Investor Relations

SiriusXM Reports 2011 Results

- Subscribers Grow to Record 21.9 Million
- Record Revenue of $3.01 Billion, Up 7% Over 2010
- Adjusted EBITDA Reaches Record $731 Million, Up 17% Over 2010
- Record Free Cash Flow of $416 Million, Up 98% Over 2010
- 2012 Adjusted EBITDA Guidance Raised to $875 Million
- Company Projects 1.3 Million Net Subscriber Additions in 2012

NEW YORK, Feb. 9, 2012 /PRNewswire/ -- Sirius XM Radio (NASDAQ: SIRI) today announced full year 2011 financial and operating results, including revenue of $3.01 billion, up 7% over 2010 revenue of $2.82 billion, and adjusted EBITDA of $731 million, up 17% from $626 million in 2010.

(Logo:  http://photos.prnewswire.com/prnh/20101014/NY82093LOGO )

"We are proud to announce that SiriusXM delivered another record-setting year in 2011, meeting or exceeding all of our guidance.  Our strong content and subscriber focus helped set a post-merger record of 1.7 million net subscriber additions, and we achieved record levels of revenue, adjusted EBITDA and free cash flow.  We expanded our adjusted EBITDA margins to 24% by tightly controlling costs and growing our revenue.  Our improved profitability, coupled with lower capital expenditures, contributed to a substantial increase in our free cash flow," noted Mel Karmazin, Chief Executive Officer, SiriusXM.

"In 2012, we expect to accelerate our revenue and adjusted EBITDA growth, and we project our free cash flow will jump by approximately 70% to $700 million.  Our subscriber base will once again end this year at another all-time record high," said Karmazin.  "We continue to invest in improving the subscriber experience, all with the goal of keeping our subscribers engaged and entertained.  All of us here at SiriusXM look forward to another fantastic year of subscriber growth and improved financial performance."

Additional highlights from 2011 include:

  • Subscriber growth continues.  Gross additions climbed 12% to an all-time high of 8.7 million, net subscriber additions improved by 20% to 1.7 million from 1.4 million in 2010, and the subscriber base rose to an all-time high of 21.9 million subscribers at year-end.  Self-pay net additions were 1.2 million in 2011, up 24% from 1.0 million in 2010.
  • Stable churn.  Self-pay churn was 1.9% in 2011, in-line with 2010's results.  New vehicle consumer conversion rate was 45% in 2011 compared to 46% in 2010.
  • Strong cost controls.  Total cash operating expenses rose 3.7%, while fixed expenses declined by 1.9%.
  • SAC per gross addition declined.  Subscriber acquisition costs (SAC) per gross addition improved by 7% to $55 in 2011 from $59 in 2010.
  • Free cash flow grew.  Free cash flow climbed to $416 million, up 98% from the $210 million generated in 2010 due to higher operating cash flow and lower capital expenditures.

GAAP net income for 2011 and 2010 was $427 million and $43 million, respectively, or $0.07 and $0.01 per diluted share, respectively.

"We ended the year with $774 million of cash, even after reducing our long-term debt by over $200 million in 2011.  Our leverage at year-end improved to 4.1x our adjusted EBITDA on a gross basis and 3.1x on a net basis," said David Frear, SiriusXM's Executive Vice President and Chief Financial Officer.  "With no debt maturities due this year and our growing free cash flow, we expect to end 2012 with nearly $1.5 billion of cash."

FOURTH QUARTER 2011 HIGHLIGHTS

Fourth quarter 2011 revenue of $784 million was up 7% from the $736 million in the fourth quarter of 2010, while adjusted EBITDA was $167 million in the fourth quarter of 2011, up 16% from the $144 million in the fourth quarter of 2010.

Highlights from the fourth quarter include:

  • Net subscriber additions climb.  Net subscriber additions were 542,966, up 65% compared to the fourth quarter of 2010.  Net self-pay subscriber additions were 374,432, an increase of 7% versus the fourth quarter of 2010.
  • SAC per gross addition improves.  Subscriber acquisition cost (SAC) per gross subscriber addition was $55 in the fourth quarter of 2011, a 5% improvement from the $58 reported in the fourth quarter of 2010.
  • Churn remained stable.  Average self-pay monthly customer churn was 1.9% in the fourth quarter of 2011, in-line with the 1.9% reported in the fourth quarter of 2010.  New vehicle consumer conversion rate was 44% in the fourth quarter of 2011 compared to 45% in the fourth quarter of 2010.
  • Free cash flow rises.  Free cash flow in the fourth quarter of 2011 was $192 million, an increase of 15% compared to $167 million in the fourth quarter of 2010.

GAAP net income (loss) for the fourth quarter of 2011 and 2010 was $71 million and ($81) million, respectively, or $0.01 and ($0.02) per diluted share, respectively.  

The discussion of adjusted EBITDA excludes the effects of stock-based compensation and certain purchase price accounting adjustments. A reconciliation of non-GAAP items to their nearest GAAP equivalent is contained in the financial supplements included with this release.

2012 GUIDANCE

The Company expects its subscriber base to grow by approximately 1.3 million net subscribers and end the year at approximately 23.2 million.  The company now expects adjusted EBITDA in 2012 of approximately $875 million, an increase from prior guidance of $860 million.  The Company reiterates its existing 2012 revenue and free cash flow guidance:

  • Revenue of approximately $3.3 billion, and
  • Free cash flow of approximately $700 million.

"With auto sales expected to rise in 2012, and what appears to be only a modest increase in churn associated with our January price increase, we expect to grow our net new subscribers by roughly 1.3 million in 2012, continuing our strong multi-year track record of subscriber growth," said Karmazin.

2011 RESULTS

Subscriber Data.

The following table contains actual subscriber data for the three and twelve months ended December 31, 2011 and 2010, respectively:


Unaudited


For the Three Months Ended December 31,


For the Twelve Months Ended December 31,


2011


2010


2011


2010

















Beginning subscribers

21,349,858


19,862,175


20,190,964


18,772,758

Gross subscriber additions

2,326,174


2,075,418


8,696,020


7,768,827

Deactivated subscribers

(1,783,208)


(1,746,629)


(6,994,160)


(6,350,621)

Net additions

542,966


328,789


1,701,860


1,418,206

Ending subscribers

21,892,824


20,190,964


21,892,824


20,190,964









Self-pay

17,908,742


16,686,799


17,908,742


16,686,799

Paid promotional

3,984,082


3,504,165


3,984,082


3,504,165

Ending subscribers

21,892,824


20,190,964


21,892,824


20,190,964









Self-pay

374,432


350,980


1,221,943


982,867

Paid promotional

168,534


(22,191)


479,917


435,339

Net additions

542,966


328,789


1,701,860


1,418,206









Daily weighted average number of subscribers

21,542,690


19,990,447


20,903,908


19,385,055









Average self-pay monthly churn

1.9%


1.9%


1.9%


1.9%









New vehicle consumer conversion rate

44%


45%


45%


46%









____________

See accompanying glossary of terms.



Subscribers. The improvement in the twelve months ended December 31, 2011 was due to the 12% increase in gross subscriber additions, primarily resulting from an increase in U.S. light vehicle sales, new vehicle penetration, and returning subscriber activations, including those from previously owned vehicles.  This increase in gross additions was partially offset by the 10% increase in deactivations, which was primarily due to an increase in paid promotional trial volumes along with growth in the subscriber base.

Average Self-pay Monthly Churn remained flat at 1.9% for all periods presented.  The consistent churn rate exhibits stability in the continued demand for and satisfaction with our service from existing subscribers.

New Vehicle Consumer Conversion Rate. The decrease in the twelve months ended December 31, 2011 was primarily due to the changing mix of sales among OEMs and operational issues impacting the timing of the receipt of customer information and prompt marketing communications with buyers and lessees of vehicles.

Metrics.

The following table contains our key operating metrics based on our unaudited adjusted results of operations for the three and twelve months ended December 31, 2011 and 2010, respectively:


Unaudited Adjusted


For the Three Months Ended December 31,


For the Twelve Months Ended December 31,

(in thousands, except for per subscriber amounts)

2011


2010


2011


2010







ARPU

$                       11.61


$                       11.80


$                       11.58


$                       11.73

SAC, per gross subscriber addition

$                            55


$                            58


$                            55


$                            59

Customer service and billing expenses, per average








subscriber

$                         1.03


$                         1.11


$                         1.03


$                         1.03

Free cash flow

$                   191,806


$                   167,355


$                   415,742


$                   210,481

Adjusted total revenue

$                   785,696


$                   740,239


$                3,025,434


$                2,838,898

Adjusted EBITDA

$                   167,277


$                   144,493


$                   731,018


$                   626,288









____________

See accompanying glossary of terms.



ARPU decreased in the twelve months ended December 31, 2011.  The decrease of $0.15 was driven primarily by an increase in subscription discounts offered through customer acquisition and retention programs and the decrease in the U.S. Music Royalty Fee, partially offset by an increase in sales of our premium services, including Premier packages, data services and Internet subscriptions.

SAC, Per Gross Subscriber Addition, decreased in the twelve months ended December 31, 2011 primarily due to lower per radio subsidy rates for certain OEMs and growth in subscriber reactivations and royalties from radio manufacturers compared to the twelve months ended December 31, 2010.

Customer Service and Billing Expenses, Per Average Subscriber, remained flat in the twelve months ended December 31, 2011, as a result of lower operating costs offset by higher call volume, handle time per call, increased agent rates and personnel costs associated with the 8% growth in daily weighted average subscribers.

Free Cash Flow for the twelve months ended