SiriusXM Canada Reports First Quarter Fiscal 2015 Results

- Company delivers top-line growth and increased profitability fueled by year-over-year expansion of its subscriber base and improvements in Self-Pay ARPU -

TORONTO, Jan. 12, 2015 /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 its fiscal 2015 first quarter ended November 30, 2014 prepared in accordance with International Financial Reporting Standards (IFRS). A summary of IFRS financial results for Q1 FY2015 is attached¹. All results are reported in Canadian dollars unless otherwise stated.

Q1 FY2015 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						Q1 FY2015			Q1 FY2014					% Change
						(November 30, 2014)			(November 30, 2013)
						(Unaudited)			(Unaudited)
									(Restated)
Revenue						78,985			76,436					3.3%
Adjusted EBITDA^1						22,906			21,419					6.9%
Net Income						8,024			4,803					67.0%
Free cash flow						13,678			12,819					6.7%
Operating^2
Self-Paying Subscribers						1,847			1,756					5.2%
Total Subscribers						2,603			2,424					7.4%
Self-Pay ARPU^3						$12.38			$12.08					2.5%
Subscriber Acquisition Cost (SAC)						$39			$43					(7.7%)
Cost Per Gross Addition (CPGA)						$64			$69					(7.2%)

¹Adjusted EBITDA is a non-GAAP measure. A reconciliation of operating income to both EBITDA and Adjusted EBITDA is provided below.

²All figures in the table above are in thousands except, ARPU, SAC and CPGA.

³Self-Pay ARPU is derived from the total of earned subscription revenue from Self-Pay subscribers and the music royalty and regulatory fee and activation fees, divided by the monthly weighted average number of Self-Paying subscribers. Please see the Company's MD&A for a more detailed description.

"During the quarter, we delivered top-line growth, increased profitability and grew our free cash flow," said Mark Redmond, President and CEO, SiriusXM Canada. "Our results are a testament to the strength of our overall business model and value of our service offering. We generated revenue growth in the face of higher churn related to our increased Music Royalty and Regulatory Fees, much of which was driven by an increase in Self-Pay ARPU. We also realized an increase in Adjusted EBITDA and strong free cash flow despite significantly higher copyright fees and greater capital expenditures.

Mr. Redmond continued: "We firmly believe we are positioned for continued growth in fiscal 2015. We are confident we can deliver year-over-year subscriber growth and increase Self-Pay ARPU. We are also gaining further traction in the pre-owned vehicle market. We realized a five percentage point improvement in total gross additions generated through this channel compared to Q1 fiscal 2014. Furthermore, industry fundamentals remain sound, our OEM penetration rate continues to increase, our investment in exclusive content is unwavering and our soon-to-be-launched new SMS system will significantly enhance our customer experience. Through the combination of our top-line growth opportunities, success in carefully managing costs and excellent operating leverage, we are confident we can deliver profitable growth for many years to come."

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

Developments During the Quarter: Adoption of IFRIC 21

On September 1, 2014, the Company adopted retrospectively IFRIC 21, Levies, which clarifies the timing of accounting for a liability in relation with the outflow of resources that is imposed by governments in accordance with legislation, based on the activities that trigger the payment. The application of IFRIC 21 impacted the timing of when the CCD obligations are accrued. As a result of the accounting policy change for IFRIC 21, the adjustments made to the three months ended November 30, 2013 Condensed Consolidated Interim Financial Statements (Unaudited) are summarized in the table below:

IFRIC 21 Adjustment	Three months ended November 30, 2013
(in $ 000's)	As Reported					IFRIC 21 Adjustment	Restated
Operating costs	57,691					(1,781)	55,910
Adjusted EBITDA	19,638					1,781	21,419
Net Income before tax	5,073					1,781	6,854
Income tax expense	(1,579)					(472)	(2,051)
Net Income after tax	3,494					1,309	4,803
Earnings per share	0.03					0.01	0.04

Q1 FY2015 Results Financial Review

For Q1 FY2015, revenue was $79.0 million, up $2.6 million, or 3.3%, from $76.4 million for the same period in 2014. The year-over-year improvement reflects growth in the Company's self-paying subscriber base and an increase in Self-Pay ARPU, which were partially offset by a reduction in promotional revenue due to revised terms related to contract renewals with certain OEM partners. Q1 FY2015 Self-Pay ARPU was $12.38, up 2.5% from $12.08 in Q1 FY2014. The year-over-year improvement in quarterly Self-Pay ARPU was driven by the Company's implementation of its increased Music Royalty and Regulatory Fees (MRF) on renewing subscribers.

Q1 FY2015 Adjusted EBITDA of $22.9 million improved by $1.5 million, or 6.9%, from $21.4 million in Q1 FY2014. The year-over-year increase was a result of revenue growth, which was offset, in part, by a higher cost of revenue due to an increase in the Company's copyright fees.

In Q1 FY2015, the Company generated net income of $8.0 million, up $3.2 million, or 67.0%, from $4.8 million in Q1 FY2014.

SAC for Q1 FY2015 continued to benefit from the revised terms related to contract renewals with certain OEM partners, as well as a greater volume of gross additions from the pre-owned vehicle market where the cost to acquire subscribers is much lower.  SAC was $39 in Q1 FY2015, down from $43 in Q1 FY2014.

CPGA was $64 in Q1 FY2015, down from $69 in Q1 FY2014, reflecting lower subsidy costs, and higher gross additions from the pre-owned vehicle channel.

In Q1 FY2015, the Company generated $17.3 million in cash from operating activities, up $1.7 million, or 11.1%, from $15.6 million in cash from operating activities in Q1 FY2014 as a result of year-over-year changes in working capital offset by timing of interest payment on long-term debt.

The Company generated free cash flow of $13.7 million in Q1 FY2015, up $0.9 million, or 6.7%, from $12.8 million in Q1 FY2014.

As at November 30, 2014, SiriusXM Canada had total cash, cash equivalents and short-term investments of $37.7 million compared to $23.9 million as at August 31, 2014. The increase is due primarily to higher operating income and beneficial working capital changes, offset by interest payments on the Company's long-term debt.

Conference Call and Webcast Details

SiriusXM Canada will hold a conference call to discuss the Company's Q1 FY2015 results on Monday, January 12, 2015 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 Monday, January 19, 2015 at midnight. To access the archived conference call, please dial 416-849-0833, or 1-855-859-2056 and enter the reservation code 57510069. A live audio webcast of the conference call will be available at http://www.siriusxm.ca and 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)											Q1 FY2015				Q1 FY2014
											(Unaudited)				(Unaudited)
															(Restated)
Operating income											14,656				10,618
Depreciation & Amortization											6,942				9,908
EBITDA											21,598				20,526
Stock based compensation											1,306				862
Fair value adjustments*											3				31
Adjusted EBITDA											22,906				21,419

* 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 January 12, 2015 for more details on the Company's Q1 FY2015 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 condensed consolidated interim financial statements for Q1 FY2015. Please see the Company's Management Discussion & Analysis filed January 12, 2015 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, 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 2,500 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 INTERIM BALANCE SHEETS
(Unaudited)
At									November 30,				August 31,
(Canadian dollars)									2014				2014
ASSETS
Current assets
Cash and cash equivalents									37,657,927				23,868,423
Accounts receivable									13,456,337				13,454,489
Prepaid expenses and other									4,426,859				4,251,306
Inventory									437,509				559,081
Total current assets									55,978,632				42,133,299
Long-term prepaid expenses									427,296				456,039
Property and equipment									3,962,994				4,508,188
Intangible assets									131,803,383				134,971,363
Deferred tax assets									47,051,499				50,592,132
Goodwill									96,732,525				96,732,525
Total assets									335,956,329				329,393,546
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Trade and other payables									44,941,727				44,121,466
Due to related parties									8,505,812				9,146,135
Interest payable									1,153,253				3,965,753
Deferred revenue									146,870,555				146,110,758
Dividends payable									13,447,592				—
Provisions									541,783				505,783
Total current liabilities									215,460,722				203,849,895
Deferred revenue									13,845,539				15,075,749
Other long-term liabilities									659,773				533,049
Due to related parties									1,239,051				1,323,965
Long-term debt									195,603,764				195,463,860
Provisions									381,409				374,240
Total liabilities									427,190,258				416,620,758
Shareholders' equity (deficiency)
Share capital									177,122,634				176,862,133
Contributed surplus									7,223,897				6,067,419
Accumulated deficit									(275,580,460)				(270,156,764)
Total shareholders' deficiency									(91,233,929)				(87,227,212)
Total liabilities and shareholders' deficiency									335,956,329				329,393,546

CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
For three months ended (Canadian dollars)							November 30, 2014	November 30, 2013-Restated
Revenue							78,984,965	76,435,692
Operating expenses
	Operating costs						57,386,789	55,909,810
	Depreciation and amortization						6,942,310	9,907,716
Operating income							14,655,866	10,618,166
Finance costs, net
	Interest income						90,446	179,425
	Interest expense						(3,117,317)	(3,890,486)
	Foreign exchange loss						(64,466)	(52,858)
Finance costs, net							(3,091,337)	(3,763,919)
Net income before income tax							11,564,529	6,854,247
Income tax expense							(3,540,633)	(2,050,804)
Net income and comprehensive income							8,023,896	4,803,443
Earnings per share - basic and diluted							0.06	0.04

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY) (Unaudited)
																	Total
For the three months ended,						Share				Contributed				Accumulated			Shareholders'
(Canadian dollars)						Capital				Surplus				deficit			Equity (deficiency)
Balance, September 1, 2013						151,794,596				6,161,440				(149,712,623)			8,243,413
Net income for the period (Restated)						—				—				4,803,443			4,803,443
Stock-based compensation						—				862,430				—			862,430
Dividends						—				—				(13,046,999)			(13,046,999)
Stock options exercised						1,591,452				(566,463)				—			1,024,989
Balance, November 30, 2013						153,386,048				6,457,407				(157,956,179)			1,887,276
Balance, September 1, 2014						176,862,133				6,067,419				(270,156,764)			(87,227,212)
Net income for the period						—				—				8,023,896			8,023,896
Stock-based compensation						—				1,305,599				—			1,305,599
Dividends						—				—				(13,447,592)			(13,447,592)
Stock options exercised						260,501				(149,121)				—			111,380
Balance, November 30, 2014						177,122,634				7,223,897				(275,580,460)			(91,233,929)

CONSOLIDATED  INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
For the three months ended (Canadian dollars)						November 30, 2014		November 30, 2013 Restated
Cash provided by (used in)
OPERATING ACTIVITIES
Net income (loss) for the period						8,023,896		4,803,443
Add (deduct) items not involving cash
	Amortization of intangible assets					6,492,759		8,650,080
	Depreciation of property and equipment					449,551		1,257,636
	Income tax expense					3,540,633		2,050,804
	Stock-based compensation					1,305,599		862,430
	Accrued interest					(2,812,500)		3,587,543
	Interest accretion					139,904		246,190
	Foreign exchange loss					73,907		61,981
Net change in non-cash working capital and deferred revenue related to operations						128,682		(5,907,386)
Cash provided by operating activities						17,342,431		15,612,721
INVESTING ACTIVITIES
Purchase of property and equipment						(205,214)		(561,968)
Purchase of intangible assets						(3,459,093)		(2,231,638)
Cash used in investing activities						(3,664,307)		(2,793,606)
FINANCING ACTIVITIES
Proceeds from exercise of stock options						111,380		1,024,989
Cash provided by financing activities						111,380		1,024,989
Net increase in cash and cash equivalents during the period						13,789,504		13,844,104
Cash and cash equivalents, beginning of period						23,868,423		44,078,584
Cash and cash equivalents, end of period						37,657,927		57,922,688

 

SOURCE Sirius XM Canada Holdings Inc.

Morlan Reddock
Sirius XM Canada
416-513-7418
[email protected]

Kristen Dickson
TMX Equicom
416-815-0700 ext 273
[email protected]