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SiriusXM Canada Reports Second Quarter Fiscal 2017 Results

TORONTO , April 12, 2017 /CNW/ - Sirius XM Canada Holdings Inc. ("SiriusXM Canada" or the "Company") (XSR.TO), parent of Sirius XM Canada Inc., today released the unaudited financial results for its fiscal 2017 second quarter ("Q2 FY2017") and year-to-date period ("YTD FY2017") ended February 28, 2017 prepared in accordance with International Financial Reporting Standards ("IFRS"). A summary of IFRS financial results for Q2 FY2017 and YTD FY2017 is attached. All results are reported in thousands of Canadian dollars, except for per share amounts, unless otherwise stated.

Q2 FY2017 and YTD FY2017 Financial and Operating Metrics

The figures below include certain non-GAAP measures and industry metrics. These figures are subject to the qualifications and assumptions set out in the Company's notes to such results.








Financial 1

Q2 FY2017

Q2 FY2016

% Change 6

YTD FY2017

YTD FY2016

% Change 6


Feb 28, 2017

Feb 29, 2016


Feb 28, 2017

Feb 29, 2016



(Unaudited)

(Unaudited)


(Unaudited)

(Unaudited)


Revenue

86,946

84,387

3.0%

174,162

167,904

3.7%

Adjusted EBITDA 2

23,933

24,810

(3.5)%

48,177

48,328

(0.3)%

Net Income and comprehensive income
before non-recurring adjustments 3

10,612

12,358

(14.1)%

20,420

22,433

(9.0)%

Net Income and comprehensive income

10,612

28,245

(62.4)%

20,420

38,320

(46.7)%

Free cash flow 4

11,763

13,674

(14.0)%

24,909

23,903

4.2%








Operating







Self-Pay subscribers

2,040

1,952

4.5%

2,040

1,952

4.5%

Total subscribers

2,779

2,653

4.8%

2,779

2,653

4.8%

Self-Pay ARPU 5

$12.47

$12.49

(0.2)%

$12.50

$12.53

(0.2)%

Subscriber Acquisition Cost (SAC)

$37

$39

(5.1)%

$35

$40

(12.5)%


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

2 Adjusted EBITDA is a non-GAAP measure. A reconciliation of net income and comprehensive income before income tax to both EBITDA and Adjusted EBITDA is provided below.

3 Non-recurring adjustment in FY2016 includes a withholding tax recovery of $15.9 million.

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 are pleased with the growth in revenue and subscribers we achieved in the quarter, which reflects the success of our unique programming lineup and superior entertainment experience," said Mark Redmond , President and CEO SiriusXM Canada. "To further solidify the value of our offering, in the quarter we also made investments in information technology and infrastructure to improve customer care and retention."

"In terms of our Recapitalization go-private transaction, we are awaiting the decision of the CRTC," added Mr. Redmond.

Q2 FY2017 and YTD FY2017 Financial Results Review

For Q2 FY2017, revenue was $86,946 , up $2,559 , or 3.0%, from $84,387 in Q2 FY2016. YTD FY2017 was $174,162 , an increase of $6,258 or 3.7% from $167,904 in YTD FY2016. The year-over-year improvement for both the quarter and year-to-date reflects growth in the Company's Self-Pay subscriber base. Q2 FY2017 Self-Pay ARPU was $12.47 , down 0.2% from $12.49 in Q2 FY2016. YTD FY2017 Self-Pay ARPU was $12.50 , a decrease of 0.2% from $12.53 for the same period in FY2016. The decrease for both the second quarter and year-to-date was mainly due to increased promotional activity.

Adjusted EBITDA for Q2 FY2017 decreased $877 , or 3.5%, to $23,933 from $24,810 in Q2 FY2016. The decrease was primarily due to higher revenue share and royalty costs, and information technology expenses, partly offset by higher revenues and lower administrative expenses. For YTD FY2017, Adjusted EBITDA was $48,177 , down $151 , or 0.3%, from $48,328 for the same period in FY2016. The decrease was primarily due to higher revenue share and royalty costs, information technology costs, marketing costs, and customer care and billing operations costs, partly offset by higher revenues and lower subsidies and distribution costs.

The Company recorded net income and comprehensive income of $10,612 in Q2 FY2017, a decrease of $17,633 , or 62.4%, compared to net income and comprehensive income of $28,245 in Q2 FY2016. For YTD FY2017, net income and comprehensive income was $20,420 , a decrease of $17,900 or 9% compared to net income and comprehensive income of $38,320 for the same period in FY2016. The decrease for both the second quarter and year-to-date was mainly due to $15,887 withholding tax recovery in Q2 FY2016 and higher operating expenses, partly offset by higher revenues.

SAC for Q2 FY2017 was $37 down $2 from $39 in Q2 FY2016. For the YTD FY2017, SAC was $35 , down $5 from $40 for the same period in FY2016. The reduction was mainly due to OEM partner mix, lower contractual OEM subsidy costs, and increased gross additions driven by vehicle industry sales (new and pre-owned).

In Q2 FY2017, the Company generated $14,457 in cash from operating activities compared to $17,293 in Q2 FY2016, a decrease of $2,836 or 16.4%. For YTD FY2017, the Company generated $29,925 in cash from operating activities, a reduction of $4,574 or 13.3% from $34,499 for the same period in FY2016. The decrease for both the second quarter and year-to-date was primarily due to lower net income, partly offset by higher operating working capital.

The Company generated free cash flow of $11,763 in Q2 FY2017, down $1,911 or 14.0%, from $13,674 in Q2 FY2016 primarily due to a decrease in cash flow generated by operating activities, partly offset by lower capital expenditures which were primarily related to fewer additions to the dual-band terrestrial repeater network, lower software additions, and higher XM activation fees. On a YTD basis, the Company generated free cash flow of $24,909 , up $1,006 , or 4.2% from $23,903 for the same period in FY2016, which was mainly due to lower capital expenditures which were primarily related to lower XM activation fees and lower additions to the dual-band terrestrial repeater network, partly offset by a decrease in cash flow generated by operating activities.

At February 28, 2017 , the Company had total cash of $51,774 compared to $40,379 at August 31, 2016 .

Annual General Meeting

The Company's Board of Directors have set May 9, 2017 as the record date for shareholders entitled to vote at the annual meeting of shareholders to be held on June 29, 2017 . In the event that the Company's Recapitalization go-private transaction closes before the shareholder meeting date, such meeting will be cancelled.

Conference Call and Webcast Details

SiriusXM Canada will hold a conference call to discuss the Company's Q2 and YTD FY2017 results on Thursday, April 13, 2017 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 Thursday, April 20, 2017 at midnight. To access the archived conference call, please dial 416-849-0833 or 1-855-859-2056 and enter reservation code: 98293921. A live audio webcast of the conference call will be available here: http://bit.ly/2odNdLN. 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

Q2 FY2017

Q2 FY2016

YTD FY2017

YTD FY2016

(All amounts in thousands)

Feb 28, 2017

Feb 29, 2016

Feb 28, 2017

Feb 29, 2016







Net income and comprehensive income before income tax

14,626

32,371

28,365

46,387


Interest expense & income (net)

3,150

3,324

6,326

6,639


Foreign exchange (gain) loss

(207)

211

103

527


Depreciation and amortization

5,651

5,618

11,691

11,121

EBITDA

23,220

41,524

46,485

64,674


Withholding tax recovery

(15,887)

(15,887)


Stock-based compensation

479

(1,410)

1,072

(1,042)


Third-party advisory costs1

234

583

620

583

Adjusted EBITDA

23,933

24,810

48,177

48,328






1 Third-party advisory costs are related to costs incurred as a result of the Company's Recapitalization go-private transaction (refer to "Developments during the Quarter section of the Company's Q2 FY2017MD&A for more detailed information).






Free Cash Flow: Reconciliation

Q2 FY2017

Q2 FY2016

YTD FY2017

YTD FY2016

(All amounts in thousands)

Feb 28, 2017

Feb 29, 2016

Feb 28, 2017

Feb 29, 2016






Cash flow provided by operating activities

14,457

17,293

29,925

34,499

Purchase of property and equipment

(815)

(1,159)

(1,209)

(2,584)

Purchase of intangible assets

(1,879)

(2,460)

(3,807)

(8,012)

Free Cash Flow

11,763

13,674

24,909

23,903

 

For a complete definition of non-GAAP measures, and for additional details on the Company's Q2 FY2017 results, please see the Company's MD&A filed April 12, 2017 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 Q2 FY2017.

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 Company's Recapitalization go-private transaction, and the timing thereof, 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, and as a consequence, actual events, performance or results may not be consistent with such 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. (XSR.TO) operates as SiriusXM Canada. SiriusXM Canada, with approximately 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 (XSR.TO), visit our website at www.siriusxm.ca.

SiriusXM Canada has been designated one of Canada's 50 Best Managed Companies eight 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

February 28,

August 31,

(All amounts in thousands)

2017

2016




ASSETS



Current assets



Cash

51,774

40,379

Accounts receivable

12,874

9,217

Prepaid expenses

1,107

1,318

Inventory

2,515

2,339

Total current assets

68,270

53,253

Property and equipment

10,339

10,678

Intangible assets

131,072

135,483

Deferred tax assets

572

8,517

Goodwill

96,733

96,733

Total assets

306,986

304,664




LIABILITIES AND SHAREHOLDERS' DEFICIENCY



Current liabilities



Trade and other payables

41,720

45,120

Due to related parties

19,975

16,557

Interest payable

3,966

3,966

Deferred revenue

153,446

156,929

Provisions

1,162

930

Total current liabilities

220,269

223,502

Deferred revenue

7,628

9,086

Other long-term liabilities

8,791

9,537

Due to related parties

1,208

1,208

Long-term debt

196,962

196,644

Total liabilities

434,858

439,977




Shareholders' deficiency



Share capital

180,280

180,280

Contributed surplus

6,478

5,943

Accumulated deficit

(314,630)

(321,536)

Total shareholders' deficiency

(127,872)

(135,313)

Total liabilities and shareholders' deficiency

306,986

304,664

 

 


INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CHANGES
IN SHAREHOLDERS' DEFICIENCY

(Unaudited)





Total

For the six months ended

Share

Contributed

Accumulated

Shareholders'

(All amounts in thousands)

Capital

Surplus

Deficit

Deficiency






At September 1, 2015

178,479

8,817

(330,742)

(143,446)

Net income and comprehensive income

38,320

38,320

Stock-based compensation

(1,555)

(1,555)

Dividends

(27,011)

(27,011)

Restricted Stock Units ("RSU") and
Performance Stock Units ("PSU") awards,
net equity settlement

1,286

(1,681)

(395)

Stock options exercised

160

(66)

94

At February 29, 2016

179,925

5,515

(319,433)

(133,993)






At September 1, 2016

180,280

5,943

(321,536)

(135,313)

Net income and comprehensive income

20,420

20,420

Stock-based compensation

535

535

Dividends

(13,514)

(13,514)

At February 28, 2017

180,280

6,478

(314,630)

(127,872)

 

 

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(Unaudited)



Three months ended

Six months ended


February 28,

February 29,

February 28,

February 29,

(All amounts in thousands except per share amounts)

2017

2016

2017

2016






Revenue

86,946

84,387

174,162

167,904






Operating expenses






Operating costs

63,726

58,750

127,677

119,117


Depreciation and amortization

5,651

5,618

11,691

11,121

Operating income

17,569

20,019

34,794

37,666






Withholding tax recovery

15,887

15,887







Interest income

116

58

212

118


Interest expense

(3,266)

(3,382)

(6,538)

(6,757)


Foreign exchange gain (loss)

207

(211)

(103)

(527)

Finance costs, net

(2,943)

(3,535)

(6,429)

(7,166)






Net income and comprehensive income before income tax

14,626

32,371

28,365

46,387

Income tax expense

(4,014)

(4,126)

(7,945)

(8,067)

Net income and comprehensive income

10,612

28,245

20,420

38,320






Earnings per share - basic and diluted

0.08

0.22

0.16

0.30

 

 

INTERIM CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)


Three months ended

Six months ended


February 28,

February 29,

February 28,

February 29,

(All amounts in thousands)

2017

2016

2017

2016






Cash provided by (used in)










OPERATING ACTIVITIES





Net income for the period

10,612

28,245

20,420

38,320

Add (deduct) items not involving cash:






Amortization of intangible assets

5,244

5,377

10,893

10,447


Depreciation of property and equipment

407

241

798

674


Income tax expense

4,014

4,126

7,945

8,067


Stock-based compensation

479

(1,410)

1,072

(1,042)


Tax paid in lieu of shares issued for stock-based compensation

(407)

(407)


Accrued interest

2,813

2,813


Interest accretion

160

151

318

297


Foreign exchange (gain) loss

(119)

90

195

283

Net change in non-cash working capital and deferred revenue related to operations

(9,153)

(21,933)

(11,716)

(22,140)

Cash provided by operating activities

14,457

17,293

29,925

34,499






INVESTING ACTIVITIES





Purchase of property and equipment

(815)

(1,159)

(1,209)

(2,584)

Purchase of intangible assets

(1,879)

(2,460)

(3,807)

(8,012)

Cash used in investing activities

(2,694)

(3,619)

(5,016)

(10,596)






FINANCING ACTIVITIES





Payment of dividends

(13,514)

(27,011)

(13,514)

(27,011)

Proceeds from exercise of stock options

60

94

Cash used in financing activities

(13,514)

(26,951)

(13,514)

(26,917)






Net (decrease) increase in cash during the period

(1,751)

(13,277)

11,395

(3,014)

Cash balance, beginning of period

53,525

36,391

40,379

26,128

Cash balance, end of period

51,774

23,114

51,774

23,114

 

SOURCE Sirius XM Canada Holdings Inc.


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