SiriusXM Canada Reports Fiscal 2014 Year-end and Fourth Quarter Results

• 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."

------------------------------------

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.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)	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.

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

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