SiriusXM Canada Reports Third Quarter Fiscal 2015 Results

- Company delivers record revenue and double-digit year-over-year growth in Adjusted EBITDA and free cash flow -

TORONTO, July 13, 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 third quarter and year-to-date ("YTD") period ended May 31, 2015 prepared in accordance with International Financial Reporting Standards (IFRS). A summary of IFRS financial results for Q3 and YTD FY2015 is attached.  All results are reported in Canadian dollars unless otherwise stated.

Q3 and YTD 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^1	Q3 2015	Q3 2014		% Change	YTD 2015	YTD 2014		% Change
	(May 31, 2015)	(May 31, 2014)			(May 31, 2015)	(May 31, 2014)
	(Unaudited)	(Unaudited)			(Unaudited)	(Unaudited)
		(Restated and Normalized)				(Restated and Normalized)
Revenue^2	83,095	75,979		9.4%	242,166	226,379		7.0%
Adjusted EBITDA^3	20,185	18,257		10.6%	66,423	66,823		(0.6)%
Net Income (loss)	7,962	(4,735)		268.2%	(9,153)	6,281		(245.7)%
Normalized net Income^4	7,962	4,094		94.5%	25,822	18,508		39.5%
Free cash flow	14,366	12,749		12.7%	39,340	35,444		11.0%
Operating^1
Self-Paying Subscribers	1,869	1,797		4.0%	1,869	1,797		4.0%
Total Subscribers	2,658	2,530		5.1%	2,658	2,530		5.1%
Self-Pay ARPU^5	$12.87	$12.33		4.4%	$12.58	$12.11		3.9%
Subscriber Acquisition Cost (SAC)	$41	$40		2.5%	$39	$38		2.6%
Cost Per Gross Addition (CPGA)	$67	$63		6.3%	$65	$63		3.2%

¹All figures in the table above are in thousands except, ARPU, SAC and CPGA.

²Includes a normalization adjustment to Q3 2014 related the renewal of certain OEM contracts. Please refer to the reconciliation tables below and the Company's MD&A for more detail.

³Adjusted EBITDA is a non-GAAP measure. A reconciliation of income (loss) before taxes to both EBITDA and Adjusted EBITDA, including one-time impact of certain OEM contract renewals in Q3 2014 and a $15.9 million withholding tax in YTD 2015, is provided below.

⁴Includes one-time adjustments for the impact of certain OEM contract renewals in Q3 2014 and a debt refinancing charge in Q3 2014 and YTD 2014 as well as a $15.9 million withholding tax expense and a $19.1 million, non-cash income tax expense for YTD 2015. Please refer to the reconciliation tables below and the Company's MD&A for more detail.

⁵Self-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.

"We set a new revenue record in the quarter, fueled by further expansion of our subscriber base and improvements in self-pay ARPU," said Mark Redmond, CEO, SiriusXM Canada. "Our top-line growth more than offset our higher copyright fees, translating into double-digit year-over-year increases in Adjusted EBITDA and free cash flow. We achieved an important milestone in the quarter. We completed the unification of our Subscriber Management System, with related business rule alignments resulting in one-time deactivations of approximately 9,000. However, we are now positioned to provide improved levels of customer service, while also driving more effective and efficient subscriber acquisition, conversion and retention. Excluding these changes, net subscriber additions would have been 16,000."

Mr. Redmond added: "We saw strong subscriber net additions in June, keeping us confident that we are on-track to achieve 2015 net self-pay subscriber growth in the mid-single digits. Our competitive positioning in the Canadian audio entertainment market is unmatched. We have in-car and streaming offerings, vehicle OEM penetration rates in the high 60s and unrivaled content. We go beyond simple commercial-free music with our exclusive, talk, news, comedy and sports content. We firmly believe in our ability to deliver continued growth as well as a supportable dividend."

Key Factors Affecting Reported Results
For the Q3 2014 and YTD 2015 periods, there were one-time events that affected the Company's results. In Q3 2014, the Company redeemed $130.8 million outstanding 9.75% senior notes that were due 2018.  This resulted in a total pre-tax debt refinancing charge of $16.6 million (after-tax - $12.2 million). In addition, in Q3 2014 the Company renewed agreements with two OEM partners. The changes to these contracts were applied retroactively from the beginning of fiscal 2014 and were fully reflected in the Q3 2014 financial results. As a result, $1.5 million in revenue, $4.1 million in revenue share and royalties and $2.1 million in subsidy costs from previous periods were reversed in Q3 2014.

For the YTD 2015 period, the company recognized a one-time, non-cash $19.1 million income tax expense and a $15.9 million withholding tax expense in Q2 2015 related to Canada Revenue Agency reassessments that the Company is currently disputing.

For the discussion below, the Company has compared normalized results as it believes this approach provides a more accurate depiction of its year-over-year performance. Please refer to the reconciliation tables below and the Company's MD&A for more detail.

Q3 and YTD FY2015 Results Financial Review
Revenue for Q3 2015 was $83.1 million, up 9.4%, or $7.1 million, from normalized revenue of $76.0 million in Q3 2014. The year-over-year improvement reflects growth in the Company's self-paying subscriber base and an increase in Self-Pay ARPU. Q3 FY2015 Self-Pay ARPU was $12.87, up 4.4% from $12.33 in Q3 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 Fee (MRF) on renewing subscribers. For YTD FY2015, revenue was $242.2 million, up $15.8 million, or 7.0% from $226.4 million for the same period in YTD FY2014. Self-Pay ARPU for YTD FY2015 was $12.58 compared to $12.11 for the same period in YTD FY2014.

Adjusted EBITDA, increased to $20.2 million in Q3 FY2015 from $18.3 million, excluding the impact of certain OEM contract renewals, in Q3 FY2014. This was a $1.9 million, or 10.6%, improvement compared to Q3 FY2014. The year-over-year increase was a result of revenue growth and marketing related cost savings, which were offset, in part, primarily by a higher cost of revenue due to an increase in the Company's copyright royalties. For YTD FY2015, Adjusted EBITDA, which excludes the one-time adjustment related to the withholding tax provision the Company took, was $66.4 million, a decrease of $0.4 million, or 0.6%, from $66.8 million for the same period in YTD FY2014.

The Company recorded net income of $8.0 million in Q3 FY2015, up $3.9 million, or 94.5%, compared to net income of $4.1 million in Q3 FY2014, after normalizing for the one-time after-tax debt refinancing charge and after-tax adjustments due to certain OEM contracts renewals. Excluding the one-time income tax expense and provision for withholding tax recorded in Q2 FY2015, the Company recorded a net income of $25.8 million in YTD FY2015. Net income was up $7.3 million, or 39.5%, compared to net income of $6.3 million in the same period of YTD FY2014, after normalizing the net income in YTD FY2014 for after-tax debt refinancing charge and after-tax adjustments due to certain OEM contracts renewals.

SAC was $41 in Q3 FY2015, up from $40 in Q3 FY2014, excluding the impact of OEM contract renewals. For YTD FY2015, SAC increased marginally to $39 in YTD FY2015 from $38 for the same period in YTD FY2014.

CPGA was $67 in Q3 FY2015, up from $63 in Q3 FY2014, excluding the impact of OEM contract renewals, reflecting higher SAC and marketing costs. For YTD FY2015, CPGA increased to $65 from $63 for the same period in YTD FY2014.

In Q3 FY2015, the Company generated $18.0 million in cash from operating activities, up $1.0 million, or 5.8%, from $17.0 million in cash from operating activities in Q3 FY2014, after excluding an early redemption premium of $10.4 million on debt refinancing in 2014. For YTD FY2015, the Company generated $52.6 million in cash from operating activities, up $6.9 million, or 15.0%, from $45.8 million in cash from operating activities for the same period in YTD FY2014.

The Company generated free cash flow of $14.4 million in Q3 FY2015, up $1.6 million, or 12.7%, from $12.7 million in Q3 FY2014 due to higher cash from operations and a $0.6 million decrease in capital spending as the Company completed the unification of its Subscriber Management System in April 2015. For YTD FY2015, the Company generated $39.3 million of free cash flow, up $3.9 million, or 11%, compared to $35.4 million in same period of YTD FY2014.

As at May 31, 2015, the Company had total cash and cash equivalents of $23.8 million compared to $22.5 million as at February 28, 2015. The increase is primarily due to cash flow from operating activities of $18.0 million offset by dividend payments of $13.5 million and capital expenditures of $3.6 million.

Conference Call and Webcast Details
SiriusXM Canada will hold a conference call to discuss the Company's Q3 FY2015 results on Tuesday, July 14, 2015 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 call will be archived for replay until Tuesday, July 21, 2015 at midnight. To access the archived conference call, please dial 416-849-0833, or 1-855-859-2056 and enter the reservation code 69174700. A live audio webcast of the conference call will be available at 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 Income (loss) before income taxes.

Adjusted EBITDA: Reconciliation			Three months ended May 31,			Nine months ended May 31,
In ($ 000's)			2015	2014		2015	2014
			Q3 2015	Q3 2014		YTD 2015	YTD 2014
				(Restated)			(Restated)
	Income (loss) before income taxes		11,240	(6,161)		20,853	9,344
	Interest expense & income		3,085	3,944		9,141	11,519
	Loss on debt repayment		—	16,636		—	16,636
	Foreign exchange loss		(138)	(44)		51	251
	Amortization		5,290	7,731		17,422	26,890
EBITDA			19,477	22,106		47,468	64,641
	Withholding tax expense		(113)	—		15,887	—
	Stock-based compensation		820	759		3,064	2,119
	Fair value adjustments		—	16		4	63
Adjusted EBITDA			20,185	22,881		66,423	66,823

* Fair value adjustment relates to reduction in revenue due to valuation of deferred revenue as per purchase price accounting

For complete definition of non-GAAP measures and for more details on the Company's Q2 FY2015 results, please see the Company's Management Discussion & Analysis filed July 13, 2015 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 condensed consolidated interim financial statements for Q3 FY2015.

The tables below show the normalized quarterly financial results for the third quarter of 2014 and normalized year-to-date financial results for 2015 in comparison to 2014.

			Q3 2015		Q3 2014								Change
in ($000's)			As Reported		As Reported		OEM Contracts		Loss on Debt		Q3 2014 Normalized		$		%
	Revenue		83,095		74,477		1,502		—		75,979		7,116		9.4%
	Operating costs		63,730		52,371		6,126		—		58,497		5,233		8.9%
	Depreciation and amortization		5,290		7,731		—		—		7,731		(2,441)		(31.6)%
Operating income			14,075		14,375		(4,624)		—		9,751		4,323		44.3%
	Withholding tax expense		(113)		—		—		—				(113)		—%
	Finance costs, net		2,948		20,536		—		(16,636)		3,900		(953)		(24.4)%
	Income tax expense (recovery)		3,277		(1,426)		(1,225)		4,409		1,757		1,520		86.5%
Net income (loss)			7,962		(4,735)		(3,398)		12,227		4,094		3,869		94.5%
Add back:
	Finance costs, net		2,948		20,536		—		(16,636)		3,900		(953)		(24.4)%
	Income tax expense (recovery)		3,277		(1,426)		(1,225)		4,409		1,757		1,520		86.5%
	Depreciation and amortization		5,290		7,731		—		—		7,731		(2,441)		(31.6)%
EBITDA			19,477		22,106		(4,624)		—		17,482		1,995		11.4%
Withholding tax expense			(113)								—		(113)		—%
Stock based compensation			820		759		—		—		759		61		8.1%
Fair value adjustments			—		16		—		—		16		(16)		9.9%
Adjusted EBITDA			20,185		22,881		(4,624)		—		18,257		1,928		10.6%
Cash from operations			17,957		6,565		—		10,411		16,977		980		5.8%
Free cash flow			14,366		2,338		—		10,411		12,749		1,617		12.7%

	YTD 2015				YTD 2014						Change
in ($000's)	As Reported	CRA Tax Reassessment	YTD 2015 Normalized		As Reported		Loss on Debt		YTD 2014 Normalized		$		%
Revenue	242,166	—	242,166		226,379		—		226,379		15,786		7.0%
Operating costs	178,810	—	178,810		161,739		—		161,739		17,072		10.6%
Depreciation and amortization	17,423		17,423		26,890				26,890		(9,468)		(35.2)%
Operating income	45,933	—	45,933		37,750		—		37,750		8,182		21.7%
Withholding tax expense	15,887	(15,887)	—		—		—		—		—		—%
Finance costs, net	9,192	—	9,192		28,407		(16,636)		11,771		(2,579)		(21.9)%
Income tax expense (recovery)	30,006	(19,088)	10,919		3,062		4,409		7,471		3,448		46.1%
Net income (loss)	(9,153)	34,975	25,822		6,281		12,227		18,508		7,313		39.5%
Add back:
Finance costs, net	9,192	—	9,192		28,407		(16,636)		11,771		(2,579)		(21.9)%
Income tax expense (recovery)	30,006	(19,088)	10,919		3,062		4,409		7,471		3,448		46.1%
Depreciation and amortization	17,422	—	17,422		26,890		—		26,890		(9,468)		(35.2)%
EBITDA	47,468	15,887	63,355		64,641		—		64,641		(1,285)		(2.0)%
Withholding tax expense	15,887	(15,887)	—		—		—		—		—		—%
Stock based compensation	3,064	—	3,064		2,119		—		2,119		945		44.6%
Fair value adjustments	4	—	4		63		—		63		(60)		(94.0)%
Adjusted EBITDA	66,423	—	66,423		66,823		—		66,823		(400)		(0.6)%
Cash from operations	52,613	—	52,613		35,350		10,411		45,761		6,851		15.0%
Free cash flow	39,340	—	39,340		25,032		10,411		35,444		3,897		11.0%

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 six 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				May 31,			August 31,
(Canadian dollars)				2015			2014
ASSETS
Current assets
Cash and cash equivalents				23,754,313			23,868,423
Accounts receivable				12,151,746			13,454,489
Prepaid expenses and other				6,054,930			4,251,306
Inventory				34,652			559,081
Total current assets				41,995,641			42,133,299
Long-term prepaid expenses				372,087			456,039
Property and equipment				4,200,405			4,508,188
Intangible assets				133,176,854			134,971,363
Deferred tax assets				20,585,720			50,592,132
Goodwill				96,732,525			96,732,525
Total assets				297,063,232			329,393,546
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities
Trade and other payables				56,450,541			44,121,466
Due to related parties				13,373,229			9,146,135
Interest payable				1,153,254			3,965,753
Deferred revenue				147,981,723			146,110,758
Provisions				947,408			505,783
Total current liabilities				219,906,155			203,849,895
Deferred revenue				12,083,119			15,075,749
Other long-term liabilities				653,581			533,049
Due to related parties				1,208,332			1,323,965
Long-term debt				195,889,976			195,463,860
Provisions				92,987			374,240
Total liabilities				429,834,150			416,620,758
Shareholders' deficiency
Share capital				178,432,309			176,862,133
Contributed surplus				8,469,128			6,067,419
Accumulated deficit				(319,672,355)			(270,156,764)
Total shareholders' deficiency				(132,770,918)			(87,227,212)
Total liabilities and shareholders' deficiency				297,063,232			329,393,546
See accompanying notes

CONSOLIDATED INTERIM STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (Unaudited)
					Three months ended				Nine months ended
					May 31,		May 31, 2014		May 31,		May 31, 2014
(Canadian dollars)					2015		(Restated)		2015		(Restated)
Revenue					83,095,034		74,477,058		242,165,542		226,379,214
Operating expenses
	Operating costs				63,730,101		52,370,965		178,810,301		161,738,581
	Depreciation and amortization				5,290,203		7,731,012		17,422,498		26,890,314
Operating income					14,074,730		14,375,081		45,932,743		37,750,319
Withholding tax recovery (expense)					112,507		—		(15,887,493)		—
Finance costs, net
	Interest income				56,182		344,160		229,208		689,203
	Interest expense				(3,141,466)		(4,288,516)		(9,370,449)		(12,208,655)
	Loss on debt repayment				—		(13,195,918)		—		(13,195,918)
	Change in fair value of embedded derivative				—		(3,440,000)		—		(3,440,000)
	Foreign exchange gain (loss)				137,724		44,043		(50,924)		(251,416)
Finance costs, net					(2,947,560)		(20,536,231)		(9,192,165)		(28,406,786)
Net income (loss) before income tax					11,239,677		(6,161,150)		20,853,085		9,343,533
Income tax recovery (expense)					(3,277,239)		1,426,091		(30,006,412)		(3,062,499)
Net income (loss) and comprehensive income (loss)					7,962,438		(4,735,059)		(9,153,327)		6,281,034
Earnings (loss) per share - basic and diluted					0.06		(0.04)		(0.07)		0.05

CONSOLIDATED INTERIM STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY (DEFICIENCY) (Unaudited)
									Total
For the nine months ended,			Share		Contributed		Accumulated		Shareholders'
(Canadian dollars)			Capital		Surplus		Deficit		Equity
Balance, September 1 , 2013			151,794,596		6,161,440		(149,712,623)		8,243,413
Net income for the period			—		—		6,281,034		6,281,034
Stock-based compensation			—		2,118,645		—		2,118,645
Dividends			—		—		(114,484,806)		(114,484,806)
Stock options exercised			3,312,225		(1,046,948)		—		2,265,277
Conversion of convertible notes			21,539,196		(1,539,196)		—		20,000,000
Balance, May 31 , 2014			176,646,017		5,693,941		(257,916,395)		(75,576,437)
Balance, September 1 , 2014			176,862,133		6,067,419		(270,156,764)		(87,227,212)
Net loss for the period			—		—		(9,153,327)		(9,153,327)
Stock-based compensation			—		3,064,081		—		3,064,081
Dividends			—		—		(40,362,264)		(40,362,264)
Stock options exercised			1,570,176		(662,372)		—		907,804
Balance, May 31 , 2015			178,432,309		8,469,128		(319,672,355)		(132,770,918)

CONSOLIDATED INTERIM STATEMENTS OF CASH FLOWS (Unaudited)
			Three months ended				Nine months ended
			May 31,		May 31, 2014		May 31,		May 31, 2014
(Canadian dollars)			2015		(Restated)		2015		(Restated)
Cash provided by (used in)
OPERATING ACTIVITIES
Net income (loss) for the period			7,962,438		(4,735,059)		(9,153,327)		6,281,034
Add(deduct) items not involving cash
	Amortization of intangible assets		4,775,768		7,283,501		16,017,701		24,471,997
	Depreciation of property and equipment		514,435		447,511		1,404,797		2,418,317
	Income tax expense		3,277,239		(1,426,091)		30,006,412		3,062,499
	Stock-based compensation		820,314		758,948		3,064,081		2,118,645
	Accrued interest		(2,812,500)		(1,267,064)		(2,812,500)		(1,551,196)
	Interest accretion		144,183		2,932,742		426,116		3,683,032
	Change in fair value of embedded derivative		—		3,440,000		—		3,440,000
	Foreign exchange loss (gain)		19,668		(70,859)		275,328		166,059
Net change in non-cash working capital and deferred revenue related to operations			3,255,119		(798,143)		13,384,241		(8,740,389)
Cash provided by operating activities			17,956,664		6,565,486		52,612,849		35,349,998
INVESTING ACTIVITIES
Purchase of property and equipment			(558,528)		(373,202)		(1,377,080)		(1,069,264)
Purchase of intangible assets			(3,067,366)		(3,854,743)		(11,116,069)		(9,248,383)
Prepayment for property and equipment			35,250		—		(779,350)		—
Maturity of short-term investments			—		—		—		2,063,000
Interest received on short-term investments			—		—		—		125,075
Cash used in investing activities			(3,590,644)		(4,227,945)		(13,272,499)		(8,129,572)
FINANCING ACTIVITIES
Payment of dividends			(13,461,970)		(13,429,490)		(40,362,264)		(39,604,863)
Proceeds from issuance of debt			—		200,000,000		—		200,000,000
Debt financing fees			—		(4,733,024)		—		(4,733,024)
Repayment of debt			—		(130,771,000)		—		(130,771,000)
Proceeds from exercise of stock options			385,175		319,972		907,804		2,265,277
Cash provided by (used) in financing activities			(13,076,795)		51,386,458		(39,454,460)		27,156,390
Net increase (decrease) in cash and cash equivalents during the period			1,289,225		53,723,999		(114,110)		54,376,816
Cash and cash equivalents, beginning of period			22,465,088		44,731,401		23,868,423		44,078,584
Cash and cash equivalents, end of period			23,754,313		98,455,400		23,754,313		98,455,400

SOURCE Sirius XM Canada Holdings Inc.

Robbie Sra, SiriusXM Canada, Tel: [phone], [email protected]; Kristen Dickson, TMX Equicom, 416-815-0700 ext 273, [email protected]