SIRIUS XM CANADA HOLDINGS INC - Record annual revenue of $303.5 million
- Annual Adjusted EBITDA* of $79.0 million, up 15.0% year-over-year
- Refinanced 9.75% Senior Notes with new 5.625% Senior Notes
- Paid $127.9 million in ongoing and special dividends during the year
- Total Subscribers increased to 2.6 million; year-over-year net additions of 184,500
TORONTO, Oct. 30, 2014 /CNW/ - Sirius XM Canada Holdings Inc. ("SiriusXM Canada" or the "Company") (TSX: XSR), parent of Sirius XM Canada Inc., today released financial results for the year ended August 31, 2014 (FY2014) and unaudited financial results for the quarter ended August 31, 2014 (Q4 FY2014) prepared in accordance with International Financial Reporting Standards (IFRS). A summary of IFRS financial results for Q4 FY2014 and FY2014 is attached1. All results are reported in Canadian dollars unless otherwise stated.
Q4 FY2014 and FY2014 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 ** | Q4 FY2014 | Q4 FY2013 | % Change | FY2014 | FY2013 | % Change |
| (August 31, 2014) | (August 31, 2013) | (August 31, 2014) | (August 31, 2013) | |||
| (Unaudited) | (Unaudited) | (Audited) | (Audited) | |||
| Revenue | $77,121 | $75,739 | 1.8% | $303,500 | $288,901 | 5.1% |
| Adjusted EBITDA* | $16,592 | $16,570 | 0.1% | $79,025 | $68,722 | 15.0% |
| Net Income | $4,427 | $4,078 | 8.6% | $7,481 | $12,191 | (38.6%) |
| Free cash flow | $10,502 | $9,704 | 8.2% | $35,534 | $49,633 | (28.4%) |
| Operating** | ||||||
| Self-Paying Subscribers | 1,852 | 1,727 | 7.2% | 1,852 | 1,727 | 7.2% |
| Total Subscribers | 2,612 | 2,427 | 7.6% | 2,612 | 2,427 | 7.6% |
| ARPU | $11.05 | $11.72 | (5.7%) | $11.26 | $11.64 | (3.3%) |
| Subscriber Acquisition Cost (SAC) | $38 | $40 | (5.0%) | $38 | $44 | (13.6%) |
| Cost Per Gross Addition (CPGA) | $66 | $76 | (13.2%) | $64 | $73 | (12.3%) |
* Adjusted EBITDA is a non-GAAP measure. A reconciliation of operating income to both EBITDA and Adjusted EBITDA is provided below.
** All figures in the table above are in thousands except, ARPU, SAC and CPGA.
"Fiscal 2014 was marked by strong financial and operational performance," said Mark Redmond, President and CEO, SiriusXM Canada. "Our milestone subscriber count of 2.6 million, record revenue and commitment to carefully managing costs, translated into our third consecutive year of double-digit Adjusted EBITDA growth. Operationally, we delivered on many important strategic initiatives: we renewed several OEM agreements on mutually beneficial terms; we achieved an OEM penetration rate of 64%; and we signed several partnership agreements in the pre-owned vehicle segment of our business."
Mr. Redmond continued: "Our success in fiscal 2014 underscores our ability to drive profitable top-line growth. We added 184,500 net new subscribers, despite the challenges of an increasingly crowded audio entertainment market. Our unrivaled content, anytime anywhere service, ease of use and unmatched position in the dashboard are vital to attracting new subscribers and retaining existing ones. Heading into fiscal 2015, we will work to deliver further revenue growth, while continuing to generate strong Adjusted EBITDA and cash flow."
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1 For a complete set of financial results including the accompanying notes please refer to the Company's filings on www.sedar.com
Q4 FY2014 and FY2014 Results Financial Review
For Q4 FY2014, revenue was $77.1 million, up $1.4 million, or 1.8%, from $75.7 million for the same period in 2013. The year-over-year improvement reflects growth in the Company's self-paying subscriber base, which was offset, in part, by lower ARPU. FY2014, revenue was $303.5 million, up $14.6 million, or 5.1%, from $288.9 million in FY2013. Q4 FY2014 ARPU was $11.05, down from $11.72 in Q4 FY2013. ARPU for FY2014 was $11.26 compared to $11.64 for FY2013. The year-over-year reduction in quarterly and annual ARPU was primarily due to the revised terms of one of the Company's OEM contract renewals.
Q4 FY2014 Adjusted EBITDA of $16.6 million was flat compared to Q4 FY2013. Higher revenue and lower marketing costs were offset, by a higher cost of revenue and overhead costs, which comprises general and administrative and information technology costs. FY2014 Adjusted EBITDA was $79.0 million, an increase of $10.3 million, or 15.0%, from $68.7 million in FY2013.
In Q4 FY2014, the Company generated net income of $4.4 million, up $0.3 million, or 8.6%, from $4.1 million in Q4 FY2013. In Q3 FY2014, the Company incurred after-tax debt refinancing charges of $12.2 million related to the Company's redemption of its 2018 Senior Notes. Excluding these charges, net income for FY2014 was $19.7 million, an increase of $7.5 million, or 61.7%, from $12.2 million in FY2013. Including the after-tax debt refinancing charges, the Company reported FY2014 net income of $7.5 million.
SAC was $38 in Q4 FY2014, down from $40 in Q4 FY2013. SAC for FY2014 was $38, down from $44 in FY2013. The year-over-year decrease in SAC for the quarter and full-year was due to lower subsidy costs and higher gross additions from the pre-owned vehicle channel in FY2014.
CPGA was $66 in Q4 FY2014, down from $76 in Q4 FY2013, reflecting lower SAC, lower marketing costs and higher gross additions from the pre-owned vehicle channel. CPGA for FY2014 was $64, down from $73 in FY2013 due to lower SAC and higher gross additions.
In Q4 FY2014, the Company generated $14.2 million in cash from operating activities. This was down $0.6 million, or 4.1%, from $14.8 million in cash from operating activities in Q4 FY2013 as a result of year-over-year changes in working capital. In Q3 FY2014, the Company completed a refinancing of its 9.75% Senior Notes, resulting in a $10.4 million call premium payment due to early repayment of the debt. Adjusting for this payment, the Company generated $60.0 million in cash from operating activities for FY2014, which was essentially in line with $60.3 million in cash from operating activities in FY2013. After the call premium, the Company reported FY2014 cash from operating activities of $49.6 million.
The Company generated free cash flow of $10.5 million in Q4 FY2014, up $0.8 million, or 8.2%, from $9.7 million in Q4 FY2013. For FY2014, the Company generated free cash flow of $45.9 million when adjusting for the $10.4 million call premium payment. This was down $3.7 million, or 7.4%, from free cash flow of $49.6 million in FY2013, reflecting a year-over-year decrease in cash from operating activities, working capital changes and a year-over-year increase in capital expenditures related to the unification of the Company's subscriber management system. Including the call premium payment, the Company generated FY2014 free cash flow of $35.5 million.
As at August 31, 2014, SiriusXM Canada had total cash, cash equivalents and short-term investments of $23.9 million. This decreased from $101.5 million as at May 31, 2014, primarily due to the Company's expenditure of $88.2 million for payment of its ongoing dividend and the $74.9 million for payment of its special dividend, which the Company paid in the fourth quarter of 2014.
"During the year, we returned $127.9 million to shareholders via dividends, on account of confidence in our business model and incremental funds from refinancing our long-term debt obligation at a substantially lower rate," said Michael Washinushi, Chief Financial Officer, SiriusXM Canada. "This refinancing improved the Company's capital structure, reduced our borrowing costs and extended the maturity. Going forward, we believe our strong financial position will be a significant competitive asset. We are well within our target leverage ratio of less than three times EBITDA. In addition, we have an undrawn $35 million credit facility and ample cash on hand to fund our ongoing growth initiatives."
Conference Call and Webcast Details
SiriusXM Canada will hold a conference call to discuss the Company's Q4 FY2014 and FY2014 results on Thursday, October 30, 2014 at 5.00 p.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 Thursday, November 6, 2014 at midnight. To access the archived conference call, please dial 416-849-0833, or 1-855-859-2056 and enter the reservation code 19122558. A live audio webcast of the conference call will be available at http://www.siriusxm.caand 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 EBITDA and Adjusted EBITDA to Operating Income.
| (In $000's) | Q4 FY2014 | Q4 FY2013 | FY2014 | FY2013 |
| (Unaudited) | (Unaudited) | (Audited) | (Audited) | |
| Operating income | 9,320 | 7,071 | 42,680 | 30,675 |
| Depreciation & Amortization | 6,837 | 9,065 | 33,727 | 35,576 |
| EBITDA | 16,157 | 16,136 | 76,407 | 66,250 |
| Stock based compensation | 431 | 399 | 2,550 | 2,257 |
| Fair value adjustments*** | 4 | 35 | 67 | 215 |
| Adjusted EBITDA | 16,592 | 16,570 | 79,025 | 68,722 |
*** 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 October 30, 2014 for more details on the Company's Q4 FY2014 and FY2014 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 consolidated statement of operations and comprehensive income for FY2014 and unaudited consolidated statement of operations and comprehensive income for Q4 FY2014. Please see the Company's Management Discussion & Analysis filed October 30, 2014 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, the redemption of Sirius XM Canada's 5.625% Senior Unsecured Notes, and the terms, timing and conditions of any refinancing of such notes. 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 2.6 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, entertainment and major sports brands including the NHL, NFL, NBA, NASCAR, CNN, CBC, FOX, BBC, Howard Stern, Oprah, 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 3,000 retail locations nationwide. To find out more about SiriusXM Canada (TSX: XSR), visit our website at www.siriusxm.ca.
SiriusXM Canada has been designated one of Canada's 50 Best Managed Companies five years in a row and 2013 and 2014 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 BALANCE SHEETS | |||
| At | August 31, | August 31, | |
| (Canadian dollars) | 2014 | 2013 | |
| ASSETS | |||
| Current assets | |||
| Cash and cash equivalents | 23,868,423 | 44,078,584 | |
| Short-term investments | - | 5,157,798 | |
| Accounts receivable | 13,454,489 | 13,359,446 | |
| Prepaid expenses and other | 4,251,306 | 6,778,736 | |
| Inventory | 559,081 | 234,349 | |
| Total current assets | 42,133,299 | 69,608,913 | |
| Long-term prepaid expenses | 456,039 | 100,157 | |
| Property and equipment | 4,508,188 | 5,979,911 | |
| Intangible assets | 134,971,363 | 152,217,165 | |
| Deferred tax assets | 50,592,132 | 54,483,616 | |
| Goodwill | 96,732,525 | 96,732,525 | |
| Total assets | 329,393,546 | 379,122,287 | |
| LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY) | |||
| Current liabilities | |||
| Trade and other payables | 44,121,466 | 47,145,257 | |
| Due to related parties | 9,146,135 | 9,620,750 | |
| Interest payable | 3,965,753 | 2,704,449 | |
| Deferred revenue | 146,110,758 | 144,885,091 | |
| Provisions | 505,783 | 1,327,974 | |
| Total current liabilities | 203,849,895 | 205,683,521 | |
| Deferred revenue | 15,075,749 | 17,105,210 | |
| Other long-term liabilities | 533,049 | 1,669,229 | |
| Due to related parties | 1,323,965 | 2,390,608 | |
| Long-term debt | 195,463,860 | 143,707,194 | |
| Provisions | 374,240 | 323,112 | |
| Total liabilities | 416,620,758 | 370,878,874 | |
| Shareholders' equity (deficiency) | |||
| Share capital | 176,862,133 | 151,794,596 | |
| Contributed surplus | 6,067,419 | 6,161,440 | |
| Accumulated deficit | (270,156,764) | (149,712,623) | |
| Total shareholders' equity (deficiency) | (87,227,212) | 8,243,413 | |
| Total liabilities and shareholders' equity (deficiency) | 329,393,546 | 379,122,287 | |
Approved by Board of Directors
| (signed) John I. Bitove | (signed) Anthony Viner | |||||||
| John I. Bitove, Director | Anthony Viner, Director | |||||||
| CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY) | ||||||||
| Total | ||||||||
| For the year ended August 31 | Share | Contributed | Accumulated | Shareholders' | ||||
| (Canadian dollars) | Capital | Surplus | Deficit | Equity (Deficiency) | ||||
| Balance, September 1, 2012 | 148,393,493 | 5,057,501 | (108,196,240) | 45,254,754 | ||||
| Net income for the year | - | - | 12,190,542 | 12,190,542 | ||||
| Stock-based compensation | - | 2,257,295 | - | 2,257,295 | ||||
| Dividends | - | - | (53,706,925) | (53,706,925) | ||||
| Stock options exercised | 3,401,103 | (1,153,356) | - | 2,247,747 | ||||
| Balance, August 31, 2013 | 151,794,596 | 6,161,440 | (149,712,623) | 8,243,413 | ||||
| Balance, September 1, 2013 | 151,794,596 | 6,161,440 | (149,712,623) | 8,243,413 | ||||
| Net income for the year | - | - | 7,481,208 | 7,481,208 | ||||
| Stock-based compensation | - | 2,549,965 | - | 2,549,965 | ||||
| Dividends | - | - | (127,925,349) | (127,925,349) | ||||
| Stock options exercised | 3,528,341 | (1,104,790) | - | 2,423,551 | ||||
| Conversion of Convertible Notes | 21,539,196 | (1,539,196) | - | 20,000,000 | ||||
| Balance, August 31, 2014 | 176,862,133 | 6,067,419 | (270,156,764) | (87,227,212) | ||||
| CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME | ||||
|
For the year ended August 31 (Canadian dollars) | 2014 | 2013 | ||
| Revenue | 303,500,408 | 288,900,782 | ||
| Operating expenses | ||||
| Operating costs | 227,093,144 | 222,650,627 | ||
| Depreciation and amortization | 33,727,257 | 35,575,596 | ||
| Operating income | 42,680,007 | 30,674,559 | ||
| Finance costs, net | ||||
| Interest income | 842,470 | 686,132 | ||
| Interest expense | (15,249,222) | (15,410,960) | ||
| Loss on debt repayment | (13,195,918) | - | ||
| Foreign exchange loss | (264,645) | (675,789) | ||
| Change in fair value of embedded derivative | (3,440,000) | 2,291,378 | ||
| Finance costs, net | (31,307,315) | (13,109,239) | ||
| Net income before income tax | 11,372,692 | 17,565,320 | ||
| Income tax expense | (3,891,484) | (5,374,778) | ||
| Net income and comprehensive income | 7,481,208 | 12,190,542 | ||
| Earnings per share - basic and diluted | 0.06 | 0.10 | ||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||
|
For the year ended August 31 (Canadian dollars) | 2014 | 2013 | |||
| Cash provided by (used in) | |||||
| OPERATING ACTIVITIES | |||||
| Net income for the year | 7,481,208 | 12,190,542 | |||
| Add(deduct) items not involving cash | |||||
| Amortization of intangible assets | 30,860,756 | 33,167,880 | |||
| Depreciation of property and equipment | 2,866,501 | 2,407,716 | |||
| Loss on disposal of property and equipment | - | 11,109 | |||
| Income tax expense | 3,891,484 | 5,374,778 | |||
| Stock-based compensation | 2,549,965 | 2,257,295 | |||
| Accrued interest | 1,261,304 | - | |||
| Interest accretion | 3,820,690 | 954,375 | |||
| Change in fair value of embedded derivative | 3,440,000 | (2,291,378) | |||
| Foreign exchange loss | 171,173 | 769,540 | |||
|
Net change in non-cash working capital and deferred revenue related to operations | (6,777,622) | 5,409,419 | |||
| Cash provided by operating activities | 49,565,459 | 60,251,276 | |||
| INVESTING ACTIVITIES | |||||
| Purchase of property and equipment | (1,147,655) | (753,788) | |||
| Purchase of intangible assets | (12,883,718) | (7,624,829) | |||
| Prepayment for property and equipment | - | (2,240,000) | |||
| Purchase of short-term investments | - | (5,306,295) | |||
| Maturity of short-term investments | 5,063,000 | - | |||
| Interest received on short-term investments | 198,575 | 176,649 | |||
| Cash used in investing activities | (8,769,798) | (15,748,263) | |||
| FINANCING ACTIVITIES | |||||
| Payment of dividends | (127,925,349) | (53,706,925) | |||
| Proceeds from issuance of debt | 200,000,000 | - | |||
| Debt financing fees | (4,733,024) | - | |||
| Repayments of debt | (130,771,000) | - | |||
| Proceeds from exercise of stock options | 2,423,551 | 2,247,747 | |||
| Cash used in financing activities | (61,005,822) | (51,459,178) | |||
|
Net decrease in cash and cash equivalents during the year | (20,210,161) | (6,956,165) | |||
| Cash and cash equivalents, beginning of year | 44,078,584 | 51,034,749 | |||
| Cash and cash equivalents, end of year | 23,868,423 | 44,078,584 | |||
SOURCE Sirius XM Canada Holdings Inc.
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