Investor Relations

SiriusXM Reports First Quarter 2014 Results

- Revenue of $998 Million, Up 11% From First Quarter of 2013
- Net Income of $94 Million
- Adjusted EBITDA Grows 28% to a Record $335 Million
- Free Cash Flow Increases 56% to a First Quarter Record of $223 Million
- Company Reiterates 2014 Guidance

NEW YORK, April 24, 2014 /PRNewswire/ -- SiriusXM announced first quarter 2014 financial and operating results, including revenue of $998 million, up 11% from the first quarter 2013 revenue of $897 million.  Earnings per diluted share were $0.02 in both the first quarter of 2014 and 2013.

SIRIUS XM logo.

Net income of $94 million, adjusted for a non-recurring item associated with accounting for the Liberty Media stock repurchase agreement and purchase price accounting adjustments from the Sirius and XM merger, net of taxes, resulted in adjusted net income of $121 million, a 46% increase over $83 million in last year's first quarter.  Adjusted EBITDA for the first quarter of 2014 reached a record $335 million, up 28% from $262 million in the first quarter of 2013.

"SiriusXM performed ahead of our expectations in the first quarter, with 266,799 net subscriber additions including 173,480 self-pay net additions.  For the ninth consecutive quarter we grew revenue at a double digit pace, and once again we set a new quarterly record for adjusted EBITDA and adjusted EBITDA margin.  Free cash flow grew 56% compared to the prior year to a new first quarter record, and we resumed our stock repurchase program, helping to drive free cash flow per share up 64%," stated Jim Meyer, Chief Executive Officer, SiriusXM.

"Our business continues to perform well.  New car installations and trial conversions set first quarter records, and our trial funnel stands near an all-time high at 6.9 million.  We are excited about this year's strong growth of subscribers, revenue, adjusted EBITDA, and free cash flow, and we are eager to continue deploying our capital to benefit our stockholders and grow free cash flow per share even faster," added Meyer.

Additional highlights of the first quarter include:

  • Subscribers Reach a Record 25.8 Million.  Net subscriber additions in the first quarter of 2014 were 266,799.  The total paid subscriber base reached a record 25.8 million, up 6% from the prior-year period.  Self-pay net subscriber additions were 173,480, while the self-pay subscriber base reached a record high of 21.3 million, up 7% from the prior-year period. Total paid and unpaid trials were 6.9 million at the end of the first quarter of 2014.
  • Adjusted EBITDA and Adjusted EBITDA Margin Reach New Record Highs.  Adjusted EBITDA climbed 28% from the first quarter of 2013 to a record quarterly figure of $335 million, and the Company's adjusted EBITDA margin reached a record 33.5% in the first quarter of 2014.
  • Free Cash Flow Per Share Climbs 64%.  Free cash flow in the first quarter of 2014 was $223 million, up 56% from $142 million in the first quarter of 2013.  Free cash flow per diluted share was 3.6 cents in the first quarter of 2014, up 64% from 2.2 cents in the first quarter of 2013.

"Last year we took steps to lower our average cost of debt, and this year we have focused our efforts on significantly increasing our flexibility to return capital to stockholders by eliminating covenants in our 5.25% Notes and increasing the threshold for restricted payments in our Credit Facility," said David Frear, SiriusXM's Executive Vice President and Chief Financial Officer.

"Tomorrow, we are scheduled to repurchase 93 million shares from Liberty Media for $340 million, bringing total share repurchases for the year to 158 million shares for $550 million and leaving us with $1.7 billion remaining under our share repurchase authorization.  Total debt to adjusted EBITDA at the end of the first quarter 2014 was 2.8 times, below our 4.0 times leverage target.  We expect to opportunistically tap the debt markets this year as we move towards our leverage target," added Frear.

2014 GUIDANCE

SiriusXM reaffirmed its previously issued guidance for 2014:

  • Net subscriber additions of approximately 1.25 million,
  • Revenue of over $4.0 billion,
  • Adjusted EBITDA of approximately $1.38 billion, and
  • Free cash flow approaching $1.1 billion.


 FIRST QUARTER 2014 RESULTS

 

SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)






For the Three Months Ended March 31,

(in thousands, except per share data)

2014


2013

Revenue:




Subscriber revenue

$           851,436


$           783,342

Advertising revenue

22,214


20,211

Equipment revenue

23,978


18,156

Other revenue

100,083


75,689

Total revenue

997,711


897,398

Operating expenses:




Cost of services:




Revenue share and royalties

195,411


148,531

Programming and content

74,870


74,610

Customer service and billing

91,069


80,394

Satellite and transmission

21,380


19,695

Cost of equipment

7,804


7,027

Subscriber acquisition costs

123,022


116,111

Sales and marketing

76,327


65,899

Engineering, design and development

15,911


14,842

General and administrative

76,243


56,340

Depreciation and amortization

68,267


67,018

Total operating expenses

750,304


650,467

Income from operations

247,407


246,931

Other income (expense):




Interest expense, net of amounts capitalized

(54,092)


(46,174)

Interest and investment income 

4,349


1,638

Loss on change in value of derivatives

(27,023)


-

Other income 

95


247

Total other expense

(76,671)


(44,289)

Income before income taxes

170,736


202,642

Income tax expense

(76,748)


(79,040)

Net income

$             93,988


$           123,602

 Foreign currency translation adjustment, net of tax

118


(172)

Total comprehensive income

$             94,106


$           123,430

Net income per common share:




Basic

$                 0.02


$                 0.02

Diluted

$                 0.02


$                 0.02

Weighted average common shares outstanding:




Basic

6,094,784


6,259,803

Diluted

6,173,848


6,606,276









 


SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS


As of March 31,


As of December 31,


2014


2013

(in thousands, except share and per share data)

(Unaudited)



ASSETS




Current assets:




Cash and cash equivalents

$                       121,171


$                       134,805

Accounts receivable, net

103,872


103,937

Receivables from distributors

89,486


88,975

Inventory, net

18,987


13,863

Prepaid expenses

123,239


110,530

Related party current assets

5,143


9,145

Deferred tax asset

896,386


937,598

Other current assets

19,501


20,160

Total current assets

1,377,785


1,419,013

Property and equipment, net

1,571,460


1,594,574

Long-term restricted investments

5,718


5,718

Deferred financing fees, net

11,988


12,604

Intangible assets, net

2,685,978


2,700,062

Goodwill

2,203,409


2,204,553

Related party long-term assets

33,663


30,164

Long-term deferred tax asset

834,663


868,057

Other long-term assets

9,511


10,035

Total assets

$                    8,734,175


$                    8,844,780

LIABILITIES AND STOCKHOLDERS' EQUITY




Current liabilities:




Accounts payable and accrued expenses

$                       558,756


$                       578,333

Accrued interest

57,376


42,085

Current portion of deferred revenue

1,623,668


1,586,611

Current portion of deferred credit on executory contracts

3,672


3,781

Current maturities of long-term debt

497,516


496,815

Current maturities of long-term related party debt

10,970


10,959

Related party current liabilities

47,536


20,320

Total current liabilities

2,799,494


2,738,904

Deferred revenue

146,830


149,026

Deferred credit on executory contracts

558


1,394

Long-term debt

2,943,202


3,093,821

Related party long-term liabilities

15,627


16,337

Other long-term liabilities

103,051


99,556

Total liabilities

6,008,762


6,099,038

Stockholders' equity:




Preferred stock, undesignated, par value $0.001 (liquidation preference of $0.001 per share); 50,000,000 shares authorized and 0 shares issued and outstanding at March 31, 2014 and December 31, 2013

-


-

Common stock, par value $0.001; 9,000,000,000 shares authorized; 6,073,791,343 and 6,096,220,526 shares issued; 6,058,791,343 and 6,096,220,526 outstanding, at March 31, 2014 and December 31, 2013, respectively

6,074


6,096

Accumulated other comprehensive loss, net of tax

(190)


(308)

Additional paid-in capital

8,607,329


8,674,129

Treasury stock, at cost; 15,000,000 and 0 shares of common stock at March 31, 2014 and December 31, 2013, respectively

(47,613)


-

Accumulated deficit

(5,840,187)


(5,934,175)

Total stockholders' equity

2,725,413


2,745,742

Total liabilities and stockholders' equity

$                    8,734,175


$                    8,844,780





SIRIUS XM HOLDINGS INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)


For the Three Months Ended March 31,

(in thousands)

2014


2013

Cash flows from operating activities:




Net income

$                        93,988


$                      123,602

Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

68,267


67,018

Non-cash interest expense, net of amortization of premium

5,231


5,442

Provision for doubtful accounts

10,634


11,410

Amortization of deferred income related to equity method investment

(694)


(694)

Gain on unconsolidated entity investments, net

(4,326)


(1,345)

Dividend received from unconsolidated entity investment

4,222


9,674

Loss on disposal of assets

196


124

Loss on change in value of derivatives

27,023


-

Share-based payment expense

18,240


14,518

Deferred income taxes

74,565


83,631

Other non-cash purchase price adjustments

(945)


(70,459)

Changes in operating assets and liabilities:




Accounts receivable

(10,569)


(13,143)

Receivables from distributors

(511)


1,663

Inventory

(5,124)


5,242

Related party assets

654


26

Prepaid expenses and other current assets

(15,682)


(51,815)

Other long-term assets

522


1,730

Accounts payable and accrued expenses

(68,168)


(97,537)

Accrued interest

15,291


31,054

Deferred revenue

34,861


47,480

Related party liabilities

177


5,891

Other long-term liabilities

3,538


(4,597)

Net cash provided by operating activities

251,390


168,915





Cash flows from investing activities:




Additions to property and equipment

(28,601)


(26,434)

Acquisition of business, net of cash acquired 

1,144


-

Net cash used in investing activities

(27,457)


(26,434)





Cash flows from financing activities:




Proceeds from exercise of stock options

259


10,946

Taxes paid in lieu of shares issued for stock-based compensation

(4,229)


-

Repayment of long-term borrowings and revolving credit facility

(152,528)


(1,933)

Common stock repurchased and retired

(81,069)


(465,712)

Net cash used in financing activities

(237,567)


(456,699)

Net decrease in cash and cash equivalents

(13,634)


(314,218)

Cash and cash equivalents at beginning of period

134,805


520,945

Cash and cash equivalents at end of period

$                      121,171


$                      206,727









Key Operating Metrics              

The following table contains our key operating metrics for the three months ended March 31, 2014 and 2013, respectively. Subscribers to our connected vehicle services are not included in our subscriber count:


Unaudited


For the Three Months Ended March 31,

(in thousands, except subscriber, per subscriber and per installation amounts)

2014


2013





   Self-pay

21,255,297


19,874,660

   Paid promotional

4,570,812


4,478,566

Ending subscribers

25,826,109


24,353,226





   Self-pay

173,480


304,386