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Press release from CNW Group

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

Wednesday, July 11, 2012

SiriusXM Canada Delivers Continued Growth with Record Revenue in Fiscal 2012 Third Quarter07:00 EDT Wednesday, July 11, 2012Total Subscribers of 2.1 million; year-over-year net additions of 214,300Record revenue of $64.6 millionAdjusted EBITDA** of $9.6 Million, up 69.7% year-over-year Free cash flow of $7.3 million, up 35% year-over-yearTORONTO, 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 CompanyYear-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.comFinancial and Operational SummaryCombined 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 *IFRSQ3 FY2012 CombinedQ3 2011 IFRSYear-to-dateFY2012 CombinedYear-to-dateFY2011 (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 Subscribers1,507 1,328 1,507 1,328        Total Subscribers2,117 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 2011For 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 foryear-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 DetailsSiriusXM 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)IFRSQ3 2012CombinedQ3 2011  IFRSYear-to-dateFY2012CombinedYear-to- dateFY2011 (Unaudited)(Unaudited)  (Unaudited)(Unaudited)       Operating loss(1,199)(3,787)  (169)(13,242)       Amortization10,0056,422  30,99020,139       EBITDA8,8062,635  30,8216,897       Stock based compensation33327  1,16090       Severance and merger costs1042,972  1,3818,474       Fair value adjustments*317   980        Adjusted EBITDA 9,5605,634  34,34215,460* Fair value adjustment relates to reduction in revenue due to valuation of deferred revenue as per purchase price accountingPlease 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 StatementsCertain 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 CanadaCanadian 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) 20122011    ASSETS   Current assets   Cash and cash equivalents 42,489,061 26,015,439Accounts receivable 11,312,986 10,718,676Prepaid expenses   3,301,821 2,587,736Inventory   455,380 2,265,438Total current assets 57,559,248 41,587,289Long-term prepaid expenses 68,603 901,563Property and equipment   8,179,284 9,680,308Intangible assets 180,420,238 206,113,620Deferred tax assets 54,455,906 51,545,684Goodwill 96,732,525 96,732,525Total assets 397,415,804 406,560,989    LIABILITIES AND SHAREHOLDERS' EQUITY   Current liabilities   Trade and other payables 34,512,258 32,870,628Due to related parties   6,298,374 17,203,492Interest payable   6,274,522 2,709,537Current portion of deferred revenue 133,681,948 126,995,705Provisions   1,804,281 2,123,557Total current liabilities 182,571,383 181,902,919Deferred revenue 20,367,418 20,084,379Other long-term liabilities   8,067,864 9,248,840Due to related parties   1,208,332 1,208,332Long-term debt 145,960,769 146,143,284Provisions   465,036 497,197Total liabilities 358,640,802 359,084,951    Shareholders' equity    Share capital 148,314,171 147,169,430Contributed surplus   4,773,856 4,324,032Accumulated deficit   (114,313,025)(104,017,424)Total shareholders' equity  38,775,002 47,476,038Total liabilities and shareholders' equity 397,415,804 406,560,989CONSOLIDATED 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) 20122011 20122011       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 30,989,7318,031,023Operating 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)2,508,882Income tax recovery   1,293,210 15,344,226   2,910,222 15,344,226Net 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)0.19CONSOLIDATED INTERIM STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY)(Unaudited)      Total     Shareholders'  ShareContributedAccumulatedEquity(Canadian dollars) CapitalSurplusdeficit(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——154,596,684CSRH cash deficiency notes (7,517,868)——(7,517,868)Shares for interest - convertible note 67,999——67,999Stock options exercised 22,515(14,361)— 8,154Equity component of convertible debt acquired — 1,539,196— 1,539,196Vested stock options at acquisition — 2,614,513— 2,614,513Stock compensation expense — 184,684— 184,684Total comprehensive income for the period ——17,853,10817,853,108Dividends 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 ——1,133,7571,133,757Balance, 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— 1,160,263Stock options exercised 1,144,741(710,439)— 434,302Balance, 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) 20122011 20122011Cash provided by (used in)             OPERATING ACTIVITIES      Net income (loss) for the period (4,188,974)8,153,869 (10,295,601)17,853,108Add(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 —   2,223,112Proceeds on sale of property and equipment —   1,757 — 1,757Purchase 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 8,154Proceeds from debt —   62,000,000 — 62,000,000Debt 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 47,610,454Cash and cash equivalents, end of period 42,489,061   26,015,439 42,489,061 26,015,439   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