12.6 per cent increase in revenue compared to the first quarter of 2010,
driven by growth in self-paying subscribers and ARPU
TORONTO, Jan. 12 /CNW/ - Canadian Satellite Radio Holdings Inc., parent
company of XM Canada ("CSR" or the "Company") (TSX: XSR), Canada's
leading satellite radio company, today released its financial results
for the first quarter ended November 30, 2010.
First Quarter 2011 Financial Highlights
Quarter ended November 30, 2010 versus quarter ended November 30, 2009
Increased revenue by 12.6 per cent to $15.4 million from $13.7 million
marking the 21st consecutive quarter of revenue growth
Average Monthly Subscription Revenue Per Subscriber (ARPU) increased to
$11.40 from $11.26, marking the second consecutive quarter of ARPU
Increased self-paying subscribers by 12.2 per cent from 391,600 to
"Our high-quality programming and content are the foundation of our
ability to attract and retain subscribers. Despite challenges in the
economy, revenue growth continues to be robust, driven by an increase
in both ARPU and self-paying subscribers. The auto sector recovery and
the expansion of our content delivery across multiple platforms - most
notably in the online and mobile space - have also contributed to our
solid results," said Michael Moskowitz, President and Chief Executive
Officer of XM Canada. "As well, we continue on our disciplined business
strategy, keeping operating costs in line to improve profitability as
we continue to evolve the business."
Recent Business Highlights
On November 24, 2010, XM Canada publicly announced it has entered into a
definitive agreement to combine operations with Sirius Canada Inc. The
combined company is expected to have a subscriber base of more than 1.7
million. The combination is expected to yield synergies of
approximately $20 million on an annualized basis within 18 months by
allowing the combined company to better manage costs through improved
efficiencies and greater economies of scale.
The Canadian Radio-television and Telecommunications Commission (CRTC)
has announced it will hold a hearing starting on March 7, 2011 to
review the application for a merger between the two companies.
Shareholders of XM Canada will vote on the merger at the company's
annual general meeting on February 17, 2011.
As part of the November 24, 2010 announcement, CSR also announced its
intention to exchange its outstanding unsecured senior notes of US$69.8
million for new Canadian dollar denominated unsecured senior notes of
CSR with different terms. Concurrent with the closing of the exchange
offer, CSR anticipates issuing additional new unsecured senior notes on
a private placement basis to accredited investors.
During first quarter of 2011, XM Canada launched its new after-market
offering, XM Snap!, further expanding its offering of in-car digital
audio entertainment. Designed for quick "do-it-yourself" installation
by plugging into a vehicle cigarette lighter or power adapter socket,
the device is built for simplicity. XM Snap! has been well-received by
technology and lifestyle media across Canada who have highlighted the
product for its streamlined features and functionality for the
XM Canada recently announced the start of voting for the 3rd annual The Verge Music Awards including 2011 nominees for Canadian Artist of the Year, Canadian Album of the Year and Emerging Artist of the Year. Canada's top five finalists will be announced February 1st, 2011.
Revenue increased by $1.7 million, or 12.6 per cent, to $15.4 million
from $13.7 million for the first quarters of 2011 and 2010,
respectively. The increase was attributable to the Company's growing
subscriber base and an increase in Average Monthly Subscription Revenue
per Subscriber (ARPU).
ARPU was $11.40 and $11.26 for the first quarters of 2011 and 2010,
respectively. ARPU increased in the first quarter of 2011 compared to
the first quarter of 2010 due primarily to the Music Royalty fee, which
was introduced in May 2010 offset by: an increase in automotive
Self-Paying Subscribers which have a lower ARPU; and an increase in
subscribers committing to multi-year plans as a result of promotional
Adjusted Operating Profit (Loss) increased from ($1.0 million) in the
first quarter of 2010 to ($2.2 million) in the first quarter of 2011.
Despite the increase in revenues year-over-year, Adjusted operating
loss increased due to absence of the $1.2 million credit on reversal of
Part II licence fee realized in the first quarter of 2010 and the
absence of one-time credits for marketing and Subsidies & Distribution
costs recognized in first quarter of 2010, merger related costs of
$0.8 million and a higher percentage cost of revenue share & royalties
due to higher revenue share payments to an OEM partner and the absence
of the discount on royalty payments the Company benefitted from in the
same period prior year.
Pre-Marketing Adjusted Operating Profit remained flat at $2.7 million
for the first quarters of 2011 and 2010, respectively. Pre-Marketing
Adjusted Operating Profit remained flat compared to the same period in
the prior year primarily due to a $1.7 million revenue improvement,
lower general and administrative costs of approximately $0.5 million
offset by higher cost of revenue of $0.4 million and by a $1.2 million
reduction due to a gain on reversal of Part II licence recognized in
first quarter of 2010 and merger related costs of $0.8 million
recognized in first quarter of 2011. This quarter is the tenth
consecutive quarter in which we have generated Pre-Marketing Adjusted
Operating Profit. As we continue to grow our revenue and manage
programming and general & administrative costs, we expect Pre-Marketing
Adjusted Operating Profit (Loss) to continue to improve on an annual
Per Subscriber Acquisition Cost (SAC) was $54 and $35 for the first
quarters of 2011 and 2010, respectively. The increase in SAC is
attributable to higher subsidies and distribution costs due to higher
costs in both the OEM and retail channels.
Cost per Gross Addition (CPGA) was $121 and $83 for the first quarters
of 2011 and 2010, respectively. CPGA increased year-over-year as a
result of higher advertising and marketing costs, as well as higher
direct costs to acquire a subscriber.
The non-GAAP measures above should be used in addition to, but not as a
substitute for, the analysis provided in the interim consolidated
statement of operations and deficit.
About Canadian Satellite Radio Holdings Inc.
Canadian Satellite Radio Holdings Inc. (TSX: XSR) operates as XM Canada
and is Canada's premium digital audio entertainment and information
company with the best signal coverage across the country. With 130
digital channels of choice, XM Canada offers Canadian listeners the
most unique and original Canadian and international programming,
including commercial-free music channels, exclusive live concerts and
sports coverage, and the best in talk, comedy, children's and
entertainment programming. A free 14-day trial of XM Radio is available
at http://www.xmradio.ca/freetrial/. Visit www.xmradio.ca for
programming and subscription information.
XM Canada is the satellite entertainment leader in the Canadian
automotive market with long-term factory installation agreements with
manufacturers that own a significant share of the domestic vehicle
market. XM's industry-leading products are available at
shop.xmradio.ca, and at retailers nationwide.
XM programming is available by subscribing directly through XM Canada
and is also available as streams of commercial-free XM music channels
on TELUS Mobile Radio and Rogers Wireless Radio on Demand. XM Canada is
the exclusive music channel provider on Air Canada's flights.
To find out more about Canadian Satellite Radio Holdings Inc. (TSX:
XSR), visit our website at www.xmradio.ca/about/.
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. Although
CSR 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. CSR's forward-looking
statements are expressly qualified in their entirety by this cautionary
statement. CSR 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 CSR's filings with the Canadian
securities regulators, available at www.sedar.com.
CANADIAN SATELLITE RADIO HOLDINGS INC.
RECONCILIATION OF LOSS BEFORE THE UNDERNOTED
TO ADJUSTED OPERATING PROFIT (LOSS) (UNAUDITED)
Adjusted Operating Profit (Loss) is defined as operating profit (loss)
before the undernoted excluding amortization, stock-based compensation
to employees, directors, officers and service providers, and non-cash
costs paid by our parent company. We believe that Adjusted Operating
Profit (Loss), as opposed to operating profit (loss) or net profit
(loss), provides a better measure of our core business operating
results and improves comparability.
This non-GAAP measure should be used in addition to, but not as a
substitute for, the analysis provided in the Statement of Operations
and Deficit. We believe Adjusted Operating Profit (Loss) is a useful
measure of our operating performance and is a significant basis used by
our management to measure the operating performance of our business.
While amortization and stock-based compensation are considered
operating costs under generally accepted accounting principles, these
expenses primarily represent non-cash current period allocation of
costs associated with long-lived assets acquired or constructed in
prior periods and non-cash employee and service provider compensation.
Costs paid by parent company are non-cash costs related to the licence
application process and are not related to ongoing operations of the
business. Adjusted Operating Profit (Loss) is a calculation used as a
basis for investors and analysts to evaluate and compare the periodic
and future operating performances and value of similar companies in our
industry, although our measure of Adjusted Operating Profit (Loss) may
not be comparable to similarly titled measures of other companies.
Adjusted Operating Profit (Loss) does not purport to represent operating
loss or cash flow from operating activities, as those terms are defined
under generally accepted accounting principles, and should not be
considered as an alternative to those measurements as an indicator of
Pre-Marketing Adjusted Operating Profit (Loss) is defined as Adjusted
Operating Profit (Loss) adding back total marketing expenses. We
believe that Pre-Marketing Adjusted Operating Profit (Loss) is a good
measure of operating performance before investing to acquire new
subscribers. This non-GAAP measure should be used in addition to, but
not as a substitute for, the analysis provided in the Statement of
Operations and Deficit. We believe Pre-Marketing Adjusted Operating
Profit (Loss) is a useful measure of our operating performance and is a
significant basis used by our management to measure the operating
performance of our business.
Reconciliation of profit (loss) before the undernoted to Adjusted
Profit (loss) before the undernoted
Add back non-Adjusted Operating Profit (Loss) items included in loss
Costs paid by parent company
Adjusted Operating Profit (Loss)
Add total marketing
Pre-Marketing Adjusted Operating Profit
SOURCE XM Canada
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