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Press release from CNW Group

SiriusXM Canada Records Strong Third Quarter Performance and Increases Dividend

Wednesday, July 10, 2013

SiriusXM Canada Records Strong Third Quarter Performance and Increases Dividend

16:01 EDT Wednesday, July 10, 2013

  • Increased quarterly dividend by 27.3% to $0.1050
  • Total Subscribers of 2.3 million; year-over-year net additions of 205,000
  • Revenue grew 13.9% to a record $73.6 million
  • Adjusted EBITDA** increased 57.8% to $15.1 million
  • Net income of $0.8 million, up $5.0 million year-over-year
  • Free cash flow increased 81.8% to $13.3 million

TORONTO, July 10, 2013 /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 and year-to-date period ended May 31, 2013 ("Q3 FY2013" and "YTD FY2013" respectively) prepared in accordance with International Financial Reporting Standards (IFRS)1. A summary of IFRS financial results for Q3 and YTD FY2013 is attached. All results are reported in Canadian dollars unless otherwise stated.

Q3 FY2013 Highlights

  • Increased quarterly dividend by 27.3% from $0.0825 to $0.1050
  • Self-Paying Subscribers increased 10.4% to 1,664,200 from 1,507,100 at May 31, 2012
  • Revenue grew 13.9% to $73.6 million from $64.6 million in Q3 FY2012
  • Adjusted EBITDA increased 57.8% to $15.1 million from $9.6 million in Q3 FY2012
  • Net income increased to $0.8 million from a loss of $4.2 million in Q3 FY2012
  • Free cash flow increased 81.8% to $13.3 million from $7.3 million in Q3 FY2012
  • Cash, cash equivalents and short term investments of $51.5 million at May 31, 2013

Year-to-date FY2013 Highlights

  • Revenue grew 11.3% to $213.2 million from $191.5 million for the same period in FY2012
  • Adjusted EBITDA increased 51.9% to $52.2 million from $34.3 million for the same period in FY2012
  • Net income increased to $8.1 million from a loss of $10.3 million for the same period in FY2012
  • Free Cash Flow increased 41.9% to $39.9 million from $28.1 million for the same period in FY2012
  • Launched new sales program targeted at the pre-owned vehicle market

"Continued execution against our business plan led to strong year-over-year growth in EBITDA and Free Cash Flow, and a significant 27% increase in our dividend," said Mark Redmond, President and CEO, SiriusXM Canada. "Our focus remains on driving revenue growth by adding new subscribers and through delivery of enhanced services to existing subscribers. At the same time, we look to improve our margins and build on our track record for generating positive cash flow by keeping a close eye on expenses. Through the first nine months of the year we have delivered against these expectations and look forward to Q4 which is our seasonally strong period for adding new subscribers."

"In the third quarter, we continued to deliver growth in revenue, profitability and Free Cash Flow, allowing for us to return more capital to shareholders in the form of a dividend increase.  At over $51 million, our cash position is strong, providing ample liquidity and flexibility to support both our operating model and exciting growth initiatives going forward," said Michael Washinushi, CFO, SiriusXM Canada.

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.

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

                           
Financial *     Q3 FY2013     Q3 FY2012       YTD FY2013     YTD FY2012
      (ended May 31, 2013)     (ended May 31, 2012)       (ended May 31, 2013)     (ended May 31, 2012)
      (Unaudited)     (Unaudited)       (Unaudited)     (Unaudited)
Total Revenue     $73,582     $64,615       $213,162     $191,501
Adjusted EBITDA**     $15,083     $9,560       $52,152     $34,342
Net Income (Loss)     $776     ($4,189)       $8,113     ($10,296)
                           
Operating*                          
Self-Paying Subscribers     1,664     1,507       1,664     1,507
Total Subscribers     2,322     2,117       2,322     2,117
ARPU     $11.88     $11.60       $11.62     $11.58
Subscriber Acquisition Cost (SAC)     $47     $49       $46     $50
Cost Per Gross Addition (CPGA)     $72     $68       $72     $74
* 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.

Q3 and YTD FY2013 Financial Review

For Q3 FY2013, revenue was $73.6 million, up $9.0 million, or 13.9%, from $64.6 million in Q3 FY2012.  The year-over-year improvement was a result of the continued growth in the Company's revenue-generating subscriber base, as well as an increase in Average Revenue Per User (ARPU). Q3 FY2013 ARPU was $11.88, up from $11.60 in Q3 FY2012. For YTD FY2013, revenue was $213.2 million, up $21.7 million, or 11.3%, from $191.5 million for the same period in FY2012. ARPU for YTD FY2013 was $11.62 compared to $11.58 for the same period in FY2012.

SAC was $47 in Q3 FY2013, down from $49 in Q3 FY2012. The year-over-year improvement was a result of a higher proportion of gross subscriber additions being generated from winback activities that requires no incremental subsidy costs. SAC for YTD FY2013 was $46, down from $50 for the same period in FY2012.

CPGA was $72 in Q3 FY2013, down from $68 in Q3 FY2012. The year-over-year increase was a result of higher marketing costs offset by higher gross subscriber additions. CPGA for YTD FY2013 was $72, down from $74 for the same period in FY2012.

Q3 FY2013 Adjusted EBITDA was $15.1 million, representing a 57.8%, or $5.5 million increase from Adjusted EBITDA of $9.6 million in Q3 FY2012. The year-over-year improvement was a result of the combination of the Company's top-line growth offset by $2.6 million increase in total operating expenses. YTD FY2013 Adjusted EBITDA was $52.2 million, an increase of 51.9%, or $17.8 million, from $34.3 million for the same period in FY2012.

In Q3 FY2013, SiriusXM Canada generated $13.3 million in Free Cash Flow. The Company generated $13.6 million in cash from operations, used $0.3 million of cash in investing activities and used $13.5 million of cash in financing activities. Comparatively, in Q3 FY2012, SiriusXM Canada generated $7.3 million in Free Cash Flow. The Company generated $8.7 million in cash from operations, used $1.4 million of cash in investing activities and used $0.9 million of cash in financing activities. For YTD FY2013, SiriusXM Canada generated $39.9 million in Free Cash Flow. The Company generated $45.4 million in cash from operations, used $10.8 million of cash in investing activities and used $39.4 million of cash in financing activities. Comparatively, for the same period in FY2012, SiriusXM Canada generated $28.1 million in Free Cash Flow. The Company generated $30.6 million in cash from operations, used $2.5 million of cash in investing activities and used $11.7 million of cash in financing activities.

As at May 31, 2013, SiriusXM Canada had total cash, cash equivalents and short-term investments of $51.5 million, down from $51.8 million as at February 28, 2013. The decrease reflects the Company's efforts to strategically deploy its cash, paying $14.3 million in dividends as per its dividend policy.

Conference Call and Webcast Details
SiriusXM Canada will hold a conference call to discuss the Company's Q3 FY2013 results on Thursday, July 10, 2013 at 5:00 p.m. ET. All interested parties can join the call by dialling 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 Thursday, July 17, 2013 at midnight. To access the archived conference call, please dial 416-849-0833, or 1-855-859-2056 and enter the reservation code 25972990. A live audio webcast of the conference call will be available at 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.

                             
(In $000's)     Q3 FY2013       Q3 FY2012       YTD FY2013     YTD FY2012
      (Unaudited)       (Unaudited)       (Unaudited)     (Unaudited)
Operating income (loss)     5,147       (1,199)       23,603     (169)
Depreciation & Amortization     9,374       10,006       26,511     30,990
EBITDA     14,521       8,806       50,114     30,821
Stock based compensation     526       333       1,858     1,160
Integration, severance and merger costs     -       104       -     1,381
Fair value adjustments*     35       317       180     980
Adjusted EBITDA     15,083       9,560       52,152     34,342
* Fair value adjustment relates to the reduction in revenue due to the valuation of deferred revenue as per purchase price accounting

Please see the Company's Management Discussion & Analysis filed July 10, 2013 for more details on the Company's Q3 and YTD FY2013 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 July 10, 2013 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 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. 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
Sirius XM Canada Holdings Inc. (TSX: XSR) operates as SiriusXM Canada. SiriusXM Canada, with over 2.3 million subscribers, 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 every major sport 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.siriusxm.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 SHEETS
(Unaudited)
 
(Canadian dollars)                    
                     
At           May 31, 2013       August 31, 2012
                     
ASSETS                    
Current assets                    
Cash and cash equivalents             46,305,765       51,034,749
Short-term investments           5,195,460      
Accounts receivable           14,457,382       12,133,138
Prepaid expenses           4,404,623       3,361,448
Inventory           200,899       324,316
Total current assets             70,564,129       66,853,651
Long-term prepaid expenses           100,590       79,410
Property and equipment           6,007,510       7,617,399
Intangible assets           159,823,113       175,986,331
Deferred tax assets             56,233,841       59,858,394
Goodwill             96,732,525       96,732,525
Total assets           389,461,708       407,127,710
                     
LIABILITIES AND SHAREHOLDERS' EQUITY                    
Current liabilities                    
Trade and other payables             43,032,074       39,085,800
Due to related parties           8,367,722       6,775,601
Interest payable           6,274,526       2,704,449
Current portion of deferred revenue           142,951,048       137,554,399
Provisions           1,532,359       1,285,587
Total current liabilities           202,157,729       187,405,836
Deferred revenue             18,116,287       21,019,320
Other long-term liabilities           3,759,798       6,902,537
Due to related parties           3,587,527       1,208,332
Long-term debt           145,702,949       144,992,819
Provisions           314,345       344,112
Total liabilities           373,638,635       361,872,956
                     
Shareholders' equity                    
Share capital           150,440,062       148,393,493
Contributed surplus           6,165,175       5,057,501
Accumulated deficit             (140,782,164)       (108,196,240)
Total shareholders' equity             15,823,073       45,254,754
Total liabilities and shareholders' equity           389,461,708       407,127,710
                     
                     

CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
(Unaudited)
 
(Canadian dollars)         Three Months ended     Nine Months ended
        May 31, 2013     May 31, 2012     May 31, 2013     May 31, 2012
                           
Revenue       73,581,631     64,615,173     213,162,178     191,500,550
                           
Operating expenses                          
  Operating costs       59,060,543     55,705,162     163,047,823     159,298,266
  Severance and merger costs           104,428         1,381,390
  Depreciation and amortization       9,374,461     10,005,268     26,511,057     30,989,731
Operating income       5,146,627     (1,199,685)     23,603,298     (168,837)
                           
Finance costs, net                          
  Interest income       170,248     103,118       511,302     228,147
  Interest expense       (3,997,601)     (4,010,560)     (11,897,897)     (12,715,708)
  Foreign exchange (loss)       (65,986)     (389,460)     (530,496)     (546,035)
  Gain (loss) on revaluation of derivatives           14,403     51,378     (3,390)
Finance costs       (3,893,339)     (4,282,499)     (11,865,713)     (13,036,986)
                           
Income (loss) before income tax       1,253,288     (5,482,184)     11,737,585     (13,205,823)
Income tax (expense) recovery       (477,169)     1,293,210     (3,624,553)     2,910,222
Net income (loss) and comprehensive income (loss)       776,119     (4,188,974)       8,113,032     (10,295,601)
                           
Basic and fully diluted (loss) earnings per share       0.01     (0.03)     0.07     (0.08)
                           
                           

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
(Unaudited)
                           
(Canadian dollars)                          
                          Total
        Share     Contributed     Accumulated     Shareholders'
For the nine months ended       Capital     Surplus     deficit     Equity
                           
                           
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
                           
                           
Balance, September 1, 2012       148,393,493     5,057,501     (108,196,240)     45,254,754
Total comprehensive income for the period               8,113,032     8,113,032
Stock-based compensation           1,858,258         1,858,258
Dividends               (40,698,956)     (40,698,956)
Stock options exercised       2,046,569     (750,584)         1,295,985
Balance, May 31, 2013       150,440,062     6,165,175     (140,782,164)     15,823,073
                           
                           

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS
(Unaudited)
 
(Canadian dollars)         Three months ended     Nine months ended
        May 31, 2013     May 31, 2012     May 31, 2013     May 31, 2012
Cash provided by (used in)                          
                           
OPERATING ACTIVITIES                          
Net income (loss) for the period       776,119     (4,188,974)       8,113,032       (10,295,601)
Add(deduct) items not involving cash                          
  Amortization of intangible assets       8,871, 200     9,338,902     24,854,334     28,866,551
  Depreciation of property and equipment       503,261     666,366       1,656,723     2,123,180
  Deferred tax expense (recovery)       477,169     (1,293,210)       3,624,553       (2,910,222)
  Stock-based compensation       526,178     333,136       1,858,258       1,160,263
  Accrued interest       3,587,543     3,583,180       3,570,077     3,564,985
  Interest accretion       241,076     229,193       710,130       718,533
  Revaluation of derivative           (14,403)       (51,378)     3,390
  Unrealized foreign exchange losses       85,134     448,082       598,586     293,658
Net change in non-cash working capital and
deferred revenue related to operations
      (1,476,316)     (438,238)       491,672     7,123,295
Cash provided by operating activities         13,591,364     8,664,034     45,425,987     30,648,032
                           
INVESTING ACTIVITIES                          
Purchase of property and equipment       (26,853)     (30,840)       (58,255)     (625,892)
Purchase of intangible assets       (309,794)     (1,341,147)     (5,439,024)     (1,891,830)
Purchase of bonds               (5,306,295)    
Interest on bonds               51,574    
Cash used by investing activities       (336,647)     (1,371,987)       (10,752,000)       (2,517,722)
                           
FINANCING ACTIVITIES                          
Payment of dividends       (14,264,286)           (40,698,956)    
Payment of related party promissory notes                   (11,173,290)
Proceeds from exercise of stock options       715,339     40,394       1,295,985       434,302
Repayments of debt           (917,700)         (917,700)
Cash used by financing activities       (13,548,947)       (877,306)       (39,402,971)     (11,656,688)
                           
Net increase in cash and cash equivalents
during the period
      (294,230)     6,414,741     (4,728,984)     16,473,622
Cash and cash equivalents, beginning of period         46,599,995     36,074,320     51,034,749     26,015,439
Cash and cash equivalents, end of period         46,305,765     42,489,061     46,305,765     42,489,061

 

 

SOURCE: SiriusXM Canada

For further information:

Morlan Reddock
Sirius XM Canada
416-513-7418
morlan.reddock@siriusxm.ca

Aaron Kabucis or Alley Adams
TMX Equicom
416-815-0700 ext. 230 or 234
akabucis@tmxequicom.com
or aadams@tmxequicom.com

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