SiriusXM Canada Reports Fourth Quarter and Fiscal 2016 Year-End Results

TORONTO, Sept. 28, 2016 /CNW/ - Sirius XM Canada Holdings Inc. ("SiriusXM Canada" or the "Company") (TSX: XSR), parent of Sirius XM Canada Inc., today released the financial results for its fourth quarter fiscal 2016 ("Q4 FY2016") and the audited consolidated financial statements for fiscal year ended  August 31, 2016 ("FY2016") prepared in accordance with International Financial Reporting Standards (IFRS). A summary of the IFRS financial results for Q4 and FY2016 is attached. All results are reported in thousands of Canadian dollars, except for subscribers and per share amounts, unless otherwise stated.

Q4 and FY2016 Financial and Operating Metrics

The figures below include certain non-GAAP measures and industry metrics. These figures are subject to the qualification and assumptions set out in the Company's notes to such results.









Financial 1

Q4 FY2016

Q4 FY2015

% Change6

FY2016

FY2015

% Change6


Aug 31, 2016

Aug 31, 2015


Aug 31, 2016

Aug 31, 2015









Revenue

87,408

83,709

4.4%

341,327

325,874

4.7%

Adjusted EBITDA 2

15,241

12,792

19.1%

84,362

79,214

6.5%

Net Income before non-recurring adjustments 3

4,184

2,406

73.9%

33,843

28,239

19.8%








Net Income (loss)

4,184

2,406

73.9%

49,730

(6,748)

837.0%








Free cash flow 4

17,991

15,817

13.7%

54,477

55,157

(1.2)%








Operating







Self-Pay subscribers

2,007

1,925

4.3%

2,007

1,925

4.3%

Total subscribers

2,831

2,726

3.9%

2,831

2,726

3.9%

Self-Pay ARPU 5

$12.67

$12.69

(0.2)%

$12.61

$12.61

-%

Subscriber Acquisition Cost (SAC)

$40

$40

-%

$40

$39

2.6%

1 All figures in the table above are in thousands except Self-Pay ARPU and SAC.

2 Adjusted EBITDA is a non-GAAP measure. A reconciliation of income (loss) before taxes to both EBITDA and Adjusted EBITDA is provided below.

3 Non-recurring adjustment in FY2016 include a withholding tax recovery of $15.9 million. Non-recurring adjustments in FY2015 includes a $15.9 million withholding tax expense and a $19.1 million non-cash income tax expense relating to future income taxes.

4 Free cash flow is a non-GAAP measure. A reconciliation of free cash flow is provided below.

5 Self-Pay ARPU is derived from the total of earned subscription revenue from Self-Pay subscribers, music royalty fee, and activation fees divided by the monthly weighted average number of Self-Pay subscribers. Please see the Company's MD&A for a more detailed description.

6 Percentage variances/changes are calculated based on the exact numbers, therefore, amounts may not sum as a result of rounding in certain instances.

 

"We continued to deliver an unmatched listening experience in the quarter with exclusive musical content, such as The Tragically Hip Radio takeover, and extensive sports coverage, while also helping foster Canadian talent through another year of our Canada's Top Comic competition," said Mark Redmond, President and CEO SiriusXM Canada. "In addition, as a result of growth in our subscriber base, we realized year-over-year improvements in revenue and Adjusted EBITDA. In terms of our proposed recapitalization go-private transaction, we are pleased to have received two out of the three necessary approvals - shareholder and court - and are working diligently to secure the required CRTC regulatory approval to complete the transaction."

Q4 and FY2016 Financial Results Review

For Q4 FY2016, revenue was $87,408, up $3,699, or 4.4%, from $83,709 in Q4 FY2015.  The year-over-year improvement reflects growth in the Company's subscriber base, partly offset by a decrease in equipment sales. Q4 FY2016 Self-Pay ARPU was relatively flat to Q4 FY2015 at $12.67. For FY2016, revenue was $341,327, up $15,453, or 4.7%, from $325,874 for the same period in FY2015.   FY2016 Self-Pay ARPU of $12.61 was in line with FY2015.

Adjusted EBITDA for Q4 FY2016 increased $2,449, or 19.1%, to $15,241 from $12,792 in Q4 FY2015. The improvement was due to revenue growth and lower marketing costs, partly offset by higher variable revenue share and royalty costs associated with the corresponding increase in revenues.  For FY2016, Adjusted EBITDA was $84,362, up $5,148, or 6.5%, from $79,214 for the same period in FY2015.

The Company recorded net income of $4,184 in Q4 FY2016, an increase of $1,778, or 73.9%, compared to net income of $2,406 in Q4 FY2015, which was mainly due to higher revenues, partly offset by increased operating expenses and greater depreciation and amortization. FY2016 net income was $49,730, up $56,478, compared to a net loss of $6,748 for the same period in FY2015. Excluding the impact of the non-recurring adjustments, net income was $33,843 and $28,239 for FY2016 and FY2015, respectively.

SAC for Q4 FY2016 and FY2015 was flat at $40. SAC for FY2016 was $40, up from $39 in FY2015, which was due to greater new vehicle production and sales volumes, a one-time net realizable provision for inventory purchased, and unfavourable foreign exchange rates compared to the same period in FY2015.

The Company generated free cash flow of $17,991 in Q4 FY2016, an improvement of $2,174, or 13.7%, from $15,817 in Q4 FY2015 mainly due to an increase in cash flow generated from operating activities partially offset by higher capital expenditures which were related to XM activation fees and additions to the dual-band terrestrial repeater network. The Company generated free cash flow of $54,477 during FY2016, down $680, or 1.2% from $55,157 in FY2015.

At August 31, 2016, the Company had total cash of $40,379 compared to $26,128 at August 31, 2015, primarily resulting from the dividend suspension pursuant to the Company's Recapitalization go-private transaction.

Conference Call and Webcast Details

SiriusXM Canada will hold a conference call to discuss the Company's FY 2016 Q4 and year-end results on Thursday, September 29, 2016 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 will be archived for replay until Thursday, October 6, 2016 at midnight. To access the archived conference call, please dial 416-849-0833 or 1-855-859-2056 and enter reservation code: 82336392. A live audio webcast of the conference call will be available here: http://bit.ly/2d3aSJa. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software downloads that may be required. An archived replay will be available for 90 days.

Reconciliations

The following is a reconciliation of EBITDA and Adjusted EBITDA to net income before income tax:






Adjusted EBITDA: Reconciliation

Q4 FY2016

Q4 FY2015

FY2016

FY2015

(All amounts in thousands)

Aug 31, 2016

Aug 31, 2015

Aug 31, 2016

Aug 31, 2015







Net income before income tax

4,058

3,564

60,641

24,416


Interest expense & income (net)

3,215

3,071

13,094

12,213


Foreign exchange (loss) gain

(79)

280

59

331


Depreciation and amortization

6,005

5,514

22,662

22,936

EBITDA

13,199

12,429

96,456

59,896


Withholding tax (recovery) expense

(15,887)

15,887


Stock-based compensation

458

363

(78)

3,427


Third-party advisory costs

1,584

3,871


Fair value adjustments 7

4

Adjusted EBITDA

15,241

12,792

84,362

79,214






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






Free Cash Flow: Reconciliation

Q4 FY2016

Q4 FY2015

FY2016

FY2015

(All amounts in thousands)

Aug 31, 2016

Aug 31, 2015

Aug 31, 2016

Aug 31, 2015






Cash flow provided by operating activities

20,812

18,343

71,837

70,955

Purchase of property and equipment

(629)

(468)

(3,834)

(1,845)

Purchase of intangible assets

(2,192)

(1,982)

(13,526)

(13,098)

Prepayment for property and equipment

(76)

(855)

Free Cash Flow

17,991

15,817

54,477

55,157

 

For a complete definition of non-GAAP measures, and for additional details on the Company's FY2016 results, please see the Company's MD&A filed September 28, 2016 which is incorporated herein by reference. 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 financial statements for FY2016.

Forward-Looking Statements

Certain statements included above are 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 completion of the Company's Recapitalization go-private transaction, the payment of dividends in the future, and future performance and financial results. Although SiriusXM Canada believes that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. As a result, we cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements. 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 more than 2.8 million subscribers, is the country's leading audio entertainment company and broadcasts more than 130 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, entertainment and major sports brands including the NHL, NFL, NBA, MLB, NASCAR, CNN, CBC, FOX, BBC, Howard Stern, Disney, Comedy Central and more.

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 2,500 retail locations nationwide. To find out more about SiriusXM Canada, visit our website at www.siriusxm.ca.

SiriusXM Canada has been designated one of Canada's 50 Best Managed Companies seven years in a row and is currently a Platinum Club Member, in addition to 2013, 2014 and 2015 rankings in PROFIT 500's list of Canada's Fastest Growing Companies.

Join SiriusXM Canada on Facebook at facebook.com/siriusxmcanada, on Twitter at twitter.com/siriusxmcanada and on Youtube at youtube.com/siriusxmcanada.

CONSOLIDATED STATEMENTS OF FINANCIAL POSITION


At


August 31,

August 31,

(All amounts in thousands)


2016

2015





ASSETS




Current assets




Cash


40,379

26,128

Accounts receivable


9,217

9,436

Prepaid expenses


1,318

5,642

Inventory


2,339

35

Total current assets


53,253

41,241

Property and equipment


10,678

4,285

Intangible assets


135,483

131,410

Deferred tax assets


8,517

19,428

Goodwill


96,733

96,733

Total assets


304,664

293,097





LIABILITIES AND SHAREHOLDERS' DEFICIENCY




Current liabilities




Trade and other payables


45,120

52,545

Due to related parties


16,557

15,950

Interest payable


3,966

3,966

Deferred revenue


156,929

153,076

Provisions


930

1,078

Total current liabilities


223,502

226,615

Deferred revenue


9,086

12,033

Other long-term liabilities


9,537

651

Due to related parties


1,208

1,208

Long-term debt


196,644

196,036

Total liabilities


439,977

436,543





Shareholders' deficiency




Share capital


180,280

178,479

Contributed surplus


5,943

8,817

Accumulated deficit


(321,536)

(330,742)

Total shareholders' deficiency


(135,313)

(143,446)

Total liabilities and shareholders' deficiency


304,664

293,097

 

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY










Total

For the year ended

Share

Contributed

Accumulated

Shareholders'

(All amounts in thousands)

Capital

Surplus

Deficit

Deficiency






At September 1, 2014

176,862

6,067

(270,157)

(87,228)

Net loss and comprehensive loss

(6,748)

(6,748)

Stock-based compensation

3,427

3,427

Dividends

(53,837)

(53,837)

Stock options exercised

1,617

(677)

940

At August 31, 2015

178,479

8,817

(330,742)

(143,446)






At September 1, 2015

178,479

8,817

(330,742)

(143,446)

Net income and comprehensive income

49,730

49,730

Stock-based compensation

(976)

(976)

Dividends

(40,524)

(40,524)

Restricted Stock Units ("RSU") and
Performance Stock Units ("PSU") awards,
net equity settlement

1,286

(1,681)

(395)

Stock options exercised

515

(217)

298

At August 31, 2016

180,280

5,943

(321,536)

(135,313)

 

CONSOLIDATED STATEMENTS OF INCOME (LOSS)







Three months ended

Year ended


August 31,

August 31,

August 31,

August 31,

(All amounts in thousands except per share amounts)

2016

2015

2016

2015






Revenue

87,408

83,709

341,327

325,874






Operating expenses






Operating costs

74,209

71,280

260,758

250,091


Depreciation and amortization

6,005

5,514

22,662

22,936

Operating income

7,194

6,915

57,907

52,847






Withholding tax recovery (expense)

15,887

(15,887)







Interest income

58

59

234

288


Interest expense

(3,273)

(3,130)

(13,328)

(12,501)


Foreign exchange (gain) loss

79

(280)

(59)

(331)

Finance costs, net

(3,136)

(3,351)

(13,153)

(12,544)






Net income and comprehensive income before
income tax

4,058

3,564

60,641

24,416

Income tax expense

126

(1,158)

(10,911)

(31,164)

Net income (loss) and comprehensive income (loss)

4,184

2,406

49,730

(6,748)






Earnings (loss) per share - basic and diluted

0.04

0.02

0.39

(0.05)

 

CONSOLIDATED STATEMENTS OF CASH FLOWS




Three months ended

Year ended

(All amounts in thousands)

August 31,
 2016

August 31,
2015

August 31,
2016

August 31,
2015

Cash provided by (used in)










OPERATING ACTIVITIES





Net income (loss) for the period

4,184

2,406

49,730

(6,748)






Add (deduct) items not involving cash:






Amortization of intangible assets

5,669

4,995

21,366

21,013


Depreciation of property and equipment

336

518

1,296

1,923


Income tax expense

(126)

1,158

10,911

31,164


Stock-based compensation

458

363

(78)

3,427


Tax paid in lieu of shares issued for stock-based
compensation

(407)


Accrued interest

2,813

2,813


Interest accretion

155

146

608

572


Foreign exchange (gain) loss

(3)

308

(27)

583

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

7,326

5,636

(11,562)

19,021






Cash provided by operating activities

20,812

18,343

71,837

70,955






INVESTING ACTIVITIES





Purchase of property and equipment

(629)

(468)

(3,834)

(1,845)

Purchase of intangible assets

(2,192)

(1,982)

(13,526)

(13,098)

Prepayment for property and equipment

(76)

(855)

Cash used in investing activities

(2,821)

(2,526)

(17,360)

(15,798)






FINANCING ACTIVITIES





Payment of dividends

(13,475)

(40,524)

(53,837)

Proceeds from exercise of stock options

36

32

298

940

Cash used in financing activities

36

(13,443)

(40,226)

(52,897)






Net increase in cash during the period

18,027

2,374

14,251

2,260

Cash balance, beginning of period

22,352

23,754

26,128

23,868

Cash balance, end of period

40,379

26,128

40,379

26,128

 

SOURCE SiriusXM Canada

For further information: Odeta Kellici, SiriusXM Canada, Tel: 416-513-7416, Odeta.Kellici@siriusxm.ca; Kristen Dickson, NATIONAL Equicom, 416-848-1429, Kdickson@national.ca


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