SiriusXM Canada Reports Q2 Fiscal 2014 Results

  • Revenue of $75.5 million, up 6.8% year-over-year
  • Adjusted EBITDA** of $20.1 million, up 5.1% year-over-year
  • Net Income of $4.4 million, up 8.3% year-over-year
  • Total Subscribers of 2,387,600; year-over-year net additions of 187,600
  • Announces intention to refinance its outstanding notes due 2018, representing a principal amount of approximately $130.8 million

/NOT FOR DISTRIBUTION TO U.S. NEWS WIRE SERVICES OR DISSEMINATION IN THE UNITED STATES/

TORONTO, April 14, 2014 /CNW/ - Sirius XM Canada Holdings Inc. ("SiriusXM Canada" or the "Company") (TSX: XSR), parent of Sirius XM Canada Inc., today released unaudited financial results for the quarter ended February 28, 2014 (Q2 FY2014) prepared in accordance with International Financial Reporting Standards (IFRS). A summary of IFRS financial results for Q2 FY2014 is attached1.  All results are reported in Canadian dollars unless otherwise stated.

Q2 FY2014 Financial Highlights

  • Revenue grew 6.8% to $75.5 million from $70.7 million in Q2 2013
  • Adjusted EBITDA increased 5.1% to $20.1 million from $19.1 million in Q2 2013
  • Net Income increased 8.3% to $4.4 million from $4.1 in Q2 2013
  • Cash from operations decreased $3.5 million to $13.2 million from $16.7 million in Q2 2013
  • Self-Paying Subscribers increased 7.8% to 1.8 million from 1.6 million at February 28, 2014
  • Paid cash dividends totaling $26.2 million during the quarter

Year-to-date FY2014 Financial Highlights

  • Revenue grew 8.8% to $151.9 million from $139.6 million in the same period in FY2013
  • Adjusted EBITDA increased 7.2% to $39.7 million from $37.1 million in the same period in FY2013
  • Net Income increased 7.9% to $7.9 million from $7.3 million in the same period in FY2013
  • Cash from operations decreased $3.0 million to $28.8 million from $31.8 million in the same period in FY2013

"Our growth trend continued in the second quarter of 2014, which led to increases at both our top and bottom line," said Mark Redmond, President and CEO, SiriusXM Canada. "While the most significant growth opportunity in the near term remains in the new vehicle market, we made good progress in Q2 with our used vehicle business. We now have more than 1,200 active dealers in the used vehicle program along with a rapidly growing number of trials underway. As we move through the second half of the fiscal year, our seasonally strong period, we have a number of exciting opportunities with our OEM partners, exclusive content and web-based offering to drive our subscriber and profitability levels higher."

Q2 FY2014 Programming Highlights:

  • Launched the Billy Joel channel, an exclusive limited-run channel featuring the artist
  • Partnered with Business News Network (BNN) for live weekday programming from Canada's most comprehensive and respected network for business news
  • Provided enhancements to SiriusXM PGA Tour Radio ahead of the Masters tournament
  • Marked the 8th consecutive year as key sponsor and contributor to Juno awards, including sponsorship for the Songwriter of the Year Award
  • Announced the Emerging Artist Showcase competition as part of the upcoming Boots and Hearts Music Festival in Toronto
  • Treated a few lucky subscribers to tickets to attend premiere events such as the Super Bowl and Howard Stern's 60th Birthday bash in New York

Financial and Operational Summary
Below, the Company has provided certain non-GAAP measures and industry metrics. These figures are subject to the qualification and assumptions set out in the notes to such results.






Financial *

Q2 FY2014

Q2 FY2013

YTD FY2014

YTD FY2013


(ended Feb 28, 2014)

(ended Feb 28, 2013)

(ended Feb 28, 2014)

(ended Feb 28, 2013)


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)

Total Revenue

$75,466

$70,689

$151,902

$139,581

Adjusted EBITDA**

$20,083

$19,113

$39,721

$37,070

Net Income

$4,419

$4,079

$7,914

$7,337






Operating*





Self-Paying Subscribers

1,769

1,641

1,769

1,641

Total Subscribers

2,388

2,200

2,388

2,200

ARPU

$11.35

$11.60

$11.44

$11.49

Subscriber Acquisition Cost (SAC)

$40

$44

$41

$45

Cost Per Gross Addition (CPGA)

$67

$72

$68

$72

* All figures in the table above are in thousands except, ARPU, SAC and CPGA
** Adjusted EBITDA is a non-GAAP measure. A reconciliation of operating income to both EBITDA and Adjusted EBITDA is provided below.

"During the quarter we improved our EBITDA margin on a normalized basis, and generated solid free cash flow," said Michael Washinushi, Chief Financial Officer, SiriusXM Canada. "Given favorable market conditions, the Company intends to refinance its outstanding notes due 2018 representing approximately $130.8 million principal amount. If successful, this undertaking should result in significant interest expense savings."

Q2 and YTD FY2014 Results Financial Review
For Q2 FY2014 revenue was $75.5 million, up $4.8 million, or 6.8%, from $70.7 million for the same period in 2013. The year-over-year increase was due primarily to an increase in the number of subscribers offset by lower ARPU. Q2 FY2014 ARPU was $11.35, down from $11.60 in the same period in FY2013. For YTD FY2014, revenue was $151.9 million, up $12.3 million, or 8.8% from $139.6 million for the same period in FY2013. ARPU for YTD FY2014 was $11.44 compared to $11.49 for the same period in FY2013.

Q2 FY2014 Adjusted EBITDA improved to $20.1 million, representing a 5.1% increase, or $1.0 million improvement, from Adjusted EBITDA of $19.1 million in Q2 FY2013. The year-over-year increase was a result of the Company's top-line growth partly offset by increases in cost of revenue and marketing expenses. YTD FY2014 Adjusted EBITDA was $39.7 million, an increase of 7.2%, or $2.6 million, from $37.1 million for the same period in FY2013.

SAC was $40 in Q2 FY2014 down from $44 in Q2 FY2013. The decrease for the quarter was due primarily to an increase in gross additions predominantly from the used vehicle channel. SAC for YTD FY2014 was $41, down from $45 for the same period in FY2013.

CPGA was $67 in Q2 FY2014 down from $72 in Q2 FY2013 due to lower SAC and higher gross additions. CPGA for YTD FY2014 was $68, down from $72 for the same period in FY2013 due to lower SAC and higher gross additions.

In Q2 FY2014, the Company generated $13.2 million in cash from operations, used $1.1 million of cash in investing activities, and used $25.3 million of cash in financing activities. The Company generated $9.9 million in free cash flow in Q2 FY2014. Comparatively, the Company generated $16.7 million of cash in operating activities, used $9.0 million of cash in investing activities and used $26.0 million of cash in financing activities in Q2 FY2013. The Company generated $13.0 million in free cash flow in Q2 FY2013.

YTD FY2014, the Company generated $28.8 million in cash from operations, used cash of $3.9 million in investing activities and used $24.2 million of cash in financing activities. YTD FY2014, the Company generated $22.7 million in free cash flow. YTD FY2013, the Company generated $31.8 million of cash in operating activities, used $10.4 million of cash in investing activities and used $25.9 million of cash in financing activities. YTD FY2013, the Company generated $26.7 million in free cash flow.

As at February 28, 2014, SiriusXM Canada had total cash and cash equivalents and short term investments of $47.8 million, compared to $63.0 million as at November 30, 2013.

Conference Call and Webcast Details
SiriusXM Canada will hold a conference call to discuss the Company's Q2 FY2014 results on Monday, April 14, 2014 at 5.00 p.m. ET. All interested parties can join the call by dialing 647-427-7450, or 1-888-231-8191. Please dial-in 15 minutes prior to the call to secure a line. The conference call will be archived for replay until Monday, April 21, 2014 at midnight. To access the archived conference call, please dial 416-849-0833, or 1-855-859-2056 and enter the reservation code 17974841. A live audio webcast of the conference call will be available at http://www.siriusxm.ca and www.newswire.ca. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software download that may be required to join the webcast.  An archived replay of the webcast will be available for 365 days at www.newswire.ca.

Reconciliations
The following is a reconciliation of EBITDA and Adjusted EBITDA to Operating Income.

(In $000's)

Q2 FY2014

Q2 FY2013

YTD FY2014

YTD FY2013


(Unaudited)

(Unaudited)

(Unaudited)

(Unaudited)






Operating income

10,317

9,828

19,154

18,457

Depreciation & Amortization

9,252

8,703

19,159

17,137

EBITDA

19,569

18,531

38,313

35,594

Stock based compensation

497

538

1,360

1,332

Fair value adjustments*

17

44

48

144

Adjusted EBITDA

20,083

19,113

39,721

37,070

* Fair value adjustment relates to reduction in revenue due to valuation of deferred revenue as per purchase price accounting

Please see the Company's Management Discussion & Analysis filed April 14, 2014 for more details on the Company's Q2 FY2014 results. The non-GAAP measures used in this press release should be used in addition to, but not as a substitute for, the analysis provided in the unaudited consolidated statement of operations and comprehensive income. Please see the Company's Management Discussion & Analysis filed April 14, 2014 for complete definition of non-GAAP measures.

This announcement is neither an offer to sell nor a solicitation of an offer to buy any of these securities and shall not constitute an offer, solicitation, or sale in any jurisdiction in which such offer, solicitation, or sale is unlawful.

Forward-Looking Statements
Certain statements included above may be forward-looking in nature. Such statements can be identified by the use of forward-looking terminology such as "expects," "may," "will," "should," "intend," "plan," or "anticipates" or the negative thereof or comparable terminology, or by discussions of strategy. Forward-looking statements include estimates, plans, expectations, opinions, forecasts, projections, targets, guidance, or other statements that are not statements of fact, including with respect to the payment of dividends in the future and future performance. Although SiriusXM Canada believes that the expectations reflected in such forward-looking statements are reasonable, it can give no assurance that such expectations will prove to have been correct, including with respect to the ability of the Company to pay dividends in the future, the redemption of Sirius XM Canada's 9.75% Senior Unsecured Notes, and the terms, timing and conditions of any refinancing of such notes. SiriusXM Canada's forward-looking statements are expressly qualified in their entirety by this cautionary statement. SiriusXM Canada makes no commitment to revise or update any forward-looking statements in order to reflect events or circumstances after the date any such statement is made, except as required by applicable law. Additional information identifying risks and uncertainties is contained in Sirius XM Canada Holdings Inc.'s filings with the Canadian securities regulators, available at www.sedar.com.

About SiriusXM Canada
Sirius XM Canada Holdings Inc. (TSX: XSR) operates as SiriusXM Canada. SiriusXM Canada, with approximately 2.4 million subscribers, is one of the country's leading audio entertainment company and broadcasts more than 120 satellite radio channels featuring premier sports, news, talk, entertainment and commercial-free music. SiriusXM Canada offers an array of content from the most recognized news and entertainment brands as well as every major sport including the NHL, NFL and MLB.

SiriusXM programming is available on a variety of devices including pre-installed and after-market radios in cars, trucks and boats, smartphones and mobile devices, and consumer electronics products for homes and offices. SiriusXM programming is also available online at www.siriusxm.ca and on Apple and Android-powered mobile devices.

SiriusXM Canada has partnerships with every major automaker and its radio products are available at more than 3,000 retail locations nationwide. To find out more about SiriusXM Canada (TSX: XSR), visit our website at www.siriusxm.ca.

CONSOLIDATED INTERIM BALANCE SHEETS
(Unaudited)

At

February 28,

August 31,


(Canadian dollars)

2014

2013






ASSETS




Current assets




Cash and cash equivalents

44,731,401

44,078,584


Short-term investments

3,022,366

5,157,798


Accounts receivable

9,191,566

13,359,446


Prepaid expenses and other

6,544,091

6,778,736


Inventory

423,384

234,349


Total current assets

63,912,808

69,608,913


Long-term prepaid expenses

100,157

100,157


Property and equipment

4,843,008

5,979,911


Intangible assets

141,319,228

152,217,165


Deferred tax assets

51,113,624

54,483,616


Goodwill

96,732,525

96,732,525


Total assets

358,021,350

379,122,287






LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities




Trade and other payables

46,098,226

47,145,257


Due to related parties

7,136,100

9,620,750


Interest payable

2,420,317

2,704,449


Current portion of deferred revenue

145,505,093

144,885,091


Provisions

391,463

1,327,974


Total current liabilities

201,551,199

205,683,521


Deferred revenue

15,597,815

17,105,210


Other long-term liabilities

1,270,945

1,669,229


Due to related parties

1,496,993

2,390,608


Long-term debt

124,457,484

143,707,194


Provisions

360,304

323,112


Total liabilities

344,734,740

370,878,874






Shareholders' equity




Share capital

176,200,240

151,794,596


Contributed surplus

5,060,798

6,161,440


Accumulated deficit

(167,974,428)

(149,712,623)


Total shareholders' equity

13,286,610

8,243,413


Total liabilities and shareholders' equity

358,021,350

379,122,287








CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND

COMPREHENSIVE INCOME
(Unaudited)

(Canadian dollars)


Three Months ended


Six Months ended




February 28,

2014

February 28,

2013


February 28,

2014

February

28, 2013










Revenue


75,466,464

70,689,104


151,902,156

139,580,547










Operating expenses








Operating costs


55,897,927

52,158,534


113,588,738

103,987,280


Depreciation and amortization


9,251,586

8,702,594


19,159,302

17,136,596


Operating income


10,316,951

9,827,976


19,154,116

18,456,671










Finance costs, net








Interest income


165,618

174,703


345,043

341,054


Interest expense


(4,029,653)

(3,926,587)


(7,920,139)

(7,900,296)


Foreign exchange loss


(242,601)

(315,846)


(295,459)

(464,510)


Gain on revaluation of            

derivative



51,378


Finance costs, net


(4,106,636)

(4,067,730)


(7,870,555)

(7,972,374)










Net income before income tax


6,210,315

5,760,246


11,283,561

10,484,297


Income tax expense


(1,791,154)

(1,681,297)


(3,369,993)

(3,147,384)


Net income and comprehensive income


4,419,161

4,078,949


7,913,568

7,336,913










Basic and fully diluted earnings per share


0.03

0.03


0.06

0.06


















CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS'

EQUITY
(Unaudited)







Total



For the six months ended

Share

Contributed

Accumulated

Shareholders'



(Canadian dollars)

Capital

Surplus

deficit

Equity

















Balance, September 1, 2012

148,393,493

5,057,501

(108,196,240)

45,254,754



Net income for the period

7,336,913

7,336,913



Stock-based compensation

1,332,080

1,332,080



Dividends

(30,501,368)

(30,501,368)



Stock options exercised

1,166,684

(586,038)

580,646



Balance, February 28, 2013

149,560,177

5,803,543

(131,360,695)

24,003,025

















Balance, September 1, 2013

151,794,596

6,161,440

(149,712,623)

8,243,413



Net income for the period

7,913,568

7,913,568



Stock-based compensation

1,359,697

1,359,697



Dividends

(26,175,373)

(26,175,373)



Stock options exercised

2,866,448

(921,143)

1,945,305



Conversion of convertible notes

21,539,196

(1,539,196)

20,000,000



Balance, February 28, 2014

176,200,240

5,060,798

(167,974,428)

13,286,610

















CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)

(Canadian dollars)

Three months ended


Six months ended



February 28,

2014

February 28,

2013


February 28,

2014

February 28,

2013


Cash provided by (used in)














OPERATING ACTIVITIES







Net income for the period

4,419,161

4,078,949


7,913,568

7,336,913


Add(deduct) items not involving cash







Amortization of intangible assets

8,538,416

8,193,125


17,188,496

15,983,134


Depreciation of property and equipment

713,170

510,762


1,970,806

1,154,755


Income tax expense

1,791,154

1,681,297


3,369,993

3,147,384


Stock-based compensation

497,267

538,431


1,359,697

1,332,080


Accrued interest

(3,871,675)

(3,605,009)


(284,132)

(17,466)


Interest accretion

504,100

235,379


750,290

469,054


Revaluation of derivative


(51,378)


Foreign exchange loss

174,935

406,545


236,917

513,452


Net change in non-cash working capital and deferred revenue related to operations

405,263

4,662,701


(3,721,123)

1,966,695


 

Cash provided by operating activities

13,171,791

16,702,180


28,784,512

31,834,623









INVESTING ACTIVITIES







Purchase of property and equipment

(134,094)

(800)


(696,062)

(31,402)


Purchase of intangible assets

(3,162,002)

(3,736,944)


(5,393,640)

(5,129,230)


Purchase of short-term investments

(5,306,295)


(5,306,295)


Maturity of short-term investments

2,063,000


2,063,000


Interest received on short-term investments

125,075

51,574


125,075

51,574


 

Cash used in investing activities

(1,108,021)

(8,992,465)


(3,901,627)

(10,415,353)









FINANCING ACTIVITIES







Payment of dividends

(26,175,373)

(26,434,670)


(26,175,373)

(26,434,670)


Proceeds from exercise of stock options

920,316

409,269


1,945,305

580,646


 

Cash used in financing activities

(25,255,057)

(26,025,401)


(24,230,068)

(25,854,024)









Net increase in cash and cash equivalents during the period

(13,191,287)

(18,315,686)


652,817

(4,434,754)


Cash and cash equivalents, beginning of period

57,922,688

64,915,681


44,078,584

51,034,749


Cash and cash equivalents, end of period

44,731,401

46,599,995


44,731,401

46,599,995









__________________________________
1 For a complete set of financial results including the accompanying notes please refer to the Company's filings on www.sedar.com

SOURCE Sirius XM Canada Holdings Inc.

For further information: Morlan Reddock, Sirius XM Canada, 416-513-7418, morlan.reddock@siriusxm.ca; Dave Mason, TMX Equicom, 416-815-0700 ext 237, dmason@tmxequicom.com