SiriusXM Canada Reports Third Quarter Fiscal 2016 Results

TORONTO, July 13, 2016 /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 2016 third quarter ("Q3 FY2016") and year-to-date period ("YTD FY2016") ended May 31, 2016 prepared in accordance with International Financial Reporting Standards (IFRS). A summary of IFRS financial results for Q3 FY2016 is attached.  All results are reported in thousands of Canadian dollars, except for subscribers and per share amounts, unless otherwise stated.

Q3 FY2016 and YTD 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	Q3 2016	Q3 2015	% Change^5	YTD 2016	YTD 2015	% Change^5
in 000's	May 31, 2016	May 31, 2015		May 31, 2016	May 31, 2015
	(Unaudited)	(Unaudited)		(Unaudited)	(Unaudited)
Revenue	86,015	83,095	3.5%	253,919	242,166	4.9%
Adjusted EBITDA ^2	20,792	20,185	3.0%	69,121	66,424	4.1%
Net Income and comprehensive income before non-recurring adjustments ^3	7,226	7,850	(7.9)%	29,659	25,834	14.8%
Net Income (loss) and comprehensive income (loss)	7,226	7,963	(9.3)%	45,546	(9,153)	597.6%
Free cash flow	12,583	14,366	(12.4)%	36,486	39,340	(7.3)%
Operating
Self-Paying Subscribers	1,961	1,869	4.9%	1,961	1,869	4.9%
Total Subscribers	2,750	2,658	3.5%	2,750	2,658	3.5%
Self-Pay ARPU ^4	$12.71	$12.87	(1.2)%	$12.59	$12.58	0.1%
Subscriber Acquisition Cost (SAC)	$43	$41	4.9%	$41	$39	5.1%

¹ All figures in the table above are in thousands except, 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 adjustments in YTD FY2016 include the reversal of the withholding tax expense of $15.9 million.  Non-recurring adjustments in FY2015 include a $15.9 million withholding tax expense and a $19.1 million non-cash income tax expense.

⁴ 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.

⁵ Percentage variances/changes are calculated based on the exact numbers, therefore, amounts may not sum as a result of rounding in certain instances.

"Throughout the quarter, we further enhanced our programming line-up, launching new shows, channels and extensive sports coverage," said Mark Redmond, President and CEO SiriusXM Canada. "The unmatched listening experience we offer continues to drive growth in our subscriber base. We recorded close to 9,000 net self-pay additions in Q3, resulting in year-over-year improvements in both revenue and Adjusted EBITDA. We remain committed to providing our subscribers with access to unrivaled content and supporting Canada's amazing talent with a platform to be heard."

Q3 FY2016 YTD FY2016 Financial Results Review

For Q3 FY2016, revenue was $86,015, up $2,920, or 3.5%, from $83,095 in Q3 FY2015.  The year-over-year improvement reflects growth in the Company's Self-Pay subscriber base, partly offset by a decrease in Self-Pay ARPU.  Q3 FY2016 Self-Pay ARPU was $12.71, down 1.2% from $12.87 in Q3 FY2015 driven by the implementation of the 14.2% Music Royalty and Regulatory Fee in lieu of the flat rate of $2.27 per month.  For YTD FY2016, revenue was $253,919, up $11,753, or 4.9%, from $242,166 for the same period in FY2015.  YTD FY2016 Self-Pay ARPU of $12.59 was in line with FY2015.

Adjusted EBITDA for Q3 FY2016 increased $607, or 3.0%, to $20,792 from $20,185 in Q3 FY2015.  The improvement was primarily due to revenue growth, partly offset by an increase in revenue share and royalty costs related to higher revenue and OEMs migrating away from the Sirius chipset to the XM chipset.  For YTD FY2016, Adjusted EBITDA was $69,121, up $2,697, or 4.1%, from $66,424 for the same period in FY2015.

The Company recorded net income and comprehensive income of $7,226 in Q3 FY2016, down $737, or 9.3%, compared to net income and comprehensive income of $7,963 in Q3 FY2015, which was mainly due to higher operating expenses and depreciation and amortization, partly offset by revenue improvements.  YTD net income and comprehensive income was $45,546, up $54,699, compared to a net loss of $9,153 for the same period in FY2015.  Excluding the impact of the non-recurring adjustments, net income and comprehensive income was $29,659 and $25,834 for YTD FY2016 and FY2015 respectively.

SAC for Q3 FY2016 was $43, up from $41 in Q3 FY2015.  The increase was mainly due to the mix of production and sales volumes from OEM partners, a one-time net realizable provision for inventory purchased during Q3 FY2016, and unfavourable foreign exchange rates.  For the YTD period, SAC was $41, up from $39 for the same period in FY2015.

In Q3 FY2016, the Company generated $16,526 in cash from operating activities, compared to $17,957 in Q3 FY2015 as a result of a decrease in operating income.  The Company generated free cash flow of $12,583 in Q3 FY2016, lower by $1,783, or 12.4%, from $14,366 in Q3 FY2015 mainly as a result of a decrease in operating income.  The Company generated free cash flow of $36,486, on a YTD basis, down $2,854, or 7.3% from $39,340 for the same period in FY2015.

As at May 31, 2016, the Company had total cash and cash equivalents of $22,352 compared to $26,128 as at August 31, 2015.  The decrease is primarily due to cash flow from financing activities as the Company issued dividend payments totaling $40,524 and incurred capital expenditures of $14,539, partly offset by cash from operating activities of $51,025.

Update on Proposed Recapitalization of the Company

On May 13, 2016, the Company announced that it had entered into a definitive agreement (the "Arrangement") to recapitalize the Company by way of a go-private transaction. On the unanimous recommendation of the special independent committee of the Company's board of directors, the Company's board of directors (with the interested directors abstaining from voting and not participating in the approval of the Arrangement) has recommended that the Company shareholders approve the Arrangement. Pursuant to the Arrangement agreement, on May 27, 2016, the Company filed a submission with the CRTC requesting approval of the Arrangement. In addition, the Company intends to hold a Special Meeting of shareholders on August 30, 2016.  Additional details regarding the proposed recapitalization transaction can be found in the Company's press release dated May 13, 2016, the material change report and the Arrangement agreement that have been filed on SEDAR, and posted to the Company's dedicated transaction website at: www.siriusxmcanadatransaction.ca.  Further information regarding the proposed recapitalization transaction will be provided in a management information circular to be mailed to the shareholders.

Conference Call and Webcast Details

SiriusXM Canada will hold a conference call to discuss the Company's Q3 FY2016 results on Thursday, July 14, 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, July 21, 2016 at midnight. To access the archived conference call, please dial 416-849-0833 or 1-855-859-2056 and enter reservation code: 37755287. A live audio webcast of the conference call will be available here: http://bit.ly/28JClRQ. 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 and comprehensive income before income tax.

Adjusted EBITDA: Reconciliation			Q3 2016	Q3 2015	YTD 2016	YTD 2015
(in thousands of Canadian dollars)			May 31, 2016	May 31, 2015	May 31, 2016	May 31, 2015
	Net income and comprehensive income before income tax		10,196	11,240	56,583	20,853
	Interest expense & income (net)		3,240	3,086	9,879	9,142
	Foreign exchange (loss) gain		(389)	(138)	138	51
	Depreciation and amortization		5,536	5,290	16,657	17,423
EBITDA			18,583	19,478	83,257	47,469
	Withholding tax (recovery) expense		—	(113)	(15,887)	15,887
	Stock-based compensation		506	820	(536)	3,064
	Third-party advisory costs		1,703	—	2,287	—
	Fair value adjustments ^6		—	—	—	4
Adjusted EBITDA			20,792	20,185	69,121	66,424

⁶ Fair value adjustment relates to a reduction in revenue due to the valuation of deferred revenue as per purchase price accounting.

For a complete definition of non-GAAP measures, and for additional details on the Company's Q3 FY2016 results, please see the Company's Interim MD&A filed July 13, 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 interim condensed consolidated financial statements for Q3 FY2016 and YTD 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 payment of dividends in the future, future performance and financial results, the Arrangement and the timing of the shareholders' meeting. 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 http://www.sedar.com/.

About SiriusXM Canada

Sirius XM Canada Holdings Inc. (TSX: XSR) operates as SiriusXM Canada. SiriusXM Canada, with more than 2.7 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.

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF
FINANCIAL POSITION
(Unaudited)
At				May 31,		August 31,
(All amounts in thousands)				2016		2015
ASSETS
Current assets
Cash and cash equivalents				22,352		26,128
Accounts receivable				11,975		9,436
Prepaid expenses				1,906		5,642
Inventory				2,398		35
Total current assets				38,631		41,241
Property and equipment				10,328		4,285
Intangible assets				137,443		131,410
Deferred tax assets				8,391		19,428
Goodwill				96,733		96,733
Total assets				291,526		293,097
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities
Trade and other payables				43,358		52,545
Due to related parties				14,833		15,950
Interest payable				1,153		3,966
Deferred revenue				153,665		153,076
Provisions				1,133		1,078
Total current liabilities				214,142		226,615
Deferred revenue				9,721		12,033
Other long-term liabilities				9,774		651
Due to related parties				1,208		1,208
Long-term debt				196,489		196,036
Total liabilities				431,334		436,543
Shareholders' deficiency
Share capital				180,225		178,479
Contributed surplus				5,687		8,817
Accumulated deficit				(325,720)		(330,742)
Total shareholders' deficiency				(139,808)		(143,446)
Total liabilities and shareholders' deficiency				291,526		293,097

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS' DEFICIENCY
(Unaudited)
								Total
For the nine months ended		Share		Contributed		Accumulated		Shareholders'
(All amounts in thousands)		Capital		Surplus		Deficit		Deficiency
Balance, September 1, 2014		176,862		6,067		(270,157)		(87,228)
Net loss and comprehensive loss		—		—		(9,153)		(9,153)
Stock-based compensation		—		3,064		—		3,064
Dividends		—		—		(40,362)		(40,362)
Stock options exercised		1,570		(662)		—		908
Balance, May 31, 2015		178,432		8,469		(319,672)		(132,771)
Balance, September 1, 2015		178,479		8,817		(330,742)		(143,446)
Net income and comprehensive income		—		—		45,546		45,546
Stock-based compensation		—		(1,251)		—		(1,251)
Dividends		—		—		(40,524)		(40,524)
RSU and PSU awards, net equity settlement		1,286		(1,681)		—		(395)
Stock options exercised		460		(198)		—		262
Balance, May 31, 2016		180,225		5,687		(325,720)		(139,808)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME (LOSS)
(Unaudited)
			Three months ended				Nine months ended
			May 31,		May 31,		May 31,		May 31,
(All amounts in thousands except per share amounts)			2016		2015		2016		2015
Revenue			86,015		83,095		253,919		242,166
Operating expenses
	Operating costs		67,432		63,730		186,549		178,810
	Depreciation and amortization		5,536		5,290		16,657		17,423
Operating income			13,047		14,075		50,713		45,933
Withholding tax recovery (expense)			—		113		15,887		(15,887)
Finance costs, net
	Interest income		58		56		176		229
	Interest expense		(3,298)		(3,142)		(10,055)		(9,371)
	Foreign exchange loss (gain)		389		138		(138)		(51)
Finance costs, net			(2,851)		(2,948)		(10,017)		(9,193)
Net income and comprehensive income before income tax			10,196		11,240		56,583		20,853
Income tax expense			(2,970)		(3,277)		(11,037)		(30,006)
Net income (loss) and comprehensive income (loss)			7,226		7,963		45,546		(9,153)
Earnings (loss) per share - basic and diluted			0.06		0.06		0.35		(0.07)

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
			Three months ended				Nine months ended
(All amounts in thousands)			May 31,  2016		May 31, 2015		May 31, 2016		May 31, 2015
Cash provided by (used in)
OPERATING ACTIVITIES
Net income (loss) for the period			7,226		7,963		45,546		(9,153)
Adjustments to reconcile net income to cash provided by operating activities:
	Amortization of intangible assets		5,250		4,776		15,697		16,018
	Depreciation of property and equipment		286		514		960		1,405
	Income tax expense		2,970		3,277		11,037		30,006
	Stock-based compensation		506		820		(536)		3,064
	Tax paid in lieu of shares issued for stock-based compensation		—		—		(407)		—
	Accrued interest		(2,813)		(2,813)		(2,813)		(2,813)
	Interest accretion		156		144		453		426
	Foreign exchange (gain) loss		(307)		20		(24)		275
Net change in non-cash working capital and deferred revenue related to operations			3,252		3,256		(18,888)		13,384
Cash provided by operating activities			16,526		17,957		51,025		52,612
INVESTING ACTIVITIES
Purchase of property and equipment			(621)		(524)		(3,205)		(1,377)
Purchase of intangible assets			(3,322)		(3,067)		(11,334)		(11,116)
Prepayment for property and equipment			—		—		—		(779)
Cash used in investing activities			(3,943)		(3,591)		(14,539)		(13,272)
FINANCING ACTIVITIES
Payment of dividends			(13,513)		(13,462)		(40,524)		(40,362)
Proceeds from exercise of stock options			168		385		262		908
Cash used in financing activities			(13,345)		(13,077)		(40,262)		(39,454)
Net (decrease) increase in cash and cash equivalents during the period			(762)		1,289		(3,776)		(114)
Cash and cash equivalents, beginning of period			23,114		22,465		26,128		23,868
Cash and cash equivalents, end of period			22,352		23,754		22,352		23,754

SOURCE Sirius XM Canada Holdings Inc.

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