Investor Relations

SiriusXM Reports Second Quarter 2012 Results

- Subscribers Grow by 622,000 to a Record 22.9 Million
- Record Revenue of $838 Million, Up 13%
- Net Income of $3.1 Billion Includes a $3.0 Billion Income Tax Benefit
- Adjusted EBITDA Grows 28% to a Record $237 Million
- Free Cash Flow Grows 39% to a Record $230 Million
- Company Raises 2012 Adjusted EBITDA Guidance to Approximately $900 Million

NEW YORK, Aug. 7, 2012 /PRNewswire/ -- Sirius XM Radio (NASDAQ: SIRI) today announced second quarter 2012 financial and operating results, including revenue of $838 million, up 13% over second quarter 2011 revenue of $744 million. Net income for the second quarter 2012 and 2011 was $3.1 billion and $173 million, respectively. Adjusted EBITDA for the second quarter of 2012 was $237 million, up 28% from $185 million in the second quarter of 2011.

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

"SiriusXM continued its exceptional performance in the second quarter, adding over 600,000 subscribers, which represents a post-merger record, despite the mixed macroeconomic trends. We also attained a record-level free cash flow of $230 million - the highest single quarterly free cash flow figure in SiriusXM's history. We are very pleased with the strong operating results we have delivered since the merger, especially our performance in 2012, as we have grown revenue, tightly controlled expenses, and produced substantial growth in adjusted EBITDA and free cash flow," remarked Mel Karmazin, Chief Executive Officer, SiriusXM.

"We've also raised our subscriber, revenue, and adjusted EBITDA guidance as the Company exceeds its targets and as subscribers demonstrate how much they love our great content. We are excited to deliver our new SiriusXM On-Demand service to our subscribers via the internet and smartphones, and our program to launch a personalized music feature via these same channels by the end of the year is on track. We intend to provide more innovative ways for our subscribers to access our best-in-class content, and we believe this focus on satisfying subscribers will also satisfy our shareholders," said Karmazin.

Additional highlights from the second quarter include:

  • Record subscriber growth. Self-pay net subscriber additions improved by 28% year-over-year to 463,000, pushing the self-pay subscriber base to an all-time high of 18.7 million subscribers. The total paid subscriber base rose to a record high 22.9 million subscribers. Strong auto sales helped lift total paid and unpaid trial inventory by approximately 400,000 from the first quarter to 6.1 million.
  • Churn and conversion stable. Self-pay monthly churn was 1.9% in the second quarter of 2012, unchanged from the 1.9% reported in the second quarter of 2011. The new vehicle consumer conversion rate was 45% in the second quarter of 2012, also unchanged from the second quarter of 2011.
  • Free cash flow grows to record level. Free cash flow was $230 million in the second quarter of 2012, an improvement of 39% from the $165 million recorded in the second quarter of 2011, and SiriusXM attained an all-time record for free cash flow generated in a single quarter in the history of satellite radio.
  • Significant net income items. Included in the second quarter 2012 net income was an income tax benefit of approximately $3.0 billion related to a reversal of substantially all of the Company's deferred income tax valuation allowance. On a comparative basis, the second quarter 2011 net income included a gain of $84 million associated with the Canadian merger of Sirius and XM.

"We ended the second quarter with $868 million of cash, after the repurchase of approximately $101 million in aggregate principal amount of our debt during the quarter. Our leverage at the end of the second quarter of 2012 improved to 3.6x our adjusted EBITDA," said David Frear, SiriusXM's Executive Vice President and Chief Financial Officer. "We called the remaining $186 million of our 9.75% Senior Secured Notes due 2015 for redemption on September 1, 2012. Following the repayment of these notes, our gross debt will stand at approximately $2.7 billion and our leverage, based upon our 2012 adjusted EBITDA guidance, will be at our 3.0x target, a significant improvement from 4.4x one year ago."

2012 GUIDANCE

"Our increase in adjusted EBITDA guidance to approximately $900 million indicates strong confidence in our ability to continue to execute in the back half of the year," said Karmazin. "We were also pleased to raise our subscriber guidance for the second time this year just last month."

The Company's 2012 subscriber, revenue, adjusted EBITDA and free cash flow guidance are as follows:

  • Net subscriber growth approaching 1.6 million,
  • Revenue approaching $3.4 billion,
  • Adjusted EBITDA of approximately $900 million, and
  • Free cash flow of approximately $700 million.

SECOND QUARTER 2012 RESULTS

SIRIUS XM RADIO INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME


















For the Three Months
Ended June 30,


For the Six Months
Ended June 30,

(in thousands, except per share data)

2012


2011


2012


2011

Revenue:








Subscriber revenue

$           730,285


$           639,642


$      1,430,526


$       1,262,080

Advertising revenue, net of agency fees

20,786


18,227


39,456


34,785

Equipment revenue

16,417


17,022


33,370


32,889

Other revenue

70,055


69,506


138,912


138,482

Total revenue

837,543


744,397


1,642,264


1,468,236

Operating expenses:








Cost of services:








Revenue share and royalties

135,426


116,741


267,537


223,670

Programming and content

65,169


67,399


135,265


140,358

Customer service and billing

68,679


62,592


134,866


128,429

Satellite and transmission

17,551


18,998


35,661


37,558

Cost of equipment

7,150


7,601


12,956


14,006

Subscriber acquisition costs

119,475


105,162


235,596


210,432

Sales and marketing

57,422


51,442


115,781


99,261

Engineering, design and development

6,272


13,939


18,962


25,074

General and administrative

65,664


60,479


125,550


116,831

Depreciation and amortization

66,793


67,062


132,910


135,462

Total operating expenses

609,601


571,415


1,215,084


1,131,081

Income from operations

227,942


172,982


427,180


337,155

Other income (expense):








Interest expense, net of amounts capitalized

(72,770)


(76,196)


(149,742)


(154,414)

Loss on extinguishment of debt and credit facilities, net

(15,650)


(1,212)


(25,621)


(7,206)

Interest and investment (loss) income

(1,728)


80,182


(2,871)


78,298

Other (loss) income

(173)