SiriusXM Canada Reports Record Total Subscribers and Revenue for
Fiscal 2015 Year-End and Fourth Quarter
–Net self-pay subscriber growth for the year fuels total subscriber all-time high,
top-line improvements and increased profitability –
Toronto, ON – October 29, 2015 – Sirius XM Canada Holdings Inc. (“SiriusXM Canada” or the “Company”)
(TSX: XSR), parent of Sirius XM Canada Inc., today released financial results for its fiscal year 2015
("FY2015") and fourth quarter ("Q4 FY2015") ended August 31, 2015 prepared in accordance with
International Financial Reporting Standards (IFRS). A summary of IFRS financial results for Q4 FY2015
and FY2015 is attached. All results are reported in Canadian dollars unless otherwise stated.
Q4 and Year-End 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. For easier comparability,
the table and financial review below exclude the impact of income tax expense and withholding tax expense
due to Canada Revenue Agency reassessments in FY2015 and the impact of the Company’s debt
refinancing in FY2014. Please see the Company’s reconciliation table below or the Company’s MD&A for
more detail.
Financial1
Q4 FY2015
Aug 31, 2015
Q4 FY2014 % Change
Aug 31, 2014
FY2015
FY2014
Aug 31, 2015
Aug 31, 2014
% Change
(Restated)
Revenue
83,709
77,121
8.5%
325,874
303,500
Adjusted EBITDA2
12,792
12,202
4.8%
79,214
79,025
0.2%
2,406
1,200
100.5%
28,227
19,708
43.2%
15,817
10,501
50.6%
55,157
45,944
20.1%
Self-Paying Subscribers
1,925
1,852
4.0%
1,925
1,852
4.0%
Total Subscribers
2,726
2,612
4.4%
2,726
2,612
4.4%
Normalized net income3
Normalized free cash flow4
Operating
1
5
Self-Pay ARPU
1
7.4%
$12.69
$12.25
3.6%
$12.61
$12.15
3.8%
Subscriber Acquisition Cost (SAC)
$40
$38
5.3%
$39
$38
2.6%
Cost Per Gross Addition (CPGA)
$71
$66
7.6%
$66
$64
3.1%
All figures in the table above are in thousands except, ARPU, SAC and CPGA.
2
Adjusted EBITDA is a non-GAAP measure. A reconciliation of income (loss) before taxes to both EBITDA and Adjusted EBITDA, including a one-time
$15.9 million withholding tax in FY2015 is provided below.
3
Adjusted for a one-time after-tax $12.2 million debt refinancing charge in FY2014 as well as a $15.9 million withholding tax expense and a $19.1 million,
non-cash income tax expense for FY2015. Please refer to the reconciliation tables below and the Company’s MD&A for more detail.
4
FY2014 adjusted for $10.4 million call premium related to the Company’s debt refinancing.
5
Self-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.
“Fiscal 2015 ended on a high note, with us delivering growth across all of our key metrics,” said Mark
Redmond, President and CEO, SiriusXM Canada. “Total subscribers reached at an all-time high, and we
delivered record quarterly and annual revenue. Supported by substantial net self-pay subscriber additions
in Q4, we achieved our stated goal of mid-single digit growth for the year. We also generated year-overyear improvements in Adjusted EBITDA and normalized free cash flow. This was despite a much larger cost
base due to higher copyright fees and increasing foreign exchange headwinds as we moved through the
year. As expected, we saw churn continue to improve in Q2, Q3 and Q4, with it coming in particularly strong
at 1.76 per cent for the quarter.”
Mr. Redmond continued: “With the superior overall audio entertainment experience we provide and our
growing addressable market, our long-term opportunities are significant. Our content is a major competitive
advantage. It is unrivaled. As we continue to demonstrate with the launch of new shows and channels, we
are committed to further enhancing our programming line-up to attract even more listeners. We remain
confident in our ability to continue to deliver top-line growth, strong Adjusted EBITDA and free cash flow.”
Key Factors Affecting FY2015 and FY2014 Reported Results
For FY2014 and FY2015 periods, there were one-time events that affected the Company’s results. In Q3
FY2014, 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) including $10.4
million call premium for early redemption of debt. For FY2015, the company recognized a one-time, noncash $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.
Q4 and Year-End FY2015 Results Financial Review
For Q4 FY2015, revenue was $83.7 million, up $6.6 million, or 8.5%, from $77.1 million in Q4 FY2014. The
year-over-year improvement reflects growth in the Company’s self-paying subscriber base and an increase
in Self-Pay ARPU. Q4 FY2015 Self-Pay ARPU was $12.69, up 3.6% from $12.25 in Q4 FY2014 driven by
the Company’s implementation of its increased Music Royalty and Regulatory Fee (MRF) on renewing
subscribers. For FY2015, revenue was $325.9 million, up $22.4 million, or 7.4%, from $303.5 million for
FY2014. Self-Pay ARPU for FY2015 was $12.61, up 3.8% compared to $12.15 for FY2014.
Adjusted EBITDA for Q4 FY2015, increased $0.6 million, or 4.8%, to $12.8 million from $12.2 million in
Q4 FY2014. The year-over-year increase was a result of revenue growth partially offset by an increase in
the Company’s copyright fees and higher overall marketing costs due to increased volumes and penetration
rates, investments in the pre-owned vehicle market and product development costs. For FY2015, Adjusted
EBITDA, which excludes a one-time adjustment related to the withholding tax provision the Company took,
was $79.2 million, an increase of $0.2 million, or 0.2%, from $79.0 million for the same period in FY2014.
The Company recorded net income of $2.4 million in Q4 FY2015, up $1.2 million, or 100.5%, compared to
net income of $1.2 million in Q4 FY2014. For FY2015, net income was $28.2 million, excluding a one-time
income tax expense and withholding tax expense. This was up $8.5 million, or 43.2%, from net income of
$19.7 million for FY2014, after normalizing for the after-tax debt refinancing charge the Company incurred
in FY2014.
SAC for Q4 FY2015 was $40, up from $38 in Q4 FY2014 as a result of higher subsidy costs and an
unfavorable impact of a weakened Canadian dollar versus the US dollar. SAC increased marginally to $39
in FY2015 from $38 in FY2014.
CPGA was $71 in Q4 FY2015, up from $66 in Q4 FY2014, reflecting higher subsidy and marketing costs,
offset, in part, by higher gross additions from the pre-owned vehicle channel. CPGA increased to $66 in
FY2015 from $64 in FY2014.
In Q4 FY2015, the Company generated $18.3 million in cash from operating activities, up $4.1 million, or
29.0%, from $14.2 million in cash from operating activities in Q4 FY2014. As a result of year-over-year
changes in working capital and lower interest payments in FY2015, the Company generated $71.0 million
in cash from operating activities, up $11.0 million, or 18.3%, from $60.0 million in cash from operating
activities in FY2014, after adjusting for the call premium of $10.4 million related to the Company’s debt
refinancing.
The Company generated free cash flow of $15.8 million in Q4 FY2015, up $5.3 million, or 50.6%, from $10.5
million in Q4 FY2014 reflecting a $4.1 million increase in cash from operations coupled with a $1.2 million
decrease in capital spending, as the Company completed the implementation of its unified Subscriber
Management System, in Q3 FY2015. For FY2015, the Company generated $55.2 million of free cash flow,
up $9.2 million, or 20.1%, compared to $45.9 million in FY2014, after adjusting for call premium for
repayment of debt. The year-over-year increase reflects higher cash from operations offset by higher capital
expenditures in FY2015.
As at August 31, 2015, the Company had total cash and cash equivalents of $26.1 million compared to
$23.8 million as at May 31, 2015. The increase is primarily due to cash flow from operating activities of
$18.3 million in Q4 FY2015 offset by dividend payments of $13.5 million and capital expenditures of
$2.5 million.
Conference Call and Webcast Details
SiriusXM Canada will hold a conference call to discuss the Company’s Q4 and year-end FY2015 results on
Friday, October 30, 2015 at 8:30 a.m. ET. All interested parties can join the call by dialing 647-427-7450,
or 1-888-231-8191. Please dial in 15 minutes prior to the call to secure a line. The conference will be
archived for replay until Friday, November 6, 2015 at midnight. To access the archived conference call,
please dial 416-849-0833 or 1-855-859-2056 and enter reservation code: 56558816. A live audio webcast
of the conference call will be available here: http://bit.ly/1juTkrt . Please connect at least 15 minutes prior to
the conference call top ensure adequate time for any software downloads that may be required. An archived
replay will be available for 90 days.
Reconciliations
The following is a reconciliation of EBITDA and Adjusted EBITDA to Income (loss) before income taxes.
Adjusted EBITDA: Reconciliation
Three months ended August 31,
In ($ 000’s)
Fiscal year ended August 31,
2015
2014
2015
2014
Q4 2015
Q4 2014
FY 2015
FY 2014
(Restated)
Income (loss) before income taxes
3,564
2,029
24,416
11,373
Interest expense & income
3,071
2,888
12,213
14,407
—
—
—
16,636
280
13
331
265
5,514
6,837
22,936
33,727
12,429
11,767
59,896
76,408
—
—
15,887
—
363
431
3,427
2,550
—
4
4
67
Adjusted EBITDA
12,792
79,214
12,202
* Fair value adjustment relates to reduction in revenue due to valuation of deferred revenue as per purchase price accounting
79,025
Loss on debt repayment
Foreign exchange loss
Amortization
EBITDA
Withholding tax expense
Stock-based compensation
Fair value adjustments *
For easier comparability, the table below shows the normalized results for fiscal FY2015 and FY2014 after
adjusting for income tax expense and withholding tax expense in FY2015 and early redemption of debt in
FY2014.
FY 2015
FY 2014
Change
As
Reported
CRA Tax
Reassessment
FY 2015
Normalized
As
Reported
Loss on
Debt
FY 2014
Normalized
Revenue
325,874
—
325,874
303,500
—
303,500
22,374
7.4 %
Operating costs
250,091
—
250,091
227,093
—
227,093
22,998
10.1 %
Depreciation and amortization
22,936
—
22,936
33,727
—
33,727
(10,791)
(32.0)%
Operating income
52,847
—
52,847
42,680
—
42,680
10,167
23.8 %
Withholding tax expense
(15,887)
15,887
—
—
—
—
—
—%
Finance costs, net
(12,544)
—
(12,544)
(31,307)
16,636
(14,671)
2,127
(14.5)%
Income tax expense (recovery)
(31,164)
19,088
(12,076)
(3,892)
(4,409)
(8,301)
(3,775)
45.5 %
(6,748)
34,975
28,227
7,481
12,227
19,708
8,519
43.2 %
(14.5)%
in ($000’s)
Net income (loss)
$
%
Add back:
Finance costs, net
(12,544)
—
(12,544)
(31,307)
16,636
(14,671)
2,127
Income tax expense (recovery)
(31,164)
19,088
(12,076)
(3,892)
(4,409)
(8,301)
(3,775)
45.5 %
Depreciation and amortization
22,936
—
22,936
33,727
—
33,727
(10,791)
(32.0)%
EBITDA
59,896
15,887
75,783
76,408
—
76,408
(625)
(0.8)%
(15,887)
(15,887)
—
—
3,427
—
3,427
2,550
—
—
4
—
4
67
79,214
—
79,214
79,025
Withholding tax expense
Stock based compensation
Fair value adjustments
Adjusted EBITDA
—
—
—
—
—%
2,550
877
34.4 %
67
(63)
(94.0)%
79,025
189
0.2 %
For complete definition of non-GAAP measures and for more details on the Company’s Q4 and FY2015 results, please
see the Company’s Annual Management Discussion & Analysis filed October 29, 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 financial statements for FY 2015.
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. Forwardlooking 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 2.7 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 Androidpowered 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 six years in a row
and 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,
twitter.com/siriusxmcanada and on Youtube at youtube.com/siriusxmcanada.
For further information, please contact:
Robbie Sra
SiriusXM Canada
Tel: 416-513-7407
Robbie.Sra@siriusxm.ca
Kristen Dickson
NATIONAL Equicom
416-848-1429
kdickson@national.ca
on
Twitter
at
CONSOLIDATED BALANCE SHEETS
August 31,
August 31,
2015
2014
26,128
23,868
Accounts receivable
9,436
13,455
Prepaid expenses
5,337
4,251
35
559
40,936
42,133
305
4,285
456
4,508
At
(in thousands of Canadian dollars)
ASSETS
Current assets
Cash and cash equivalents
Inventory
Total current assets
Long-term prepaid expenses
Property and equipment
Intangible assets
131,410
134,971
Deferred tax assets
19,428
50,592
Goodwill
96,733
96,733
293,097
329,393
Trade and other payables
52,545
44,121
Due to related parties
15,950
9,146
3,966
3,966
153,076
146,111
983
506
226,520
203,850
12,033
651
15,076
533
1,208
1,324
196,036
195,464
95
374
436,543
416,621
178,479
176,862
8,817
6,067
Total assets
LIABILITIES AND SHAREHOLDERS' DEFICIENCY
Current liabilities
Interest payable
Deferred revenue
Provisions
Total current liabilities
Deferred revenue
Other long-term liabilities
Due to related parties
Long-term debt
Provisions
Total liabilities
Shareholders' deficiency
Share capital
Contributed surplus
Accumulated deficit
(330,742)
(270,157)
Total shareholders' deficiency
(143,446)
(87,228)
293,097
329,393
Total liabilities and shareholders’ deficiency
Approved by the Board of Directors
(signed) Christine Magee
(signed) Anthony Viner
Christine Magee, Director
Anthony Viner, Director
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(DEFICIENCY)
Total
For the year ended August 31,
(in thousands of Canadian dollars)
Balance, September 1 , 2013
Net income for the period
Stock-based compensation
Dividends
Stock options exercised
Share
Contributed
Accumulated
Shareholders'
Capital
Surplus
Deficit
Equity (Deficiency)
151,795
—
6,161
—
—
2,550
—
—
(149,713)
7,481
—
(127,925)
8,243
7,481
2,550
(127,925)
3,528
(1,105)
—
2,423
21,539
(1,539)
—
20,000
Balance at August 31, 2014
176,862
6,067
(270,157)
(87,228)
Balance, September 1 , 2014
176,862
6,067
(270,157)
(87,228)
(6,748)
(6,748)
Conversion of convertible notes
Net loss for the period
—
—
Stock-based compensation
—
3,427
Dividends
—
—
Stock options exercised
Balance at August 31, 2015
1,617
178,479
(677)
8,817
—
(53,837)
—
(330,742)
3,427
(53,837)
940
(143,446)
CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE INCOME (LOSS)
For the year ended August 31,
(in thousands of Canadian dollars, except per share amounts)
Revenue
2015
2014
325,874
303,500
250,091
227,093
22,936
33,727
52,847
42,680
Operating expenses
Operating costs
Depreciation and amortization
Operating income
Withholding tax recovery (expense)
(15,887)
—
Finance costs, net
Interest income
Interest expense
288
(12,501)
843
(15,249)
Loss on debt repayment
—
(13,196)
Change in fair value of embedded derivative
—
(3,440)
Foreign exchange loss
Finance costs, net
Net income before income tax
Income tax expense
Net income (loss) and comprehensive income (loss)
Earnings (loss) per share - basic and diluted
(331)
(265)
(12,544)
(31,307)
24,416
11,373
(31,164)
(3,892)
(6,748)
7,481
(0.05)
0.06
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the year ended August 31,
(in thousands of Canadian dollars)
2015
2014
(6,748)
7,481
21,013
30,861
1,923
2,866
31,164
3,892
3,427
2,550
Accrued interest
—
1,261
Interest accretion
572
3,821
—
3,440
Cash provided by (used in)
OPERATING ACTIVITIES
Net income (loss) for the period
Add (deduct) items not involving cash
Amortization of intangible assets
Depreciation of property and equipment
Income tax expense
Stock-based compensation
Change in fair value of embedded derivative
Foreign exchange loss
583
171
Net change in non-cash working capital and deferred revenue related to operations
19,021
(6,778)
Cash provided by operating activities
70,955
49,565
(1,845)
(1,148)
(13,098)
(12,884)
INVESTING ACTIVITIES
Purchase of property and equipment
Purchase of intangible assets
Prepayment for property and equipment
(855)
—
Maturity of short-term investments
—
5,063
Interest received on short-term investments
—
199
Cash used in investing activities
(15,798)
(8,770)
(53,837)
(127,925)
FINANCING ACTIVITIES
Payment of dividends
Proceeds from issuance of debt
—
Debt financing fees
—
(4,733)
Repayment of debt
—
(130,771)
Proceeds from exercise of stock options
Cash used in financing activities
940
200,000
2,424
(52,897)
(61,005)
2,260
(20,210)
Cash and cash equivalents, beginning of year
23,868
44,078
Cash and cash equivalents, end of year
26,128
23,868
Net increase (decrease) in cash and cash equivalents during the year