Group 1 - The analyst believes that BCE will be forced to cut its dividend within 12–18 months, which is expected to negatively impact the share price [1] - The analyst has a focus on undercovered and unappreciated Canadian dividend stocks, indicating a strategy centered on identifying solid value companies that pay dividends [1]

Company Announcement - BCE Inc. has filed its 2024 annual report on Form 40-F with the U.S. Securities and Exchange Commission (SEC) [1] - The Form 40-F includes audited financial statements for the year ended December 31, 2024, and is accessible on BCE's website and the SEC's website [1] Investor Information - Holders of BCE securities can request a printed copy of the audited financial statements at no charge by contacting BCE Investor Relations [2] Company Overview - BCE is recognized as Canada's largest communications company, offering advanced Bell broadband Internet, wireless, TV, media, and business communications services [3][5] Community Initiatives - Through the "Bell for Better" initiative, BCE is investing in social and economic prosperity, including the Bell Let's Talk initiative which focuses on mental health awareness and anti-stigma campaigns [4]

Core Viewpoint - BCE Inc. reported a mixed performance in Q4 2024, with adjusted EPS exceeding expectations but total operating revenues declining year over year, leading to a significant drop in stock price [1][2][3]. Financial Performance - Adjusted EPS for Q4 2024 was C$0.79, up from C$0.76 in the prior-year quarter, surpassing the Zacks Consensus Estimate of C$0.50 [1]. - Total operating revenues decreased by 0.8% year over year to C$6,422 million ($4,590 million), while the consensus estimate was $4,469 million [2]. - Service revenues fell by 1.1% to C$5,287 million, while product revenues grew by 0.9% to C$1,135 million [2]. Segmental Results - BCE combined its Bell Wireless and Bell Wireline segments into Bell CTS, reporting a 1.1% decline in operating revenues to C$5,681 million [4]. - Within Bell CTS, service revenues decreased by 1.6% to C$4,546 million, impacted by lower legacy voice and data revenues, while product revenues increased due to higher land mobile radio sales [5][6]. Subscriber Metrics - Postpaid mobile phone net subscriber activations dropped by 56.1% year over year to 56,550, attributed to fewer new activations and increased competition [7]. - The prepaid customer base saw a slight decline of 5,480, an improvement from a loss of 36,630 in the prior-year quarter [8]. Media Performance - Bell Media revenues grew by 1.2% year over year to C$832 million, driven by higher advertising and subscriber revenues, with total digital revenue increasing by 6% [8][9]. Cash Flow and EBITDA - Adjusted EBITDA increased by 1.5% to C$2,605 million, with a margin of 40.6%, up from 39.7% in the prior-year quarter [10][12]. - Cash generated from operating activities was C$1,877 million, down from C$2,373 million in the prior-year quarter, with free cash flow at C$874 million compared to C$1,289 million a year ago [13]. 2025 Outlook - BCE anticipates revenue growth in the range of (3%)-1% and adjusted EBITDA growth of (2%)-2% for 2025, citing pricing pressure and lower subscriber growth as key challenges [14]. - The company expects free cash flow growth between 11-19% due to lower capital spending, with an annualized common dividend per share estimated at C$3.99 [14].

Core Viewpoint - High-yielding dividend stocks can present attractive investment opportunities, but recent events with Walgreens Boots Alliance highlight the risks associated with dividend sustainability, as several companies may face similar challenges in maintaining their payouts [1]. Group 1: Innovative Industrial Properties (IIP) - Innovative Industrial Properties (IIP) is a REIT focused on the cannabis industry, currently offering a yield of nearly 11%, but its shares have declined by nearly 40% in the past six months, indicating investor skepticism about its payout sustainability [3][4]. - The cannabis industry's prospects have dimmed, particularly after PharmaCann, a key tenant contributing 17% of IIP's rental revenue, defaulted on all leases, raising concerns about the REIT's ability to maintain its quarterly dividend of $1.90 per share [4][5]. - In Q3, IIP reported funds from operations per share of $2.02, which provides little buffer against its current dividend, suggesting a potential cut in the near future [5][6]. Group 2: Wendy's - Wendy's currently offers a dividend yield of 6.7%, but its revenue growth was only 2% over the first nine months of 2024, with total sales just under $1.7 billion [7]. - The company reported diluted earnings per share (EPS) of $0.71, while its quarterly dividend of $0.25 totals $0.75 over three quarters, exceeding its EPS, and free cash flow has been insufficient to cover the dividend in two of the past four quarters [8][9]. - Wendy's dividend is at risk of being unsustainable, and while management may not cut it immediately, a reduction could occur if financial performance does not improve [9]. Group 3: BCE - BCE, a Canadian telecom giant, has announced plans to acquire U.S.-based Ziply Fiber, aiming for growth in the U.S. market, but this move may incur significant costs [10]. - Despite a long history of annual dividend increases, BCE has stated it will not raise its payout this year, leading to investor dissatisfaction and a stock price decline to levels not seen since 2009 [11]. - Over the past 12 months, BCE paid out CA$3.8 billion in dividends, significantly exceeding its CA$3 billion in free cash flow, raising concerns about the sustainability of its nearly 12% yield [12].

Financial Performance and Key Metrics - BCE achieved a consolidated EBITDA margin increase of 1.2 percentage points to 43.4%, marking the highest annual margin performance in over 30 years [8] - Adjusted EBITDA rose by 1.5%, leading to a 90-point margin improvement to 40.6% [46] - Total revenue decreased by 0.8%, reflecting competitive pricing pressures and declines in legacy services [46] Business Line Performance - Wireless service revenue declined by 1.5%, but the company expects improvement in ARPU going forward [51] - Internet revenue grew by 3.4%, indicating a balance between market growth and disciplined pricing [52] - Business solutions revenue increased by 14%, driven by technology services and acquisitions [52] Market Performance - Digital revenue in media grew by 19% year-over-year, now comprising 42% of total media revenue, up from 35% in 2023 [11] - The company reported a 12% increase in households subscribing to mobility and Internet service bundles [10] Company Strategy and Industry Competition - BCE's strategic focus includes enhancing customer experience, leading in business technology services, and transforming into a digital media powerhouse [16] - The company plans to grow its fiber footprint significantly, targeting approximately 12 million fiber passings in North America by 2028 [22] - BCE aims to generate $1 billion in annual revenue from technology solutions by 2030 [26] Management Commentary on Operating Environment and Future Outlook - Management acknowledged ongoing macroeconomic and regulatory pressures impacting revenue growth [14] - The company anticipates a revenue loss of approximately $125 million in 2025 due to the transition of consumer electronics sales [58] - Future revenue growth is contingent on improvements in wireless and broadband pricing [57] Other Important Information - BCE plans to reduce capital expenditures by $500 million in 2025, with a projected capital intensity ratio of approximately 14% [36][66] - The company is reviewing noncore assets for potential divestiture, with up to $7 billion expected from planned sales [42] Q&A Session Summary Question: Can you elaborate on the US fiber footprint expansion and noncore asset sales? - Management indicated that the focus is on closing the acquisition of Ziply Fiber, which will drive growth in the core fiber business [79] - Noncore asset sales do not include Bell Media, as the digital pivot is a key growth vector [78] Question: What is the target leverage ratio by the end of 2025? - The company aims to maintain a strong investment-grade credit rating and reduce net leverage, with ongoing asset reviews to strengthen the balance sheet [90] Question: What are the expectations for revenue growth guidance? - Revenue growth is dependent on sustained pricing increases in a competitive environment, with the potential for improvement if recent pricing changes stick [121]

Core Insights - BCE reported $4.59 billion in revenue for Q4 2024, a year-over-year decline of 3.5%, with EPS remaining unchanged at $0.56 [1] - The revenue exceeded the Zacks Consensus Estimate of $4.47 billion, resulting in a surprise of +2.71%, while the EPS surpassed the consensus estimate of $0.50 by +12.00% [1] Financial Performance - BCE's shares returned +5.4% over the past month, outperforming the Zacks S&P 500 composite's +2.1% change [3] - The company currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3] Subscriber Metrics - Gross Subscriber Activations for Postpaid were 510,850, below the estimated 561,638 [4] - Total Mobile Phone Subscribers at the end of the period were 10,288,570, compared to the average estimate of 10,425,840 [4] - Blended churn rate was reported at 2%, slightly higher than the estimated 1.9% [4]

Q4 2024 Results & 2025 Financial Guidance Call Delivering on near-term operating plan with financial discipline, while taking actions to position Bell for future success (1) Adjusted EBITDA margin is defined as adjusted EBITDA divided by operating revenue. (2) Digital revenues are comprised of advertising revenue from digital platforms including web sites, mobile apps, connected TV apps and OOH digital assets/platforms, as well as advertising procured through Bell digital buying platforms and subscription r ...

Core Viewpoint - BCE reported quarterly earnings of $0.56 per share, exceeding the Zacks Consensus Estimate of $0.50 per share, with a year-over-year comparison showing no change in earnings [1] - The company posted revenues of $4.59 billion for the quarter, surpassing the Zacks Consensus Estimate by 2.71%, but down from $4.76 billion a year ago [2] Group 1: Earnings Performance - BCE's earnings surprise was 12%, while the previous quarter saw a negative surprise of -3.51% [1][2] - Over the last four quarters, BCE has only surpassed consensus EPS estimates once [2] Group 2: Revenue Insights - The company has topped consensus revenue estimates just once in the last four quarters [2] - Current consensus EPS estimate for the upcoming quarter is $0.48 on revenues of $4.2 billion, and for the current fiscal year, it is $2 on revenues of $17.13 billion [7] Group 3: Stock Performance and Outlook - BCE shares have increased by approximately 7.4% since the beginning of the year, outperforming the S&P 500's gain of 3.1% [3] - The current estimate revisions trend for BCE is unfavorable, resulting in a Zacks Rank 4 (Sell), indicating expected underperformance in the near future [6] Group 4: Industry Context - The Diversified Communication Services industry, to which BCE belongs, is currently in the bottom 11% of over 250 Zacks industries, suggesting a challenging environment [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can impact BCE's stock performance [5]

Core Insights - BCE Inc. reported steady financial results for Q4 and full-year 2024, balancing growth with profitability while transforming its business and reducing costs [2][5] - The company achieved its highest annual adjusted EBITDA margin in over 30 years at 43.4% [3][25] - BCE's strategic roadmap for 2025 focuses on customer-centric initiatives, enhancing fibre and 5G services, growing business technology services, and expanding digital media offerings [5][21] Financial Performance - Q4 2024 operating revenues were $6,422 million, down 0.8% year-over-year, while full-year revenues decreased 1.1% to $24,409 million [19][21] - Net earnings for Q4 increased 16.1% to $505 million, with net earnings attributable to common shareholders rising 20.7% to $461 million, or $0.51 per share [19][21] - Adjusted EBITDA for Q4 grew 1.5% to $2,605 million, with an adjusted EBITDA margin of 40.6%, the highest for Q4 in over three decades [19][25] Subscriber Metrics - Total mobile phone and connected device net subscriber activations in Q4 reached 151,413, while retail Internet net activations were 34,187, contributing to a 3.4% growth in Internet revenue [19][34] - Postpaid mobile phone net activations decreased significantly by 56.1% year-over-year to 56,550 due to competitive pressures and market conditions [28] - BCE's retail IPTV customer base saw a net decrease of 444 subscribers in Q4, contrasting with a net gain of 23,537 in the same quarter of the previous year [28] Digital and Media Growth - Digital revenues accounted for 42% of total media revenue in 2024, up from 35% in 2023, with a 19% increase in digital revenue year-over-year [4][34] - Bell Media's operating revenue increased by 1.2% in Q4 to $832 million, driven by higher advertising and subscriber revenues [34] - Crave subscriptions grew by 18% year-over-year, reaching over 3.6 million, with a record number of hours viewed in Q4 2024 [34] Capital Expenditures and Cash Flow - Capital expenditures in Q4 were $963 million, down 6.4% from the previous year, with total capital expenditures for 2024 at $3,897 million [19][25] - Free cash flow decreased by 32.2% in Q4 to $874 million, attributed to lower cash flows from operating activities and higher interest payments [19][25] - BCE maintained its annualized common share dividend at $3.99 per share, with a participation rate of approximately 34% in its discounted treasury dividend reinvestment plan [36][21]

Core Viewpoint - Wall Street anticipates a year-over-year decline in BCE's earnings and revenues for the quarter ended December 2024, with actual results being crucial for stock price movement [1][3]. Earnings Expectations - BCE is expected to report quarterly earnings of $0.51 per share, reflecting an 8.9% decrease year-over-year, and revenues are projected at $4.49 billion, down 5.6% from the previous year [3]. - The consensus EPS estimate has been revised 1.37% lower in the last 30 days, indicating a bearish sentiment among analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that BCE's Most Accurate Estimate is lower than the consensus estimate, resulting in an Earnings ESP of -2.63%, which suggests a challenging outlook for beating earnings expectations [10][11]. - BCE currently holds a Zacks Rank of 5, further complicating the prediction of an earnings beat [11]. Historical Performance - In the last reported quarter, BCE was expected to post earnings of $0.57 per share but delivered only $0.55, resulting in a surprise of -3.51% [12]. - Over the past four quarters, BCE has only beaten consensus EPS estimates once [13]. Conclusion - BCE does not appear to be a strong candidate for an earnings beat, and investors should consider other factors when making decisions regarding the stock ahead of the earnings release [16].