SiriusXM Canada Reports Fourth Quarter and Fiscal 2016 Year-End Results

TORONTO, Sept. 28, 2016 /CNW/ - Sirius XM Canada Holdings Inc. ("SiriusXM Canada" or the "Company") (TSX: XSR), parent of Sirius XM Canada Inc., today released the financial results for its fourth quarter fiscal 2016 ("Q4 FY2016") and the audited consolidated financial statements for fiscal year ended  August 31, 2016 ("FY2016") prepared in accordance with International Financial Reporting Standards (IFRS). A summary of the IFRS financial results for Q4 and FY2016 is attached. All results are reported in thousands of Canadian dollars, except for subscribers and per share amounts, unless otherwise stated.

Q4 and FY2016 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 ^1	Q4 FY2016	Q4 FY2015	% Change^6	FY2016	FY2015	% Change^6
	Aug 31, 2016	Aug 31, 2015		Aug 31, 2016	Aug 31, 2015
Revenue	87,408	83,709	4.4%	341,327	325,874	4.7%
Adjusted EBITDA ^2	15,241	12,792	19.1%	84,362	79,214	6.5%
Net Income before non-recurring adjustments ^3	4,184	2,406	73.9%	33,843	28,239	19.8%
Net Income (loss)	4,184	2,406	73.9%	49,730	(6,748)	837.0%
Free cash flow ^4	17,991	15,817	13.7%	54,477	55,157	(1.2)%
Operating
Self-Pay subscribers	2,007	1,925	4.3%	2,007	1,925	4.3%
Total subscribers	2,831	2,726	3.9%	2,831	2,726	3.9%
Self-Pay ARPU ^5	$12.67	$12.69	(0.2)%	$12.61	$12.61	-%
Subscriber Acquisition Cost (SAC)	$40	$40	-%	$40	$39	2.6%

¹ All figures in the table above are in thousands except Self-Pay ARPU and SAC.

² Adjusted EBITDA is a non-GAAP measure. A reconciliation of income (loss) before taxes to both EBITDA and Adjusted EBITDA is provided below.

³ Non-recurring adjustment in FY2016 include a withholding tax recovery of $15.9 million. Non-recurring adjustments in FY2015 includes a $15.9 million withholding tax expense and a $19.1 million non-cash income tax expense relating to future income taxes.

⁴ Free cash flow is a non-GAAP measure. A reconciliation of free cash flow is provided below.

⁵ Self-Pay ARPU is derived from the total of earned subscription revenue from Self-Pay subscribers, music royalty fee, and activation fees divided by the monthly weighted average number of Self-Pay subscribers. Please see the Company's MD&A for a more detailed description.

⁶ Percentage variances/changes are calculated based on the exact numbers, therefore, amounts may not sum as a result of rounding in certain instances.

"We continued to deliver an unmatched listening experience in the quarter with exclusive musical content, such as The Tragically Hip Radio takeover, and extensive sports coverage, while also helping foster Canadian talent through another year of our Canada's Top Comic competition," said Mark Redmond, President and CEO SiriusXM Canada. "In addition, as a result of growth in our subscriber base, we realized year-over-year improvements in revenue and Adjusted EBITDA. In terms of our proposed recapitalization go-private transaction, we are pleased to have received two out of the three necessary approvals - shareholder and court - and are working diligently to secure the required CRTC regulatory approval to complete the transaction."

Q4 and FY2016 Financial Results Review

For Q4 FY2016, revenue was $87,408, up $3,699, or 4.4%, from $83,709 in Q4 FY2015.  The year-over-year improvement reflects growth in the Company's subscriber base, partly offset by a decrease in equipment sales. Q4 FY2016 Self-Pay ARPU was relatively flat to Q4 FY2015 at $12.67. For FY2016, revenue was $341,327, up $15,453, or 4.7%, from $325,874 for the same period in FY2015.   FY2016 Self-Pay ARPU of $12.61 was in line with FY2015.

Adjusted EBITDA for Q4 FY2016 increased $2,449, or 19.1%, to $15,241 from $12,792 in Q4 FY2015. The improvement was due to revenue growth and lower marketing costs, partly offset by higher variable revenue share and royalty costs associated with the corresponding increase in revenues.  For FY2016, Adjusted EBITDA was $84,362, up $5,148, or 6.5%, from $79,214 for the same period in FY2015.

The Company recorded net income of $4,184 in Q4 FY2016, an increase of $1,778, or 73.9%, compared to net income of $2,406 in Q4 FY2015, which was mainly due to higher revenues, partly offset by increased operating expenses and greater depreciation and amortization. FY2016 net income was $49,730, up $56,478, compared to a net loss of $6,748 for the same period in FY2015. Excluding the impact of the non-recurring adjustments, net income was $33,843 and $28,239 for FY2016 and FY2015, respectively.

SAC for Q4 FY2016 and FY2015 was flat at $40. SAC for FY2016 was $40, up from $39 in FY2015, which was due to greater new vehicle production and sales volumes, a one-time net realizable provision for inventory purchased, and unfavourable foreign exchange rates compared to the same period in FY2015.

The Company generated free cash flow of $17,991 in Q4 FY2016, an improvement of $2,174, or 13.7%, from $15,817 in Q4 FY2015 mainly due to an increase in cash flow generated from operating activities partially offset by higher capital expenditures which were related to XM activation fees and additions to the dual-band terrestrial repeater network. The Company generated free cash flow of $54,477 during FY2016, down $680, or 1.2% from $55,157 in FY2015.

At August 31, 2016, the Company had total cash of $40,379 compared to $26,128 at August 31, 2015, primarily resulting from the dividend suspension pursuant to the Company's Recapitalization go-private transaction.

Conference Call and Webcast Details

SiriusXM Canada will hold a conference call to discuss the Company's FY 2016 Q4 and year-end results on Thursday, September 29, 2016 at 8:30 a.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 will be archived for replay until Thursday, October 6, 2016 at midnight. To access the archived conference call, please dial 416-849-0833 or 1-855-859-2056 and enter reservation code: 82336392. A live audio webcast of the conference call will be available here: http://bit.ly/2d3aSJa. Please connect at least 15 minutes prior to the conference call to ensure adequate time for any software downloads that may be required. An archived replay will be available for 90 days.

Reconciliations

The following is a reconciliation of EBITDA and Adjusted EBITDA to net income before income tax:

Adjusted EBITDA: Reconciliation		Q4 FY2016	Q4 FY2015	FY2016	FY2015
(All amounts in thousands)		Aug 31, 2016	Aug 31, 2015	Aug 31, 2016	Aug 31, 2015
	Net income before income tax	4,058	3,564	60,641	24,416
	Interest expense & income (net)	3,215	3,071	13,094	12,213
	Foreign exchange (loss) gain	(79)	280	59	331
	Depreciation and amortization	6,005	5,514	22,662	22,936
EBITDA		13,199	12,429	96,456	59,896
	Withholding tax (recovery) expense	—	—	(15,887)	15,887
	Stock-based compensation	458	363	(78)	3,427
	Third-party advisory costs	1,584	—	3,871	—
	Fair value adjustments ^7	—	—	—	4
Adjusted EBITDA		15,241	12,792	84,362	79,214
^7 Fair value adjustment relates to a reduction in revenue due to the valuation of deferred revenue as per purchase price accounting
Free Cash Flow: Reconciliation		Q4 FY2016	Q4 FY2015	FY2016	FY2015
(All amounts in thousands)		Aug 31, 2016	Aug 31, 2015	Aug 31, 2016	Aug 31, 2015
Cash flow provided by operating activities		20,812	18,343	71,837	70,955
Purchase of property and equipment		(629)	(468)	(3,834)	(1,845)
Purchase of intangible assets		(2,192)	(1,982)	(13,526)	(13,098)
Prepayment for property and equipment		—	(76)	—	(855)
Free Cash Flow		17,991	15,817	54,477	55,157

For a complete definition of non-GAAP measures, and for additional details on the Company's FY2016 results, please see the Company's MD&A filed September 28, 2016 which is incorporated herein by reference. 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 financial statements for FY2016.

Forward-Looking Statements

Certain statements included above are 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 completion of the Company's Recapitalization go-private transaction, the payment of dividends in the future, and future performance and financial results. Although SiriusXM Canada believes that the expectations reflected in such forward-looking statements are reasonable, forward-looking statements, by their very nature, are subject to inherent risks and uncertainties and are based on assumptions, both general and specific, which give rise to the possibility that actual results or events could differ materially from our expectations expressed in or implied by such forward-looking statements. As a result, we cannot guarantee that any forward-looking statement will materialize and we caution you against relying on any of these forward-looking statements. 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 2.8 million subscribers, is the country's leading audio entertainment company and broadcasts more than 130 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, MLB, 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, visit our website at www.siriusxm.ca.

SiriusXM Canada has been designated one of Canada's 50 Best Managed Companies seven years in a row and is currently a Platinum Club Member, in addition to 2013, 2014 and 2015 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 STATEMENTS OF FINANCIAL POSITION
At		August 31,		August 31,
(All amounts in thousands)		2016		2015
ASSETS
Current assets
Cash		40,379		26,128
Accounts receivable		9,217		9,436
Prepaid expenses		1,318		5,642
Inventory		2,339		35
Total current assets		53,253		41,241
Property and equipment		10,678		4,285
Intangible assets		135,483		131,410
Deferred tax assets		8,517		19,428
Goodwill		96,733		96,733
Total assets		304,664		293,097
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities
Trade and other payables		45,120		52,545
Due to related parties		16,557		15,950
Interest payable		3,966		3,966
Deferred revenue		156,929		153,076
Provisions		930		1,078
Total current liabilities		223,502		226,615
Deferred revenue		9,086		12,033
Other long-term liabilities		9,537		651
Due to related parties		1,208		1,208
Long-term debt		196,644		196,036
Total liabilities		439,977		436,543
Shareholders' deficiency
Share capital		180,280		178,479
Contributed surplus		5,943		8,817
Accumulated deficit		(321,536)		(330,742)
Total shareholders' deficiency		(135,313)		(143,446)
Total liabilities and shareholders' deficiency		304,664		293,097

CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY
				Total
For the year ended	Share	Contributed	Accumulated	Shareholders'
(All amounts in thousands)	Capital	Surplus	Deficit	Deficiency
At September 1, 2014	176,862	6,067	(270,157)	(87,228)
Net loss and comprehensive loss	—	—	(6,748)	(6,748)
Stock-based compensation	—	3,427	—	3,427
Dividends	—	—	(53,837)	(53,837)
Stock options exercised	1,617	(677)	—	940
At August 31, 2015	178,479	8,817	(330,742)	(143,446)
At September 1, 2015	178,479	8,817	(330,742)	(143,446)
Net income and comprehensive income	—	—	49,730	49,730
Stock-based compensation	—	(976)	—	(976)
Dividends	—	—	(40,524)	(40,524)
Restricted Stock Units ("RSU") and Performance Stock Units ("PSU") awards, net equity settlement	1,286	(1,681)	—	(395)
Stock options exercised	515	(217)	—	298
At August 31, 2016	180,280	5,943	(321,536)	(135,313)

CONSOLIDATED STATEMENTS OF INCOME (LOSS)
		Three months ended		Year ended
		August 31,	August 31,	August 31,	August 31,
(All amounts in thousands except per share amounts)		2016	2015	2016	2015
Revenue		87,408	83,709	341,327	325,874
Operating expenses
	Operating costs	74,209	71,280	260,758	250,091
	Depreciation and amortization	6,005	5,514	22,662	22,936
Operating income		7,194	6,915	57,907	52,847
Withholding tax recovery (expense)		—	—	15,887	(15,887)
	Interest income	58	59	234	288
	Interest expense	(3,273)	(3,130)	(13,328)	(12,501)
	Foreign exchange (gain) loss	79	(280)	(59)	(331)
Finance costs, net		(3,136)	(3,351)	(13,153)	(12,544)
Net income and comprehensive income before income tax		4,058	3,564	60,641	24,416
Income tax expense		126	(1,158)	(10,911)	(31,164)
Net income (loss) and comprehensive income (loss)		4,184	2,406	49,730	(6,748)
Earnings (loss) per share - basic and diluted		0.04	0.02	0.39	(0.05)

CONSOLIDATED STATEMENTS OF CASH FLOWS
		Three months ended		Year ended
(All amounts in thousands)		August 31,  2016	August 31, 2015	August 31, 2016	August 31, 2015
Cash provided by (used in)
OPERATING ACTIVITIES
Net income (loss) for the period		4,184	2,406	49,730	(6,748)
Add (deduct) items not involving cash:
	Amortization of intangible assets	5,669	4,995	21,366	21,013
	Depreciation of property and equipment	336	518	1,296	1,923
	Income tax expense	(126)	1,158	10,911	31,164
	Stock-based compensation	458	363	(78)	3,427
	Tax paid in lieu of shares issued for stock-based compensation	—	—	(407)	—
	Accrued interest	2,813	2,813	—	—
	Interest accretion	155	146	608	572
	Foreign exchange (gain) loss	(3)	308	(27)	583
Net change in non-cash working capital and deferred revenue related to operations		7,326	5,636	(11,562)	19,021
Cash provided by operating activities		20,812	18,343	71,837	70,955
INVESTING ACTIVITIES
Purchase of property and equipment		(629)	(468)	(3,834)	(1,845)
Purchase of intangible assets		(2,192)	(1,982)	(13,526)	(13,098)
Prepayment for property and equipment		—	(76)	—	(855)
Cash used in investing activities		(2,821)	(2,526)	(17,360)	(15,798)
FINANCING ACTIVITIES
Payment of dividends		—	(13,475)	(40,524)	(53,837)
Proceeds from exercise of stock options		36	32	298	940
Cash used in financing activities		36	(13,443)	(40,226)	(52,897)
Net increase in cash during the period		18,027	2,374	14,251	2,260
Cash balance, beginning of period		22,352	23,754	26,128	23,868
Cash balance, end of period		40,379	26,128	40,379	26,128

SOURCE SiriusXM Canada

Odeta Kellici, SiriusXM Canada, Tel: [phone], [email protected]; Kristen Dickson, NATIONAL Equicom, 416-848-1429, [email protected]