2025 second-quarter MD&A. These factors are not intended to represent a complete list of the factors that could affect Cogeco Communications and future events and results may vary significantly from what management currently foresees. The reader should not place undue importance on forward-looking information contained in this press release and the forward-looking statements contained in this press release represent Cogeco Communications’ expectations as of the date of this press release (or as of the date they are otherwise stated to be made) and are subject to change after such date. While management may elect to do so, the Corporation is under no obligation (and expressly disclaims any such obligation) and does not undertake to update or alter this information at any particular time, whether as a result of new information, future events or otherwise, except as required by law.

All amounts are stated in Canadian dollars unless otherwise indicated. This press release should be read in conjunction with the Corporation’s MD&A for the three and six-month periods ended February 28, 2025, the Corporation’s condensed interim consolidated financial statements and the notes thereto for the same periods prepared in accordance with IFRS® Accounting Standards as issued by the International Accounting Standards Board (“IFRS Accounting Standards”) and the Corporation’s fiscal 2024 Annual Report.

Non-IFRS Accounting Standards and other financial measures

This press release includes references to non-IFRS Accounting Standards and other financial measures used by Cogeco Communications. These financial measures are reviewed in assessing the performance of Cogeco Communications and used in the decision-making process with regard to its business units.

Reconciliations between non-IFRS Accounting Standards and other financial measures to the most directly comparable IFRS Accounting Standards measures are provided below. Certain additional disclosures for non-IFRS Accounting Standards and other financial measures used in this press release have been incorporated by reference and can be found in the “Non-IFRS Accounting Standards and other financial measures” section of the Corporation’s MD&A for the three and six-month periods ended February 28, 2025, available on SEDAR+ at www.sedarplus.ca. The following non-IFRS Accounting Standards measures are used as a component of Cogeco Communications’ non-IFRS Accounting Standards ratios.

Specified non-IFRS Accounting Standards measures

Used in the component of the following non-IFRS Accounting Standards ratios

Adjusted profit attributable to owners of the Corporation

Adjusted diluted earnings per share

Constant currency basis

Change in constant currency

Net capital expenditures, excluding network expansion projects

Capital intensity, excluding network expansion projects

Financial measures presented on a constant currency basis for the three and six-month periods ended February 28, 2025 are translated at the average foreign exchange rate of the comparable periods of the prior year, which were 1.3452 USD/CDN and 1.3553 USD/CDN, respectively.

Constant currency basis and foreign exchange impact reconciliation

Consolidated

Three months ended

February 28, 2025

February 29, 2024

(1)

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Revenue

732,426

(21,406)

711,020

730,501

0.3

(2.7)

Operating expenses

371,006

(11,558)

359,448

378,151

(1.9)

(4.9)

Management fees – Cogeco Inc.

4,921

—

4,921

5,238

(6.1)

(6.1)

Adjusted EBITDA

356,499

(9,848)

346,651

347,112

2.7

(0.1)

Free cash flow (1)

116,603

(1,760)

114,843

101,799

14.5

12.8

Net capital expenditures

157,895

(5,343)

152,552

170,769

(7.5)

(10.7)

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its free cash flow calculation to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Comparative figures were restated to conform to the current presentation.

 

Six months ended

February 28, 2025

February 29, 2024

(1)

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Revenue

1,471,121

(24,129)

1,446,992

1,478,190

(0.5)

(2.1)

Operating expenses

739,564

(12,998)

726,566

761,642

(2.9)

(4.6)

Management fees – Cogeco Inc.

9,843

—

9,843

10,476

(6.0)

(6.0)

Adjusted EBITDA

721,714

(11,131)

710,583

706,072

2.2

0.6

Free cash flow (1)

265,461

(1,964)

263,497

239,647

10.8

10.0

Net capital expenditures

308,540

(6,030)

302,510

317,196

(2.7)

(4.6)

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its free cash flow calculation to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Comparative figures were restated to conform to the current presentation.

Canadian telecommunications segment

Three months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Revenue

370,211

—

370,211

373,479

(0.9)

(0.9)

Operating expenses

177,719

(634)

177,085

174,720

1.7

1.4

Adjusted EBITDA

192,492

634

193,126

198,759

(3.2)

(2.8)

Net capital expenditures

74,108

(580)

73,528

106,345

(30.3)

(30.9)

 

Six months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Revenue

747,477

—

747,477

749,927

(0.3)

(0.3)

Operating expenses

355,507

(731)

354,776

354,814

0.2

—

Adjusted EBITDA

391,970

731

392,701

395,113

(0.8)

(0.6)

Net capital expenditures

148,269

(700)

147,569

194,181

(23.6)

(24.0)

American telecommunications segment

Three months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Revenue

362,215

(21,406)

340,809

357,022

1.5

(4.5)

Operating expenses

184,506

(10,911)

173,595

190,672

(3.2)

(9.0)

Adjusted EBITDA

177,709

(10,495)

167,214

166,350

6.8

0.5

Net capital expenditures

80,402

(4,756)

75,646

62,855

27.9

20.4

 

Six months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Revenue

723,644

(24,129)

699,515

728,263

(0.6)

(3.9)

Operating expenses

367,123

(12,255)

354,868

383,743

(4.3)

(7.5)

Adjusted EBITDA

356,521

(11,874)

344,647

344,520

3.5

—

Net capital expenditures

154,129

(5,319)

148,810

118,708

29.8

25.4

Adjusted profit attributable to owners of the Corporation

Three months ended

Six months ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(In thousands of Canadian dollars)

$

$

$

$

Profit for the period attributable to owners of the Corporation

74,674

93,681

175,262

183,174

Acquisition, integration, restructuring and other costs (gains)

8,035

885

(1,923)

3,501

Loss on debt extinguishment (1)

—

—

—

16,880

Tax impact for the above items

(1,861)

(219)

(1,580)

(5,380)

Non-controlling interest impact for the above items

(155)

(293)

(392)

(395)

Adjusted profit attributable to owners of the Corporation

80,693

94,054

171,367

197,780

(1)

Included within financial expense.

Free cash flow and free cash flow, excluding network expansion projects reconciliations

Three months ended

Six months ended

February 28, 2025

February 29, 2024

(1)

February 28, 2025

February 29, 2024

(1)

(In thousands of Canadian dollars)

$

$

$

$

Cash flows from operating activities

253,212

285,434

472,077

522,416

Changes in other non-cash operating activities

24,343

2,253

98,517

55,188

Income taxes paid (received)

7,443

(7,628)

14,082

(4,725)

Current income taxes

(9,670)

(9,189)

(24,298)

(16,417)

Interest paid

62,195

68,288

123,666

132,260

Financial expense

(63,003)

(68,163)

(128,492)

(151,457)

Loss on debt extinguishment (2)

—

—

—

16,880

Amortization of deferred transaction costs and discounts on long-term debt (2)

2,228

2,007

3,692

4,681

Net capital expenditures (3)

(157,895)

(170,769)

(308,540)

(317,196)

Proceeds from sale and leaseback and other disposals of property, plant and equipment (1)

931

1,644

20,544

1,899

Repayment of lease liabilities

(3,181)

(2,078)

(5,787)

(3,882)

Free cash flow (1)

116,603

101,799

265,461

239,647

Net capital expenditures in connection with network expansion projects

15,573

24,390

37,372

56,050

Free cash flow, excluding network expansion projects (1)

132,176

126,189

302,833

295,697

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its calculation of free cash flow and free cash flow, excluding network expansion projects, to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Comparative figures were restated to conform to the current presentation.

(2)

Included within financial expense.

(3)

Net capital expenditures exclude non-cash acquisitions of right-of-use assets and the purchases, and related borrowing costs, of spectrum licences, and are presented net of government subsidies, including the utilization of those received in advance.

Net capital expenditures reconciliation

Three months ended

Six months ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(In thousands of Canadian dollars)

$

$

$

$

Acquisition of property, plant and equipment

159,371

180,247

312,614

333,796

Subsidies received in advance recognized as a reduction of the cost of property, plant and equipment during the period

(1,476)

(9,478)

(4,074)

(16,600)

Net capital expenditures

157,895

170,769

308,540

317,196

Adjusted EBITDA reconciliation

Three months ended

Six months ended

February 28, 2025

February 29, 2024

February 28, 2025

February 29, 2024

(In thousands of Canadian dollars)

$

$

$

$

Profit for the period

79,637

96,562

186,797

192,314

Income taxes

22,904

17,820

49,529

35,918

Financial expense

63,003

68,163

128,492

151,457

Depreciation and amortization

182,920

163,682

358,819

322,882

Acquisition, integration, restructuring and other costs (gains)

8,035

885

(1,923)

3,501

Adjusted EBITDA

356,499

347,112

721,714

706,072

Net capital expenditures and free cash flow, excluding network expansion projects reconciliations

Net capital expenditures

Three months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Net capital expenditures

157,895

(5,343)

152,552

170,769

(7.5)

(10.7)

Net capital expenditures in connection with network expansion projects

15,573

(73)

15,500

24,390

(36.2)

(36.4)

Net capital expenditures, excluding network expansion projects

142,322

(5,270)

137,052

146,379

(2.8)

(6.4)

 

Six months ended

February 28, 2025

February 29, 2024

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Net capital expenditures

308,540

(6,030)

302,510

317,196

(2.7)

(4.6)

Net capital expenditures in connection with network expansion projects

37,372

(89)

37,283

56,050

(33.3)

(33.5)

Net capital expenditures, excluding network expansion projects

271,168

(5,941)

265,227

261,146

3.8

1.6

Free cash flow

Three months ended

February 28, 2025

February 29, 2024

(1)

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Free cash flow (1)

116,603

(1,760)

114,843

101,799

14.5

12.8

Net capital expenditures in connection with network expansion projects

15,573

(73)

15,500

24,390

(36.2)

(36.4)

Free cash flow, excluding network expansion projects (1)

132,176

(1,833)

130,343

126,189

4.7

3.3

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its calculation of free cash flow and free cash flow, excluding network expansion projects, to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Comparative figures were restated to conform to the current presentation.

 

Six months ended

February 28, 2025

February 29, 2024

(1)

Change

(In thousands of Canadian dollars, except percentages)

Actual

Foreign
exchange
impact

In

constant
currency

Actual

Actual

In

constant
currency

$

$

$

$

%

%

Free cash flow (1)

265,461

(1,964)

263,497

239,647

10.8

10.0

Net capital expenditures in connection with network expansion projects

37,372

(89)

37,283

56,050

(33.3)

(33.5)

Free cash flow, excluding network expansion projects (1)

302,833

(2,053)

300,780

295,697

2.4

1.7

(1)

During the fourth quarter of fiscal 2024, the Corporation updated its calculation of free cash flow and free cash flow, excluding network expansion projects, to include proceeds on disposals of property, plant and equipment, which includes proceeds from sale and leaseback transactions. Comparative figures were restated to conform to the current presentation.

Additional information

Additional information relating to the Corporation is available on SEDAR+ at www.sedarplus.ca and on the Corporation’s website at corpo.cogeco.com.

About Cogeco Communications Inc.

Cogeco Communications Inc. is a leading telecommunications provider committed to bringing people together through powerful communications and entertainment experiences. We provide world-class Internet, video and wireline phone services to 1.6 million residential and business subscribers in Canada and thirteen states in the United States. We also offer wireless services in most of our U.S. operating territory. Our services are marketed under the Cogeco and oxio brands in Canada, and under the Breezeline brand in the U.S. We take pride in our strong presence in the communities we serve and in our commitment to a sustainable future. Cogeco Communications Inc.’s subordinate voting shares are listed on the Toronto Stock Exchange (TSX: CCA).

For information:
Investors
Troy Crandall
Head, Investor Relations
Cogeco Communications Inc.
Tel.: 514 764-4600
troy.crandall@cogeco.com

Media
Claudja Joseph
Director, Communications
Cogeco Communications Inc.
Tel.: 514 764-4600
claudja.joseph@cogeco.com

Conference Call:

Thursday, April 10, 2025 at 11:00 a.m. (Eastern Daylight Time)

A live audio webcast of the analyst call will be available on both the Investor Relations and the Events and Presentations pages of Cogeco Communications’ website. Financial analysts will be able to access the live conference call and ask questions. Media representatives may attend as listeners only. A recording of the conference call will be available on Cogeco Communications’ website for a three-month period.

Please use the following dial-in number to access the conference call 10 minutes before the start of the conference:

Local – Toronto: 1 289 514-5100

Toll Free – North America: 1 800 717-1738

To join this conference call, participants are required to provide the operator with the name of the company hosting the call, that is, Cogeco Inc. or Cogeco Communications Inc.

SOURCE Cogeco Communications Inc.

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U.S. News & World Report Reveals the 2027 Best Places to Retire

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Affordability is a top priority for attendees as Midland, Michigan, holds No. 1 spot.

Summary

Midland, Michigan, is the No. 1 Best Place to Retire for the second year in a row.Affordability is the most considered factor when choosing a place to retire in 2027.Florida and Texas dominate the top 250 Best Places to Retire, offering a number of affordable and retiree-tax friendly locations.

WASHINGTON, Oct. 27, 2026 /PRNewswire/ — U.S. News & World Report, the global authority in rankings and consumer advice, today revealed the 2027 Best Places to Retire in the United States.

Midland, Michigan, retained the No. 1 rank for the second year in a row. Midland scored high in affordability and retiree taxes, helping it to lock in the top spot.

“Retirees are seeking a place that gives them a sense of security and comfort as they live out their golden years,” said Megan Wood, assistant managing editor, home services and real estate. “Whether that comfort prioritizes scenic nature spots, access to multi-cultural experiences, or everyday affordability, places like Midland, Michigan, offer financial safety while still providing a good quality of life.”

Homosassa Springs, Florida, came in at No. 2 due to strong scores in affordability, 55+ population growth and retiree taxes. High performance for, quality of life, retiree taxes, affordability and quality of life resulted in Weirton, West Virginia, placing No. 3 on the list.

U.S. News adjusted its scoring weights for the 2027 rankings to mirror a growing concern for affordability in America. This resulted in multiple double-digit jumps in the top 25, including Paducah, Kentucky (No. 8), ascending into the top 10 for the first time.

“It’s no secret that affordability is top of mind for Americans this year, which is why U.S. News updated its weighting criteria to better align with what retirees prioritize,” Wood said. “The 2027 rankings reflect key metrics used to highlight the places that best suit retiree needs.”

U.S. News evaluated more than 850 U.S. cities – publishing the top 250 places – based on how well they meet American retirees’ expectations against measures including quality of life, affordability, healthcare, retiree taxes, job market, and population and migration for retirees aged 55 and older.

The six measures factored into this year’s rankings were weighted based on a public survey of individuals across the U.S. who are at or approaching retirement age (45 and older) to find out what matters most to people when they’re considering where to retire. Resources include federal, state and local data provided by Applied Geographic Solutions, which includes data sourced from the FBI’s Uniform Crime Reporting program, Bureau of Labor Statistics, Bureau of Economic Analysis and U.S. News’ Best Hospitals rankings. To learn more about how the rankings are determined, read the Best Places to Retire methodology.

Best Places to Retire is part of U.S. News’ Real Estate section, which provides rankings and tools to help individuals navigate the housing market, including home value estimates to working with an agent.

2027 U.S. News Best Places to Retire – Top 10 
*See the full rankings here.

Midland, Michigan Homosassa Springs, Florida Weirton, West VirginiaThe Woodlands, TexasSpring, TexasRancho Rio, New Mexico Altoona, PennsylvaniaPaducah, KentuckyLynchburg, Virginia Palm Coast, Florida 

For more information on Best Places to Retire, explore Facebook, LinkedIn, Tik Tok, Instagram and X using #BestPlacesToRetire.

About U.S. News & World Report
U.S. News & World Report is the global leader for journalism that empowers consumers, citizens, business leaders and policy officials to make confident decisions in all aspects of their lives and communities. A multifaceted media company, U.S. News provides unbiased rankings, independent reporting and analysis, and consumer advice to millions of people on USNews.com each month. A pillar in Washington for more than 90 years, U.S. News is the trusted home for in-depth and exclusive insights on education, health, politics, the economy, insurance, personal finance, travel, automobiles, real estate, careers and consumer products and services.

View original content to download multimedia:https://www.prnewswire.com/news-releases/us-news–world-report-reveals-the-2027-best-places-to-retire-302920068.html

SOURCE U.S. News & World Report, L.P.

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IBM Introduces Identity and Control for AI Agents, Securing Frontier Intelligence for the Enterprise

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Enterprises are deploying agents faster than they can verify them. HashiCorp Vault uses Agent Identity to give each agent a governed identity Verified agents still need limits on access. Vault extends its established secrets management to AI agents, built to enforce least-privilege access and enable real-time revocation when an agent attempts an unauthorized action Enterprises can’t scale agents they can’t see, test or account for. IBM watsonx Orchestrate is designed to unify discovery, containment, and evaluation across Amazon Bedrock, Microsoft Foundry and Google Gemini 

ATLANTA, Oct. 27, 2026 /PRNewswire/ — At TechXchange 2026, IBM (NYSE: IBM) is announcing new capabilities to help developers, IT and security teams put AI agents to work across business systems with clear authority and accountability. IBM brings together agent discovery, verified identities, access controls and performance evaluation to help organizations understand who owns each agent, control what it can access, and trace its actions across existing applications and infrastructure.  

According to Gartner, by 2028 the average Fortune 500 enterprise will use over 150,000 AI agents. But only 13% of organizations believe that they have the right AI agent governance in place [1]. Persistent credentials, unclear ownership and disconnected controls make it harder to govern agents as they interact with other agents, invoke tools and act across teams, platforms and clouds. 

“The winners in enterprise AI are changing how their business runs, not simply adding more AI to it,” said Dinesh Nirmal, Senior Vice President, IBM Software. “For agents to take on real work across the systems a company depends on, it requires an AI operating model – one that connects agents to the business’s data, applications and infrastructure and runs them with the same discipline as its most critical systems. Build trust and control into that model, and agents stop being a technology and become a way of doing business.”  

Today’s announcements extend IBM’s portfolio to deliver an AI operating model of four essential systems working together: agents, data, automation and hybrid infrastructure. This starts with the trust and control every agent needs – a verified identity, only the access it needs, and one place to discover, secure and evaluate agents regardless of where they were built. 

Extending HashiCorp Vault to AI agents
HashiCorp Vault manages the secrets and credentials that applications and services use to access business systems. It provides that control through centrally managed secrets, automated rotation for supported credentials, and dynamically generated credentials that expire or can be revoked. These capabilities help reduce the time exposed credentials remain usable and limit access to the permissions configured for each role. 

HashiCorp Vault already secures non-human identities for organizations including ABN AMRO, Adobe, athenahealth, BBVA, BlackRock, Canva, Duke Energy, Expedia, London Stock Exchange, Starbucks, Swiss Federal Railways and Target, across systems that process billions of dollars in transactions [2]. HashiCorp will now extend those capabilities to AI agents, issuing secured, short-lived credentials that limit each agent to what it needs. 

Establishing agent identity and accountability
AI agents are a growing class of non-human identity, alongside applications and services. As they begin acting across business systems, enterprises need a clear record of who owns each agent and what authority it has been granted. HashiCorp is combining governed agent identity with credential controls to help organizations delegate work with defined authority and accountability. 

When used with HashiCorp Vault, Agent Identity establishes the authoritative record for each agent, such as who owns it, its lifecycle status and the authority it has been granted. Built to extend existing identity and security investments, it shares relevant identity and authorization context with Vault’s credential controls – ultimately enforcing least-privilege access and enabling real-time revocation when an agent attempts an unauthorized action. 

Controlling agent credentials and access
Identifying an agent is only the start. Enterprises also need to control the credentials it uses to reach databases, applications and cloud services – and how long those credentials remain valid. As agents invoke tools and act across business systems, their credentials become a critical security boundary. An agent with a long-lived, overprivileged credential can put systems and data at risk if it’s compromised or acts outside its intended task. Enterprises need to establish what each agent’s job is, limit the access it receives and revoke that access when circumstances change. 

These controls extend beyond initial authentication. If an agent attempts to retrieve information or perform actions outside its approved permissions, the access can be denied and session revoked in real time to prevent unauthorized activity. Vault’s short-lived credentials and least-privilege controls can further restrict what an agent accesses and the duration of those permissions.  

Additional capabilities include: 

Vault 2.2 gives agents their own secured accounts, automatically renews their credentials and incorporates post-quantum encryption for quantum-era threats. Secure Hub (public preview) gives companies centralized visibility across their Vault environments to make it easier to understand operational health, usage and security resources. 

At TechXchange, client speakers will share how they use Vault to secure enterprise applications, workloads and AI agents 

athenahealth: Automating certificate management with Vault’s PKI engine. Albert Einstein College of Medicine: Applying IBM Verify and Vault to AI agent identity, just-in-time access, dynamic secrets and auditability. Optum: Using Vault Radar to detect exposed secrets and Boundary for just-in-time, identity-based access. Seven-Eleven Japan: Centralizing and encrypting secrets with Vault Enterprise and detecting hardcoded secrets with Vault Radar. Yum! Brands: Building an identity security platform with IBM Verify, with a look ahead to machine identities and secrets management. 

“AI presents extraordinary opportunities to accelerate biomedical research and discovery, but realizing its potential requires a foundation of security, trust, and responsible governance,” said Shailesh M. Shenoy, Assistant Dean for Information Technology at Albert Einstein College of Medicine. “In my experience, technologies such as IBM Verify and HashiCorp Vault can play an important role in helping organizations establish the identity, access, and security controls needed to innovate with confidence.”  

Managing agents across platforms
Identity tells organizations what an agent is. But they also need to see every agent they have, wherever it was built. IBM watsonx Orchestrate works across the AI ecosystem, not inside a single vendor’s platform, to give organizations one place to discover, secure and evaluate their agents. Capabilities include: 

Discover (tech preview): Organizations can’t govern agents they don’t know exist. Orchestrate connects to platforms such as Amazon Bedrock, Microsoft Foundry and Google Gemini to find agents built in third-party environments, so teams can see and manage agents instead of adding them manually. This capability also extends to models and MCP servers. Contain (tech preview): One rogue agent can disrupt others and spread mistakes across the business. Orchestrate now runs agents in isolated sandboxes so a rogue agent can’t interfere with others. Teams also now have access to a kill switch to shut down any agent. Evaluate: Agents that aren’t tested and tracked can quietly drift off course and increase costs. Teams using Orchestrate can now test the quality, accuracy and compliance of agents, models and MCP servers before deployment, then monitor them in production. Built-in cost tracking shows each agent’s model and token use, so teams can spot what’s driving spend and fix it. 

Orchestrate also works with Vault’s credential controls and Agent Identity to establish what each agent’s job is, govern its authority and enforce least-privilege credential access. Together, these controls help organizations authorize and audit agent actions and rapidly revoke trust and credentials when risk changes. 

Connecting agents to the business
Once agents are authorized to use a company’s APIs and tools, they need to know what already exists, how systems connect, what can be reused safely and what their actions could affect. IBM Integration Intelligence Hub is built to provide that knowledge through its Unified Context Engine, so agents can fix problems like stuck messages or deploy an API using what’s already in place. Skills, approval policies and audit controls keep those actions in check. Instead of rebuilding for AI, organizations can put agents to work on the systems they already depend on. 

Scaling agents with NVIDIA
Agent Identity and HashiCorp Vault integrate with NVIDIA OpenShell secure runtime software, the foundation of the NVIDIA OpenShell Architecture. Together, they pair a protected environment for agents to run in with a verified identity and short-lived credentials for every agent, so each action can be traced, limited and reviewed. 

“Businesses need enforceable control over how agents operate and what they can access,” said John Fanelli, vice president, enterprise software, NVIDIA. “Our work with IBM combines NVIDIA OpenShell’s policy-governed runtime with Agent Identity and HashiCorp Vault to help enterprises scale AI agents with secure execution, verified identities and tightly scoped access to business systems.” 

Responding to Emerging Security Threats
When new vulnerabilities are discovered, enterprises must quickly identify affected systems, determine required changes and deploy fixes without disrupting critical operations. In complex environments, this process often involves multiple teams, tools and processes. 

IBM Concert integrates observability, optimization, incident management and security across applications, infrastructure and networks. With AI-powered insights and proof of exploitability, Concert helps teams to identify high-risk vulnerabilities, assess operational impact, and coordinate responses. These capabilities also help organizations address performance, manage costs and maintain resilience in hybrid environments. 

HashiCorp Terraform provides an infrastructure context and governed workflows for change implementation. New features now generally available and in public preview, including Terraform policy, Terraform Developer Portal and Terraform remote MCP server, enable developers and AI agents to access approved configurations and implement infrastructure changes through established controls. Terraform powered by Infragraph also helps teams understand infrastructure relationships and dependencies for more informed decisions. 

Together, these capabilities enable organizations to progress from identifying vulnerabilities to implementing and verifying remediation, while optimizing the visibility and governance essential for enterprise operations. 

A comprehensive system intelligence and change orchestration layer for IBM Z 
IBM Z Atlas maps a client’s entire z/OS stack across infrastructure, middleware, and applications, and then uses that intelligence to address the manual effort of tasks like patch management, regulatory response, and sharing system knowledge across teams, from systems programmers to application developers. Atlas addresses the leading cause of unplanned z/OS outages – changes that aren’t proven to be safe – by mapping how a change impacts the z/OS stack and testing and validating it. This design (in tech preview) accelerates clients’ modernization efforts by keeping experts in control and giving practitioners, in operations or development, the same shared Z system visibility to reduce risk. 

Availability
HashiCorp Vault 2.2, Agent Identity, watsonx Orchestrate evaluate capabilities, IBM Concert, and HashiCorp Terraform policy are generally available. Secure Hub, Terraform Developer Portal, Terraform remote MCP server, and IBM Z Atlas are in public preview. IBM Integration Intelligence Hub and watsonx Orchestrate discover and contain capabilities are in tech preview. 

Statements regarding IBM’s future direction and intent are subject to change or withdrawal without notice and represent goals and objectives only. 

Learn more
IBM TechXchange is IBM’s annual conference for developers and technology practitioners and brings together nearly 6,500 attendees from 85 countries. This year, the event incorporates HashiConf to bring together the HashiCorp community with practitioners from across IBM, Red Hat and Confluent. Attendees can choose from more than 1,000 sessions and experiences, including 180 hands-on labs, 260 client-led sessions and more than 50 certification exams. Speakers include American Airlines, Bradesco, Citi, CVS Health, Deutsche Bank, DoorDash, Hertz, and US Bancorp who will share how they are making AI enterprise ready. 

Session livestream and replays will be available here: ibm.biz/txc26-livestream.  

Supporting Materials

Strengthen security for agentic AI with new Vault, Verify, Boundary, and Secure Hub capabilities  IBM Agent Identity now generally available: Building Trust for the Agentic Era  Vault Enterprise 2.2 advances identity security, PKI, and cryptoagility  Announcing the public preview of Secure Hub: govern Vault at scale  IBM watsonx Orchestrate advances AI agent management with new capabilities  IBM Integration Intelligence Hub gives AI the context to act, not just access IBM Concert platform advances the path to cross-domain agentic IT operations  Terraform advances infrastructure lifecycle management for the agentic era Introducing IBM Z Atlas: Change Intelligence for IBM Z 

[1]: Gartner Identifies Six Steps to Manage AI Agent Sprawl
[2]: HashiCorp Vault client stories  

About IBM  
IBM is a leading provider of global hybrid cloud and AI, and consulting expertise. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Thousands of governments and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and consulting deliver open and flexible options to our clients. All of this is backed by IBM’s long-standing commitment to trust, transparency, responsibility, inclusivity and service. Visit www.ibm.com for more information. 

Media contacts:

Sarah Benchaita
IBM
sarah.benchaita@ibm.com

Kate Lehman
IBM
Kate.Lehman@ibm.com 

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Three Blind Spots Leave Industrial Companies Exposed to Critical Mineral Shortages

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Boston Consulting Group Finds Industrial Companies Underestimate Their Critical Mineral Exposure, Which Also Limits Their Access to Public CapitalDemand for Key Minerals Is Projected at 120% to 250% of Forecast Supply Through 2040An Estimated $3.5 Trillion of Products Depend on Gallium, a “Mosquito Mineral” Traded in a Market Under $350 Million a YearSome Governments Have Deployed Less Than 10% of Their Critical Minerals Funds

BOSTON, Oct. 27, 2026 /PRNewswire/ — Industrial companies are underestimating their exposure to critical mineral shortages and missing a strategic opportunity as a result, according to new analysis from Boston Consulting Group (BCG). Three blind spots in the metrics that companies rely on hide where the risk sits, including what BCG calls “mosquito minerals,” so small by traded value that they never reach a risk register.

These are among the findings of Why Critical Mineral Shortages Are a CEO Issue, a BCG report released today. BCG’s proprietary model projects demand for key inputs, including rare earths, graphite, copper and lithium, at roughly 120% to 250% of forecast supply through 2040.

“Most industrials track exposure through spend and direct supplier data, and the minerals that can stop a production line are often the ones they spend almost nothing on,” said Tycho Möncks, a BCG managing director and partner and a coauthor of the report. “The question for CEOs and boards is not whether their company is exposed. It is. The question is whether they intend to live with that exposure or turn it into an advantage.”

Small Markets Can Stall Large Industries

Companies often start their risk assessment with the bill of materials, which points them toward high-volume metals such as copper and lithium. Mosquito minerals fall outside that view. Their traded value is tiny, but the value chains that depend on them are not.

Rare earths. The rare earths used in a fighter jet are worth less than the paint that coats the plane.Gallium. The global market is worth under $350 million a year, with production of only about 900 tons, yet BCG estimates about $3.5 trillion of final products depend on it.Arsenic. The upstream market is about $50 million worldwide, yet a single producer supplies roughly 60% of the ultra-high-purity grade used in 5G and 6G infrastructure, data center optics, radar systems, and defense electronics.Byproduct supply. Gallium, germanium and arsenic are recovered as byproducts of other mining and industrial processes, so the host metal’s market sets their supply. Even a sharp price spike may not bring new production.

Exposure Hides Below Tier One Suppliers

A company that buys almost no critical minerals directly can still be acutely exposed because minerals arrive embedded in motors, magnets, power modules, lasers and sensors. They also sit in the tools and processes used to make those components, from crucibles and catalysts to dies and the capital equipment itself.

Turbine blades, engine blocks and structural aerospace components, for example, are machined with cutting tools made of tungsten carbide bonded with cobalt. A manufacturer that has never bought either metal directly can still see production stop if those tools run short, a dependency that appears on no bill of materials.

Companies also tend to map where critical minerals are mined, but for some minerals the bottleneck is processing, not production. A map of where assets sit and a map of who owns them can look very different, so a change of supplier that looks like diversification may leave a company’s exposure unchanged.

Public Capital Is Committed but Largely Unspent

The three blind spots also lead to a strategic miss. The International Energy Agency reports that public finance commitments to critical minerals in advanced economies reached around $65 billion in 2025, more than four times the 2023 level. BCG’s review of government-backed vehicles found the flagship instruments barely deployed, with some countries having spent less than 10% of their allocated capital and others nothing.

These vehicles are designed to draw in private capital, and offtake requirements are typically the main eligibility gate. BCG argues that companies without a clear view of their own exposure cannot make a credible commitment, and so cannot qualify. The funds are not free money: they carry conditions such as reporting obligations and localization requirements, and they represent only about one tenth of the capital needed through 2040. But for industrial companies, BCG says, they are a way to build a competitive advantage.

Several of the companies that have reframed their approach and tapped public capital are industrial companies and trading firms, not miners, and BCG found that in each case the CEO and executive team led the process of identifying and correcting their blind spots.

“These blind spots have a cost beyond risk. The money is there, but it comes with offtake requirements, and a company cannot make a credible commitment without knowing its own exposure,” said Karthik Valluru, a BCG managing director and senior partner who coauthored the report. “Mapping that exposure properly is where the opportunity starts.”

Download the publication here:

https://www.bcg.com/publications/2026/critical-minerals-risk-blind-spots

Media Contact: 
Bruce Wraight
wraight.bruce@bcg.com 

About Boston Consulting Group
Boston Consulting Group bridges the gap between ambition and outcomes for the world’s leading companies and organizations. We are built for this era of unprecedented change — bringing strategic clarity rooted in over 60 years of deep domain knowledge, combined with applied AI shaped by our practitioners. BCG works shoulder-to-shoulder with CEOs across industries and geographies to deliver transformative impact at scale: stronger returns, transferred capabilities, and change that sticks. For more information, visit bcg.com.

View original content to download multimedia:https://www.prnewswire.com/news-releases/three-blind-spots-leave-industrial-companies-exposed-to-critical-mineral-shortages-302920029.html

SOURCE Boston Consulting Group (BCG)

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