SiriusXM Canada Delivers Continued Growth with Record Revenue in Fiscal 2012 Third Quarter

  • Total Subscribers of 2.1 million; year-over-year net additions of 214,300
  • Record revenue of $64.6 million
  • Adjusted EBITDA** of $9.6 Million, up 69.7% year-over-year
  • Free cash flow of $7.3 million, up 35% year-over-year

TORONTO, July 11, 2012 /CNW/ - Canadian Satellite Radio Holdings Inc. ("SiriusXM Canada" or the "Company") (TSX: XSR), parent of Sirius XM Canada Inc., today released unaudited financial results for the three- and nine-month periods ended May 31, 2012 (Q3 and year-to-date FY2012, respectively) prepared in accordance with International Financial Reporting Standards (IFRS). A summary of IFRS financial results for Q3 and year-to-date FY2012 is attached1. To provide a basis of comparison of the performance of the combined entity formed through the merger of Sirius Canada and XM Canada, the Company has also provided unaudited combined financial information (referred to as "Combined Information") for the comparative three- and nine-month periods ended May 31, 2011. All results are reported in Canadian dollars unless otherwise stated.

Q3 FY2012 Highlights Compared to Combined Information for the Comparative Quarter in 2011

     Adjusted EBITDA increased 69.7% to $9.6 million from $5.6 million in Q3 FY2011
•     Self-Paying Subscribers increased 13.4% to 1.5 million from 1.3 million at May 31, 2011
•     Revenue increased 8.1% to $64.6 million from $59.7 million in Q3 FY2011
•     Free cash flow up 35% to $7.3 million from $5.4 million in Q3 FY2011
•     Reported cash and cash equivalents of $42.5 million at May 31, 2012
•     Completed a secondary offering on a bought deal basis for an aggregate of 8,000,000 Class A Subordinate Voting Shares of the Company

Year-to-date FY2012 Highlights Compared to Combined Information for the Comparative Period in 2011

     Adjusted EBITDA increased 122.1% to $34.3 million from $15.5 million for the same period in FY2011
•     Revenue grew 8.0% to $191.5 million from $177.3 million for the same period in FY2011
•     Free cash flow up 445% to $28.1 million, from $5.2 million for the same period in FY2011

"We continue to drive significant year-over-year growth in Adjusted EBITDA and free cash flow through subscriber additions and cost synergies," said Mark Redmond, President and CEO, SiriusXM Canada. "Our results to-date are a strong testament to the benefits of the merger. We are being integrated into more new vehicles and are poised to increasingly benefit from the expected rise in auto sales to pre-recession levels in Canada. We remain committed to managing costs and optimizing operating efficiencies, which, in combination with our success in executing on our strategic priorities, should result in continued improvement in our financial performance."


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

Financial and Operational Summary

Combined Information for Q3 2011 assumes the combination of XM Canada and Sirius Canada Inc. occurred as of September 1, 2010. 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 * IFRS
Q3 FY2012
  Combined
Q3 2011
  IFRS
Year-to-date
FY2012
  Combined
Year-to-date
FY2011
  (ended May 31, 2012)   (ended May 31, 2011)   (ended May 31, 2012)   (ended May 31, 2011)
  (Unaudited)   (Unaudited)   (Unaudited)   (Unaudited)
               
Total Revenue $64,615   $59,750   $191,500   $177,277
               
Adjusted EBITDA** $9,560   $5,634   $34,342   $15,460
               
Net Loss ($4,189)   ($9,156)   ($10,296)   ($20,836)
               
Operating*              
               
Self-Paying Subscribers 1,507   1,328   1,507   1,328
               
Total Subscribers 2,117   1,902   2,117   1,902
               
Subscriber Acquisition Cost (SAC) $49   $50   $50   $55
               
Cost Per Gross Addition (CPGA) $68   $76   $74   $88

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

"In the quarter, we continued to demonstrate the strong operating leverage our business model provides," said Michael Washinushi, CFO, SiriusXM Canada. "Most of our $4.9 million increase in revenue flowed straight through to Adjusted EBITDA, which was up $4.0 million year-over-year despite $0.7 million in one-time expenses related to our secondary offering and the CRTC hearing."

Financial review of Q3 and year-to-date FY2012 IFRS results compared to Combined Information for the comparative three and nine-month periods in 2011

For Q3 FY2012, revenue was $64.6 million, up $4.9 million, or 8.1% from $59.7 million for the comparative quarter in 2011, primarily as a result of the growth in the Company's revenue-generating subscriber base. Year-to-date FY2012 revenue was $191.5 million, up $14.2 million, or 8.0% from $177.3 million for the same period in 2011.

SAC was $49 in Q3 FY2012 relatively in line with $50 for the comparative quarter in 2011 as subsidies and distribution costs increased proportionally with gross additions. SAC for year-to-date FY2012 was $50, down from $55 for the same period in 2011 due to lower subsidies and distribution costs and higher gross additions.

CPGA was $68 in Q3 FY2012, a decrease from $76 for the comparative quarter in 2011. The decline was a result of a decrease in marketing costs achieved through increased operating efficiencies and post-merger cost synergies coupled with higher gross subscriber additions. CPGA for year-to-date FY2012 was $74, down from $88 for the same period in 2011 due to a decrease in marketing costs as well as lower subsidy and distribution costs.

Q3 FY2012 Adjusted EBITDA improved to $9.6 million, representing a 69.7% increase, or $4.0 million improvement, from Adjusted EBITDA of $5.6 million for the comparative quarter in 2011. This increase over the comparable quarter in 2011 was a result of the Company's top-line growth combined with a decrease in marketing expenses, which was offset by a higher cost of revenue and an increase in administrative and information technology costs. Adjusted EBITDA for year-to-date FY2012 was $34.3 million, up 122.1%, or $18.9 million, from $15.5 million for the same period in 2011.

During the quarter, SiriusXM Canada generated $8.7 million in cash from operations, used cash of $1.4 million in investing activities related to the purchase of property equipment and intangible assets and used $0.9 million in financing activities to repay the outstanding portion of a US dollar Senior Note. The Company generated $7.3 million in free cash flow in Q3 FY2012. For year-to-date FY2012, the Company generated $30.6 million in cash from operations, used $2.5 million in investing activities and used $11.7 million in financing activities. The Company generated $28.0 million in free cash flow for the FY2012 year-to-date period. As at May 31, 2012, SiriusXM Canada had total cash and cash equivalents of $42.5 million, up from $36.1 million as at February 29, 2012.

Conference Call and Webcast Details

SiriusXM Canada will hold a conference call to discuss the Company's Q3 FY2012 results on Wednesday, July 11, 2012 at 8:30 a.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 Wednesday, July 18, 2012 at midnight. To access the archived conference call, please dial 416-849-0833, or 1-855-859-2056 and enter the reservation code 93170441. A live audio webcast of the conference call in addition to a slide presentation 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 unaudited EBITDA and unaudited Adjusted EBITDA to Operating Income (loss).

(In $000's) IFRS
Q3 2012
Combined
Q3 2011
    IFRS
Year-to-date
FY2012
Combined
Year-to-
date
FY2011
  (Unaudited) (Unaudited)     (Unaudited) (Unaudited)
             
Operating loss (1,199) (3,787)     (169) (13,242)
             
Amortization 10,005 6,422     30,990 20,139
             
EBITDA 8,806 2,635     30,821 6,897
             
Stock based compensation 333 27     1,160 90
             
Severance and merger costs 104 2,972     1,381 8,474
             
Fair value adjustments* 317       980  
             
Adjusted EBITDA 9,560 5,634     34,342 15,460

* 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 July 10, 2012 for a more detailed explanation of the differences between IFRS actual financial results and the combined information described in this press release. 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 consolidated statement of operations and comprehensive income. Please see the Company's Management Discussion & Analysis filed July 10, 2012 for complete definition of non-GAAP measures.

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 future operating performance and merger benefits and costs synergies. 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. 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 Canadian Satellite Radio Holdings Inc.'s filings with the Canadian securities regulators, available at www.sedar.com.

About SiriusXM Canada

Canadian Satellite Radio Holdings Inc. (TSX: XSR) operates as SiriusXM Canada. SiriusXM Canada is 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 from professional sports leagues including the NHL, NFL, MLB and CFL.

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.sirius.ca and www.xmradio.ca and on Apple, BlackBerry 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 SHEET
(Unaudited)

As at   May 31, August 31,
(Canadian dollars)   2012 2011
       
ASSETS      
Current assets      
Cash and cash equivalents   42,489,061 26,015,439
Accounts receivable   11,312,986 10,718,676
Prepaid expenses     3,301,821 2,587,736
Inventory     455,380 2,265,438
Total current assets   57,559,248 41,587,289
Long-term prepaid expenses   68,603 901,563
Property and equipment     8,179,284 9,680,308
Intangible assets   180,420,238 206,113,620
Deferred tax assets   54,455,906 51,545,684
Goodwill   96,732,525 96,732,525
Total assets   397,415,804 406,560,989
       
LIABILITIES AND SHAREHOLDERS' EQUITY      
Current liabilities      
Trade and other payables   34,512,258 32,870,628
Due to related parties     6,298,374 17,203,492
Interest payable     6,274,522 2,709,537
Current portion of deferred revenue   133,681,948 126,995,705
Provisions     1,804,281 2,123,557
Total current liabilities   182,571,383 181,902,919
Deferred revenue   20,367,418 20,084,379
Other long-term liabilities     8,067,864 9,248,840
Due to related parties     1,208,332 1,208,332
Long-term debt   145,960,769 146,143,284
Provisions     465,036 497,197
Total liabilities   358,640,802 359,084,951
       
Shareholders' equity      
Share capital   148,314,171 147,169,430
Contributed surplus     4,773,856 4,324,032
Accumulated deficit     (114,313,025) (104,017,424)
Total shareholders' equity   38,775,002 47,476,038
Total liabilities and shareholders' equity   397,415,804 406,560,989

CONSOLIDATED INTERIM STATEMENT OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
(Unaudited)

    Three Months ended   Nine months ended
    May 31, August 31,   May 31, August 31,
(Canadian dollars)   2012 2011   2012 2011
             
Revenue   64,615,173 55,465,638   191,500,550 140,917,994
             
Operating expenses            
  Operating costs   55,705,162 44,711,382   159,298,266 117,318,777
  Severance and merger costs     104,428 6,261,928     1,381,390 7,737,246
  Depreciation and amortization   10,005,268 6,283,402   30,989,731 8,031,023
Operating income   (1,199,685) (1,791,074)   (168,837) 7,830,948
             
Finance costs, net            
  Interest income     103,118 80,737     228,147 329,145
  Interest expense   (4,010,560) (3,427,853)   (12,715,708) (3,427,853)
  Foreign exchange gain / (loss)   (389,460) (143,904)   (546,035) (315,095)
  Gain / (loss) on debt payment   (1,908,263)   (1,908,263)
  Gain / (loss) on revaluation of derivative   14,403   (3,390)
              
Finance costs   (4,282,499) (5,399,283)   (13,036,986) (5,322,066)
             
Net income (loss) before income tax   (5,482,184) (7,190,357)   (13,205,823) 2,508,882
Income tax recovery     1,293,210 15,344,226     2,910,222 15,344,226
Net income (loss) and comprehensive income (loss)   (4,188,974) 8,153,869   (10,295,601) 17,853,108
             
Basic and fully diluted (loss) earnings per share   (0.03) 0.07   (0.08) 0.19

CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)
(Unaudited)

          Total
          Shareholders'
    Share Contributed Accumulated Equity
(Canadian dollars)   Capital Surplus deficit (deficiency)
           
Balance, December 1, 2010   36,000,100 (115,460,055) (79,459,955)
Return of Capital   (36,000,000) (36,000,000)
CSRH shares outstanding at time of merger   154,596,684 154,596,684
CSRH cash deficiency notes   (7,517,868) (7,517,868)
Shares for interest - convertible note   67,999 67,999
Stock options exercised   22,515 (14,361) —  8,154
Equity component of convertible debt acquired   —  1,539,196 —  1,539,196
Vested stock options at acquisition   —  2,614,513 —  2,614,513
Stock compensation expense   —  184,684 —  184,684
Total comprehensive income for the period   17,853,108 17,853,108
Dividends on Class C preferred shares   (1,601,753) (1,601,753)
Dividends on Class C shares   (5,942,481) (5,942,481)
Part VI.1 tax reversal   1,133,757 1,133,757
Balance, August 31, 2011   147,169,430 4,324,032 (104,017,424) 47,476,038
           
Balance, September 1, 2011   147,169,430 4,324,032 (104,017,424) 47,476,038
Total comprehensive (loss) for the period   —  —  (10,295,601) (10,295,601)
Stock-based compensation   —  1,160,263 —  1,160,263
Stock options exercised   1,144,741 (710,439)   434,302
Balance, May 31, 2012   148,314,171 4,773,856 (114,313,025) 38,775,002

CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS
(Unaudited)

    Three Months ended   Nine months ended
    May 31, August 31,   May 31, August 31,
(Canadian dollars)   2012 2011   2012 2011
Cash provided by (used in)            
             
OPERATING ACTIVITIES            
Net income (loss) for the period   (4,188,974) 8,153,869   (10,295,601) 17,853,108
Add(deduct) items not involving cash            
  Amortization of intangible assets     9,338,902 5,605,363   28,866,551   6,861,192
  Depreciation of property and equipment     666,366 678,039   2,123,180   1,169,831
  Future income tax recovery   (1,293,210) (15,344,226)     (2,910,222) (15,344,226)
  Write down of intangible asset   —  4,235,953     4,235,953
  Stock-based compensation     333,136 184,684   1,160,263   184,684
  Accrued interest     3,583,180 2,709,537   3,564,985   2,709,537
  Interest accretion     229,193 129,234   718,533   129,234
  Loss on repayment of debt   —  1,908,263   —    1,908,263
  Share issued for interest settlement   —  67,999   —  67,999
  Revaluation of derivative   (14,403)   3,390
  Unrealized foreign exchange losses     448,082   7,879   293,658 7,879
  Net change in non-cash working capital and deferred revenue related to operations   (438,238) (10,009,687)   7,123,295 (12,046,186)
Cash provided by (used in) operating activities     8,664,034 (1,673,093)   30,648,032   7,737,268
             
INVESTING ACTIVITIES            
Cash acquired on acquisition   —  2,223,112   —    2,223,112
Proceeds on sale of property and equipment   —    1,757   —  1,757
Purchase of property and equipment     (30,840)   (65,132)     (625,892) (180,198)
Purchase of intangible assets   (1,341,147) (482,203)     (1,891,830) (1,931,242)
Cash provided by (used in) investing activities   (1,371,987) 1,677,534     (2,517,722)   113,429
             
FINANCING ACTIVITIES            
Distributions to shareholders   —  (44,723,690)   —  (44,723,690)
Proceeds from exercise of stock options    40,394   8,154   434,302 8,154
Proceeds from debt   —    62,000,000   —  62,000,000
Debt financing fees   —  (4,118,803)   —  (4,118,803)
Repayments of debt   (917,700) (42,611,373)   (917,700) (42,611,373)
Payment of related party promissory notes   —  —    (11,173,290)  — 
Cash provided by financing activities   (877,306) (29,445,712)   (11,656,688) (29,445,712)
             
Net increase (decrease) in cash and cash equivalents during the period     6,414,741 (29,441,271)   16,473,622 (21,595,015)
Cash and cash equivalents, beginning of period   36,074,320   55,456,710   26,015,439 47,610,454
Cash and cash equivalents, end of period   42,489,061   26,015,439   42,489,061 26,015,439

 

 

 

SOURCE SiriusXM Canada

For further information:

Investors 
Morlan Reddock 
416-513-7418 
morlan.reddock@siriusxm.ca

Kristen Dickson
TMX Equicom
416-815-0700 ext 273
kdickson@equicomgroup.com


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