NEW YORK, July 28, 2015 /PRNewswire/ --
- Self-pay Net Additions Increase 37% to 519,000
- Record Second Quarter Revenue up 8% to $1.12 Billion
- Net Income of $103 Million,
Including a Pre-tax $108 Million
Settlement
- Adjusted EBITDA Climbs 12% to a Record $415 Million
- Free Cash Flow Reaches $371
Million, up 11%
- GAAP EPS of $0.02;
Adjusted EPS of $0.03, Excluding
Settlement
SiriusXM today announced second quarter 2015 operating and
financial results, including record second quarter revenue of
$1.12 billion, up 8% versus the
second quarter of 2014.
Net income in the second quarter of 2015 was $103 million, including a pre-tax $108 million charge to settle certain royalty
litigation, versus $120 million in
the second quarter of 2014. Net income per diluted common share was
$0.02 in the second quarter of 2015
and 2014. Adjusted EBITDA was $415
million in the second quarter of 2015, up 12% from
$370 million in the second quarter of
2014.
Adjusted net income was $170
million in the second quarter of 2015, up 29% from
$131 million in the second quarter of
2014. Adjusted net income per diluted common share was $0.03 in the second quarter of 2015 compared to
$0.02 in the second quarter of 2014.
Adjusted net income excludes the impact of the settlement of
certain royalty litigation during the second quarter of 2015.
"After another quarter of exceptional execution and subscriber
growth, we are increasing our subscriber guidance for the second
time this year to approximately 1.8 million net additions. We are
also increasing guidance for revenue, adjusted EBITDA and free cash
flow. Self-pay net additions of 519,000 were the strongest second
quarter result since 2007, and our quarterly self-pay churn rate of
1.6% was outstanding. The economy continues to get stronger, our
execution has never been better, and demand for our differentiated
content bundle remains very high," said Jim
Meyer, Chief Executive Officer, SiriusXM.
"We are focused on delivering the best, most compelling and most
entertaining audio content available. Listeners are attracted to
our diverse and exclusive content, such as our broadcasts of the
Grateful Dead's historic concerts in Chicago, our two live exclusive subscriber
concerts by Pitbull and James
Taylor, and broadcasts of leading music festivals including
Coachella, Bonnaroo, and The Electric Daisy Carnival. This fall we
will bring our subscribers an exclusive channel created with the
talented Andy Cohen, and launch our
new exclusive 24/7 original headline news channel with FOX News,"
added Meyer.
SECOND QUARTER 2015 HIGHLIGHTS
- Strong subscriber growth continues. SiriusXM added
692,000 net new subscribers in the second quarter, a 46% increase
from the 475,000 net new subscribers added in the second quarter of
2014. Self-pay net subscriber additions were 519,000 in the second
quarter of 2015 compared to 380,000 in the second quarter of 2014,
which made it the largest second quarter for self-pay subscriber
growth since 2007. Total paid subscribers reached 28.4 million, and
self-pay subscribers reached 23.4 million, both record highs.
- Record-low post-merger churn rate of 1.6%. The self-pay
churn rate of 1.6% in the second quarter was the best on record
since Sirius and XM were combined in 2008, a decrease from 1.8% in
the prior year period. This trend demonstrates the strong,
sustainable demand for satellite radio.
- Second quarter adjusted EBITDA rises 12%. Adjusted
EBITDA of $415 million in the second
quarter of 2015 was the highest quarterly amount in the company's
history, an increase of 12% over the $370
million reported in the second quarter of 2014. Adjusted
EBITDA margin was 37%, equal to the record high margin set in the
first quarter of 2015.
- Free cash flow per diluted share increases 25%. Free
cash flow of $371 million was up 11%
from $335 million in the second
quarter of 2014. With increased cash flow and a lower share count
from the company's share repurchase program, free cash flow per
diluted share climbed 25% to 6.7
cents in the second quarter of 2015, up from 5.4 cents in the second quarter of 2014.
- Revolving credit facility increased to $1.75 billion and extended to 2020. In the
second quarter the company amended its revolving credit facility,
increasing it from $1.25 billion to $1.75
billion and extending its maturity from 2017 to 2020.
- Pre-72 litigation settlement. The company entered into
an agreement to settle certain outstanding litigation relating to
the use of recordings fixed prior to February 15, 1972. These plaintiffs have
represented that they own or control approximately 80% of the
pre-1972 recordings the company has historically used. Pursuant to
the settlement, the company will pay the plaintiffs $210 million for past claims and the continued
use of their recordings through 2017. As part of the settlement,
the company has the right to enter into a license with each
plaintiff to broadcast its pre-1972 recordings from 2018 through
2022. The royalty rate for each license will be determined by
negotiation or, if necessary, binding arbitration.
"We repurchased 144 million shares for $560 million during the second quarter, and this
year through yesterday we have repurchased 338 million shares for
approximately $1.3 billion. Our
growing free cash flow, low leverage and undrawn credit facility
allow us to continue investing in growth, while providing
flexibility to pursue strategic opportunities and return capital to
shareholders," noted David Frear,
Chief Financial Officer, SiriusXM.
INCREASED 2015 GUIDANCE
"Our performance in the first half has been phenomenal on all
fronts," Frear added. "As a result, we are increasing guidance
across the board for subscribers, revenue, adjusted EBITDA, and
free cash flow. Our adjusted EBITDA guidance includes approximately
$19 million of incremental expense
from the reported royalty litigation settlement that will be
reflected in the second half of 2015. Reported free cash flow in
the second half of 2015 will exclude the cash payment we expect to
make this month under the settlement."
Our full year 2015 guidance is as follows:
- Net self-pay subscriber additions of approximately 1.6
million,
- Total net subscriber additions of approximately 1.8
million,
- Revenue of approximately $4.5
billion,
- Adjusted EBITDA of approximately $1.62
billion, and
- Free cash flow of approximately $1.3
billion.
SECOND QUARTER 2015 RESULTS
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
(in thousands,
except per share data)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
940,077
|
|
$
878,160
|
|
$
1,851,547
|
|
$
1,729,596
|
Advertising
revenue
|
28,839
|
|
25,498
|
|
55,712
|
|
47,712
|
Equipment
revenue
|
29,263
|
|
27,616
|
|
54,104
|
|
51,594
|
Other
revenue
|
125,031
|
|
104,071
|
|
242,837
|
|
204,154
|
Total
revenue
|
1,123,210
|
|
1,035,345
|
|
2,204,200
|
|
2,033,056
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
331,517
|
|
200,221
|
|
544,495
|
|
395,632
|
Programming and
content
|
69,370
|
|
69,570
|
|
140,516
|
|
144,440
|
Customer service and
billing
|
91,932
|
|
90,092
|
|
184,029
|
|
181,161
|
Satellite and
transmission
|
21,714
|
|
21,272
|
|
43,018
|
|
42,651
|
Cost of
equipment
|
10,930
|
|
12,030
|
|
19,775
|
|
19,834
|
Subscriber
acquisition costs
|
136,504
|
|
124,407
|
|
258,764
|
|
247,429
|
Sales and
marketing
|
86,493
|
|
77,759
|
|
165,237
|
|
154,086
|
Engineering, design
and development
|
16,088
|
|
15,630
|
|
31,048
|
|
31,541
|
General and
administrative
|
72,137
|
|
72,582
|
|
151,960
|
|
148,825
|
Depreciation and
amortization
|
67,096
|
|
67,204
|
|
132,123
|
|
135,471
|
Total operating
expenses
|
903,781
|
|
750,767
|
|
1,670,965
|
|
1,501,070
|
Income from
operations
|
219,429
|
|
284,578
|
|
533,235
|
|
531,986
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest expense, net
of amounts capitalized
|
(75,380)
|
|
(67,521)
|
|
(145,288)
|
|
(121,613)
|
Interest and
investment income (loss)
|
4,032
|
|
(1,066)
|
|
5,013
|
|
3,283
|
Loss on change in
value of derivatives
|
-
|
|
(7,463)
|
|
-
|
|
(34,485)
|
Other income
(loss)
|
189
|
|
(1,745)
|
|
(69)
|
|
(1,652)
|
Total other
expense
|
(71,159)
|
|
(77,795)
|
|
(140,344)
|
|
(154,467)
|
Income before income
taxes
|
148,270
|
|
206,783
|
|
392,891
|
|
377,519
|
Income tax
expense
|
(45,421)
|
|
(86,822)
|
|
(184,350)
|
|
(163,570)
|
Net income
|
$
102,849
|
|
$
119,961
|
|
$
208,541
|
|
$
213,949
|
Foreign currency
translation adjustment, net of tax
|
(9)
|
|
(40)
|
|
(9)
|
|
78
|
Total comprehensive
income
|
$
102,840
|
|
$
119,921
|
|
$
208,532
|
|
$
214,027
|
Net income per common
share:
|
|
|
|
|
|
|
|
Basic
|
$
0.02
|
|
$
0.02
|
|
$
0.04
|
|
$
0.04
|
Diluted
|
$
0.02
|
|
$
0.02
|
|
$
0.04
|
|
$
0.04
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
5,443,590
|
|
5,865,032
|
|
5,506,818
|
|
5,979,273
|
Diluted
|
5,507,601
|
|
6,210,078
|
|
5,570,445
|
|
6,054,771
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
|
As of
June30,
|
|
As of December
31,
|
|
2015
|
|
2014
|
(in thousands,
except per share data)
|
(unaudited)
|
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
294,053
|
|
$
147,724
|
Receivables,
net
|
240,325
|
|
220,579
|
Inventory,
net
|
24,599
|
|
19,397
|
Prepaid
expenses
|
122,996
|
|
116,336
|
Related party current
assets
|
4,097
|
|
4,344
|
Deferred tax
asset
|
903,376
|
|
1,038,603
|
Other current
assets
|
40,920
|
|
2,763
|
Total current
assets
|
1,630,366
|
|
1,549,746
|
Property and
equipment, net
|
1,463,827
|
|
1,510,112
|
Long-term restricted
investments
|
9,888
|
|
5,922
|
Deferred financing
fees, net
|
15,377
|
|
12,021
|
Intangible assets,
net
|
2,618,802
|
|
2,645,046
|
Goodwill
|
2,205,107
|
|
2,205,107
|
Related party
long-term assets
|
-
|
|
3,000
|
Long-term deferred
tax asset
|
395,224
|
|
437,736
|
Other long-term
assets
|
69,480
|
|
6,819
|
Total
assets
|
$
8,408,071
|
|
$
8,375,509
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
787,040
|
|
$
587,755
|
Accrued
interest
|
97,243
|
|
80,440
|
Current portion of
deferred revenue
|
1,694,232
|
|
1,632,381
|
Current portion of
deferred credit on executory contracts
|
-
|
|
1,394
|
Current maturities of
long-term debt
|
8,074
|
|
7,482
|
Related party current
liabilities
|
4,687
|
|
4,340
|
Total current
liabilities
|
2,591,276
|
|
2,313,792
|
Deferred
revenue
|
156,229
|
|
151,901
|
Long-term
debt
|
5,108,336
|
|
4,493,863
|
Related party
long-term liabilities
|
12,215
|
|
13,635
|
Other long-term
liabilities
|
92,751
|
|
92,481
|
Total
liabilities
|
7,960,807
|
|
7,065,672
|
Stockholders'
equity:
|
|
|
|
Common stock, par
value $0.001; 9,000,000 shares authorized; 5,379,798 and 5,653,529
shares issued; 5,370,298 and 5,646,119 outstanding at June 30, 2015
and December 31, 2014, respectively
|
5,379
|
|
5,653
|
Accumulated other
comprehensive loss, net of tax
|
(411)
|
|
(402)
|
Additional paid-in
capital
|
5,710,484
|
|
6,771,554
|
Treasury stock, at
cost; 9,500 and 7,410 shares of common stock at June 30, 2015 and
December 31, 2014, respectively
|
(35,795)
|
|
(26,034)
|
Accumulated
deficit
|
(5,232,393)
|
|
(5,440,934)
|
Total stockholders'
equity
|
447,264
|
|
1,309,837
|
Total liabilities and
stockholders' equity
|
$
8,408,071
|
|
$
8,375,509
|
|
|
|
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
For the Six Months
Ended June 30,
|
(in
thousands)
|
2015
|
|
2014
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
208,541
|
|
$
213,949
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
132,123
|
|
135,471
|
Non-cash interest
expense, net of amortization of premium
|
3,868
|
|
10,779
|
Provision for
doubtful accounts
|
21,919
|
|
21,287
|
Amortization of
deferred income related to equity method investment
|
(1,388)
|
|
(1,388)
|
Gain on
unconsolidated entity investments, net
|
-
|
|
(966)
|
Dividend received
from unconsolidated entity investment
|
7,677
|
|
8,554
|
Loss on change in
value of derivatives
|
-
|
|
34,485
|
Share-based payment
expense
|
38,941
|
|
36,027
|
Deferred income
taxes
|
177,739
|
|
157,965
|
Other non-cash
purchase price adjustments
|
(1,394)
|
|
(1,890)
|
Changes in operating
assets and liabilities:
|
|
|
|
Receivables
|
(41,665)
|
|
(30,651)
|
Inventory
|
(5,202)
|
|
(7,692)
|
Related party,
net
|
(4,117)
|
|
2,837
|
Prepaid expenses and
other current assets
|
(44,821)
|
|
(1,057)
|
Other long-term
assets
|
(62,663)
|
|
1,238
|
Accounts payable and
accrued expenses
|
199,532
|
|
(40,098)
|
Accrued
interest
|
16,803
|
|
12,943
|
Deferred
revenue
|
66,179
|
|
44,981
|
Other long-term
liabilities
|
269
|
|
(4,702)
|
Net cash provided by
operating activities
|
712,341
|
|
592,072
|
Cash flows from
investing activities:
|
|
|
|
Additions to property
and equipment
|
(61,229)
|
|
(58,417)
|
Purchases of
restricted and other investments
|
(3,966)
|
|
-
|
Acquisition of
business, net of cash acquired
|
-
|
|
1,144
|
Return of capital
from investment in unconsolidated entity
|
-
|
|
24,178
|
Net cash used in
investing activities
|
(65,195)
|
|
(33,095)
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
exercise of stock options
|
-
|
|
260
|
Taxes paid in lieu of
shares issued for stock-based compensation
|
(15,420)
|
|
(7,313)
|
Proceeds from
long-term borrowings and revolving credit facility, net of
costs
|
1,259,346
|
|
1,921,230
|
Repayment of
long-term borrowings and revolving credit facility
|
(660,549)
|
|
(905,815)
|
Common stock
repurchased and retired
|
(1,084,194)
|
|
(1,532,164)
|
Net cash used in
financing activities
|
(500,817)
|
|
(523,802)
|
Net increase in cash
and cash equivalents
|
146,329
|
|
35,175
|
Cash and cash
equivalents at beginning of period
|
147,724
|
|
134,805
|
Cash and cash
equivalents at end of period
|
$
294,053
|
|
$
169,980
|
Key Operating
Metrics
The following table contains our key operating metrics based on
our adjusted results of operations for the three and six months
ended June 30, 2015 and 2014,
respectively. Subscribers and subscription related revenues and
expenses associated with our connected vehicle services are not
included in our subscriber count or subscriber-based operating
metrics:
|
Unaudited
|
(in thousands,
except per subscriber and per installation amounts)
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Self-pay
subscribers
|
23,436
|
|
21,635
|
|
23,436
|
|
21,635
|
Paid promotional
subscribers
|
4,999
|
|
4,667
|
|
4,999
|
|
4,667
|
Ending subscribers
(a)
|
28,434
|
|
26,302
|
|
28,434
|
|
26,302
|
|
|
|
|
|
|
|
|
Self-pay
subscribers
|
519
|
|
380
|
|
913
|
|
553
|
Paid promotional
subscribers
|
173
|
|
96
|
|
210
|
|
189
|
Net additions
(a)
|
692
|
|
475
|
|
1,123
|
|
742
|
|
|
|
|
|
|
|
|
Daily weighted
average number of subscribers
|
28,031
|
|
26,006
|
|
27,720
|
|
25,805
|
|
|
|
|
|
|
|
|
Average self-pay
monthly churn
|
1.6%
|
|
1.8%
|
|
1.7%
|
|
1.9%
|
|
|
|
|
|
|
|
|
New vehicle consumer
conversion rate
|
41%
|
|
42%
|
|
41%
|
|
42%
|
|
|
|
|
|
|
|
|
ARPU
|
$
12.42
|
|
$
12.36
|
|
$
12.34
|
|
$
12.27
|
SAC, per
installation
|
$
32
|
|
$
33
|
|
$
33
|
|
$
34
|
Customer service and
billing expenses, per average subscriber
|
$
0.99
|
|
$
1.05
|
|
$
1.00
|
|
$
1.07
|
Free cash
flow
|
$
370,914
|
|
$
335,044
|
|
$
647,146
|
|
$
557,833
|
Adjusted
EBITDA
|
$
414,962
|
|
$
370,437
|
|
$
814,189
|
|
$
705,220
|
(a) Note: Amounts may
not sum as a result of rounding.
|
Glossary
Adjusted EBITDA – EBITDA is defined as net income
before interest and investment income (loss); interest expense, net
of amounts capitalized; income tax expense and depreciation and
amortization. We adjust EBITDA to exclude the impact of other
income and expense, loss on extinguishment of debt, loss on change
in value of derivatives as well as certain other charges discussed
below. This measure is one of the primary Non-GAAP financial
measures on which we (i) evaluate the performance of our on-going
core operating results period over period, (ii) base our internal
budgets and (iii) compensate management. As such, adjusted EBITDA
is a Non-GAAP financial performance measure that excludes (if
applicable): (i) certain adjustments as a result of the
purchase price accounting for the Sirius and XM merger, (ii)
depreciation and amortization, (iii) share-based payment expense
and (iv) other significant operating expense (income) that does not
relate to the on-going performance of our business. The
purchase price accounting adjustments include: (i) the elimination
of deferred revenue associated with the investment in XM Canada,
(ii) recognition of deferred subscriber revenues not recognized in
purchase price accounting, and (iii) elimination of the benefit of
deferred credits on executory contracts, which are primarily
attributable to third party arrangements with programming
providers. We believe adjusted EBITDA is a useful measure of
the underlying trend of our operating performance, which provides
useful information about our business apart from the costs
associated with our physical plant, capital structure and purchase
price accounting. We believe investors find this Non-GAAP financial
measure useful when analyzing our results and comparing our
operating performance to the performance of other communications,
entertainment and media companies. We believe investors use current
and projected adjusted EBITDA to estimate our current and
prospective enterprise value and to make investment decisions.
Because we fund and build-out our satellite radio system through
the periodic raising and expenditure of large amounts of capital,
our results of operations reflect significant charges for
depreciation expense. The exclusion of depreciation and
amortization expense is useful given significant variation in
depreciation and amortization expense that can result from the
potential variations in estimated useful lives, all of which can
vary widely across different industries or among companies within
the same industry. We believe the exclusion of share-based payment
expense is useful given share-based payment expense is not directly
related to the operational conditions of our business.
We also believe the exclusion of the pre-1972 sound recordings
legal settlement is useful as it does not represent an expense
incurred as part of normal operations for the period. The
portion of the pre-1972 sound recordings legal settlement related
to the future period of July 2015
through December 2017 will not be
excluded from adjusted EBITDA in future periods as the royalty
expense will relate to the on-going performance of our
business.
Adjusted EBITDA has certain limitations in that it does not take
into account the impact to our statements of comprehensive income
of certain expenses, including share-based payment expense and
certain purchase price accounting for the Sirius and XM merger. We
endeavor to compensate for the limitations of the Non-GAAP measure
presented by also providing the comparable GAAP measure with equal
or greater prominence and descriptions of the reconciling items,
including quantifying such items, to derive the Non-GAAP
measure. Investors that wish to compare and evaluate our
operating results after giving effect for these costs, should refer
to net income as disclosed in our unaudited consolidated statements
of comprehensive income. Since adjusted EBITDA is a Non-GAAP
financial performance measure, our calculation of adjusted EBITDA
may be susceptible to varying calculations; may not be comparable
to other similarly titled measures of other companies; and should
not be considered in isolation, as a substitute for, or superior to
measures of financial performance prepared in accordance with GAAP.
The reconciliation of net income to the adjusted EBITDA is
calculated as follows:
|
Unaudited
|
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
(in
thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Net income
(GAAP):
|
$
102,849
|
|
$
119,961
|
|
$
208,541
|
|
$
213,949
|
Add back items
excluded from Adjusted EBITDA:
|
|
|
|
|
|
|
|
Purchase price
accounting adjustments:
|
|
|
|
|
|
|
|
Revenues
|
1,813
|
|
1,813
|
|
3,626
|
|
3,626
|
Operating
expenses
|
(558)
|
|
(945)
|
|
(1,394)
|
|
(1,890)
|
Pre-1972 sound
recordings legal settlement (GAAP)
|
107,658
|
|
-
|
|
107,658
|
|
-
|
Share-based payment
expense (GAAP)
|
19,524
|
|
17,787
|
|
38,941
|
|
36,027
|
Depreciation and
amortization (GAAP)
|
67,096
|
|
67,204
|
|
132,123
|
|
135,471
|
Interest expense, net
of amounts capitalized (GAAP)
|
75,380
|
|
67,521
|
|
145,288
|
|
121,613
|
Interest and
investment (income) loss (GAAP)
|
(4,032)
|
|
1,066
|
|
(5,013)
|
|
(3,283)
|
Loss on change in
value of derivatives (GAAP)
|
-
|
|
7,463
|
|
-
|
|
34,485
|
Other (income) loss
(GAAP)
|
(189)
|
|
1,745
|
|
69
|
|
1,652
|
Income tax expense
(GAAP)
|
45,421
|
|
86,822
|
|
184,350
|
|
163,570
|
Adjusted
EBITDA
|
$
414,962
|
|
$
370,437
|
|
$
814,189
|
|
$
705,220
|
|
|
|
|
|
|
|
|
Adjusted Net Income and Adjusted Earnings Per
Share - We define these Non-GAAP financial measures as our
actual net income adjusted to exclude the impact of certain
purchase price accounting adjustments, the loss on change in value
of derivatives, and the pre-1972 sound recordings legal settlement,
net of income tax expense. Adjusted earnings per share is derived
from adjusted net income divided by our weighted average common
shares outstanding. The following table reconciles our actual
income before income taxes to our adjusted net income for the three
and six months ended June 30, 2015
and 2014:
|
Unaudited
|
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
(in
thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Income before income
taxes (GAAP):
|
$
148,270
|
|
$
206,783
|
|
$
392,891
|
|
$
377,519
|
Add back items
excluded from adjusted net income:
|
|
|
|
|
|
|
|
Purchase price
accounting adjustments:
|
|
|
|
|
|
|
|
Revenues
|
1,813
|
|
1,813
|
|
3,626
|
|
3,626
|
Operating
expenses
|
(558)
|
|
(945)
|
|
(1,394)
|
|
(1,890)
|
Loss on change in
value of derivatives (GAAP)
|
-
|
|
7,463
|
|
-
|
|
34,485
|
Pre-1972 sound
recordings legal settlement (GAAP)
|
107,658
|
|
-
|
|
107,658
|
|
-
|
Adjusted income
before income taxes
|
$
257,183
|
|
$
215,114
|
|
$
502,781
|
|
$
413,740
|
Allocable income tax
expense
|
(87,135)
|
|
(83,679)
|
|
(226,438)
|
|
(160,945)
|
Adjusted net
income
|
$
170,048
|
|
$
131,435
|
|
$
276,343
|
|
$
252,795
|
Adjusted net income
per common share:
|
|
|
|
|
|
|
|
Basic
|
$
0.03
|
|
$
0.02
|
|
$
0.05
|
|
$
0.04
|
Diluted
|
$
0.03
|
|
$
0.02
|
|
$
0.05
|
|
$
0.04
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
5,443,590
|
|
5,865,032
|
|
5,506,818
|
|
5,979,273
|
Diluted
|
5,507,601
|
|
6,210,078
|
|
5,570,445
|
|
6,054,771
|
Adjusted Revenues and Operating Expenses - We define
this Non-GAAP financial measure as our actual revenues and
operating expenses adjusted to exclude the impact of certain
purchase price accounting adjustments from the merger of Sirius and
XM and share-based payment expense. We use this Non-GAAP financial
measure to manage our business, to set operational goals and as a
basis for determining performance-based compensation for our
employees. The following tables reconcile our actual revenues
and operating expenses to our adjusted revenues and operating
expenses for the three and six months ended June 30, 2015 and 2014:
|
Unaudited For the
Three Months Ended June 30, 2015
|
(in
thousands)
|
As
Reported
|
|
Purchase Price
Accounting Adjustments
|
|
Allocation of
Share-based Payment Expense
|
|
Adjusted
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
940,077
|
|
$
-
|
|
$
-
|
|
$
940,077
|
Advertising
revenue
|
28,839
|
|
-
|
|
-
|
|
28,839
|
Equipment
revenue
|
29,263
|
|
-
|
|
-
|
|
29,263
|
Other
revenue
|
125,031
|
|
1,813
|
|
-
|
|
126,844
|
Total
revenue
|
$
1,123,210
|
|
$
1,813
|
|
$
-
|
|
$
1,125,023
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
$
331,517
|
|
$
-
|
|
$
-
|
|
$
331,517
|
Programming and
content
|
69,370
|
|
558
|
|
(2,119)
|
|
67,809
|
Customer service and
billing
|
91,932
|
|
-
|
|
(676)
|
|
91,256
|
Satellite and
transmission
|
21,714
|
|
-
|
|
(975)
|
|
20,739
|
Cost of
equipment
|
10,930
|
|
-
|
|
-
|
|
10,930
|
Subscriber
acquisition costs
|
136,504
|
|
-
|
|
-
|
|
136,504
|
Sales and
marketing
|
86,493
|
|
-
|
|
(4,024)
|
|
82,469
|
Engineering, design
and development
|
16,088
|
|
-
|
|
(2,128)
|
|
13,960
|
General and
administrative
|
72,137
|
|
-
|
|
(9,602)
|
|
62,535
|
Depreciation and
amortization (a)
|
67,096
|
|
-
|
|
-
|
|
67,096
|
Share-based payment
expense
|
-
|
|
-
|
|
19,524
|
|
19,524
|
Total operating
expenses
|
$
903,781
|
|
$
558
|
|
$
-
|
|
$
904,339
|
|
|
|
|
|
|
|
|
(a) Purchase price
accounting adjustments included above exclude the incremental
depreciation and amortization associated with the $785,000 stepped
up basis in property, equipment and intangible assets as a result
of the merger of Sirius and XM. The increased depreciation and
amortization for the three months ended June 30, 2015 was
$9,000.
|
|
Unaudited For the
Three Months Ended June 30, 2014
|
(in
thousands)
|
As
Reported
|
|
Purchase Price
Accounting Adjustments
|
|
Allocation of
Share-based Payment Expense
|
|
Adjusted
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
878,160
|
|
$
-
|
|
$
-
|
|
$
878,160
|
Advertising
revenue
|
25,498
|
|
-
|
|
-
|
|
25,498
|
Equipment
revenue
|
27,616
|
|
-
|
|
-
|
|
27,616
|
Other
revenue
|
104,071
|
|
1,813
|
|
-
|
|
105,884
|
Total
revenue
|
$
1,035,345
|
|
$
1,813
|
|
$
-
|
|
$
1,037,158
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
$
200,221
|
|
$
-
|
|
$
-
|
|
$
200,221
|
Programming and
content
|
69,570
|
|
945
|
|
(2,254)
|
|
68,261
|
Customer service and
billing
|
90,092
|
|
-
|
|
(587)
|
|
89,505
|
Satellite and
transmission
|
21,272
|
|
-
|
|
(956)
|
|
20,316
|
Cost of
equipment
|
12,030
|
|
-
|
|
-
|
|
12,030
|
Subscriber
acquisition costs
|
124,407
|
|
-
|
|
-
|
|
124,407
|
Sales and
marketing
|
77,759
|
|
-
|
|
(3,407)
|
|
74,352
|
Engineering, design
and development
|
15,630
|
|
-
|
|
(1,937)
|
|
13,693
|
General and
administrative
|
72,582
|
|
-
|
|
(8,646)
|
|
63,936
|
Depreciation and
amortization (a)
|
67,204
|
|
-
|
|
-
|
|
67,204
|
Share-based payment
expense
|
-
|
|
-
|
|
17,787
|
|
17,787
|
Total operating
expenses
|
$
750,767
|
|
$
945
|
|
$
-
|
|
$
751,712
|
|
|
|
|
|
|
|
|
(a) Purchase price
accounting adjustments included above exclude the incremental
depreciation and amortization associated with the $785,000 stepped
up basis in property, equipment and intangible assets as a result
of the merger of Sirius and XM. The increased depreciation and
amortization for the three months ended June 30, 2014 was
$10,000.
|
|
Unaudited For the
Six Months Ended June 30, 2015
|
(in
thousands)
|
As
Reported
|
|
Purchase Price
Accounting Adjustments
|
|
Allocation of
Share-based Payment Expense
|
|
Adjusted
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
1,851,547
|
|
$
-
|
|
$
-
|
|
$
1,851,547
|
Advertising
revenue
|
55,712
|
|
-
|
|
-
|
|
55,712
|
Equipment
revenue
|
54,104
|
|
-
|
|
-
|
|
54,104
|
Other
revenue
|
242,837
|
|
3,626
|
|
-
|
|
246,463
|
Total
revenue
|
$
2,204,200
|
|
$
3,626
|
|
$
-
|
|
$
2,207,826
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
$
544,495
|
|
$
-
|
|
$
-
|
|
$
544,495
|
Programming and
content
|
140,516
|
|
1,394
|
|
(4,346)
|
|
137,564
|
Customer service and
billing
|
184,029
|
|
-
|
|
(1,371)
|
|
182,658
|
Satellite and
transmission
|
43,018
|
|
-
|
|
(1,912)
|
|
41,106
|
Cost of
equipment
|
19,775
|
|
-
|
|
-
|
|
19,775
|
Subscriber
acquisition costs
|
258,764
|
|
-
|
|
-
|
|
258,764
|
Sales and
marketing
|
165,237
|
|
-
|
|
(7,768)
|
|
157,469
|
Engineering, design
and development
|
31,048
|
|
-
|
|
(4,262)
|
|
26,786
|
General and
administrative
|
151,960
|
|
-
|
|
(19,282)
|
|
132,678
|
Depreciation and
amortization (a)
|
132,123
|
|
-
|
|
-
|
|
132,123
|
Share-based payment
expense
|
-
|
|
-
|
|
38,941
|
|
38,941
|
Total operating
expenses
|
$
1,670,965
|
|
$
1,394
|
|
$
-
|
|
$
1,672,359
|
|
|
|
|
|
|
|
|
(a) Purchase price
accounting adjustments included above exclude the incremental
depreciation and amortization associated with the $785,000 stepped
up basis in property, equipment and intangible assets as a result
of the merger of Sirius and XM. The increased depreciation and
amortization for the six months ended June 30, 2015 was
$18,000.
|
|
Unaudited For the
Six Months Ended June 30, 2014
|
(in
thousands)
|
As
Reported
|
|
Purchase Price
Accounting Adjustments
|
|
Allocation of
Share-based Payment Expense
|
|
Adjusted
|
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
1,729,596
|
|
$
-
|
|
$
-
|
|
$
1,729,596
|
Advertising
revenue
|
47,712
|
|
-
|
|
-
|
|
47,712
|
Equipment
revenue
|
51,594
|
|
-
|
|
-
|
|
51,594
|
Other
revenue
|
204,154
|
|
3,626
|
|
-
|
|
207,780
|
Total
revenue
|
$
2,033,056
|
|
$
3,626
|
|
$
-
|
|
$
2,036,682
|
Operating
expenses
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
$
395,632
|
|
$
-
|
|
$
-
|
|
$
395,632
|
Programming and
content
|
144,440
|
|
1,890
|
|
(4,469)
|
|
141,861
|
Customer service and
billing
|
181,161
|
|
-
|
|
(1,164)
|
|
179,997
|
Satellite and
transmission
|
42,651
|
|
-
|
|
(1,902)
|
|
40,749
|
Cost of
equipment
|
19,834
|
|
-
|
|
-
|
|
19,834
|
Subscriber
acquisition costs
|
247,429
|
|
-
|
|
-
|
|
247,429
|
Sales and
marketing
|
154,086
|
|
-
|
|
(6,973)
|
|
147,113
|
Engineering, design
and development
|
31,541
|
|
-
|
|
(3,863)
|
|
27,678
|
General and
administrative
|
148,825
|
|
-
|
|
(17,656)
|
|
131,169
|
Depreciation and
amortization (a)
|
135,471
|
|
-
|
|
-
|
|
135,471
|
Share-based payment
expense
|
-
|
|
-
|
|
36,027
|
|
36,027
|
Total operating
expenses
|
$
1,501,070
|
|
$
1,890
|
|
$
-
|
|
$
1,502,960
|
|
|
|
|
|
|
|
|
(a) Purchase price
accounting adjustments included above exclude the incremental
depreciation and amortization associated with the $785,000 stepped
up basis in property, equipment and intangible assets as a result
of the merger of Sirius and XM. The increased depreciation and
amortization for the six months ended June 30, 2014 was
$20,000.
|
Adjusted Cash Operating Expenses - We define this
Non-GAAP financial measure as our actual operating expenses
adjusted to exclude the impact of certain purchase price accounting
adjustments from the merger of Sirius and XM, depreciation and
amortization expense, share-based payment expense, and the pre-1972
sound recordings legal settlement. The following table reconciles
our actual operating expenses to our adjusted cash operating
expenses for the three and six months ended June 30, 2015 and 2014:
|
Unaudited
|
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
(in
thousands)
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Operating expenses
(GAAP):
|
$
903,781
|
|
$
750,767
|
|
$
1,670,965
|
|
$
1,501,070
|
Items excluded from
adjusted cash operating expenses:
|
|
|
|
|
|
|
|
Purchase price
accounting adjustments
|
558
|
|
945
|
|
1,394
|
|
1,890
|
Pre-1972 sound
recordings legal settlement (GAAP)
|
(107,658)
|
|
-
|
|
(107,658)
|
|
-
|
Share-based payment
expense (GAAP)
|
(19,524)
|
|
(17,787)
|
|
(38,941)
|
|
(36,027)
|
Depreciation and
amortization (GAAP)
|
(67,096)
|
|
(67,204)
|
|
(132,123)
|
|
(135,471)
|
Adjusted cash
operating expenses
|
$
710,061
|
|
$
666,721
|
|
$
1,393,637
|
|
$
1,331,462
|
|
|
|
|
|
|
|
|
ARPU - is derived from total earned subscriber
revenue, advertising revenue and other subscription-related
revenue, excluding revenue associated with our connected vehicle
business, divided by the number of months in the period, divided by
the daily weighted average number of subscribers for the period.
Other subscription-related revenue includes the U.S. Music Royalty
Fee. ARPU is calculated as follows (in thousands, except per
subscriber amounts):
|
Unaudited
|
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
Subscriber revenue,
excluding connected vehicle (GAAP)
|
$
915,311
|
|
$
855,846
|
|
$ 1,803,692
|
|
$ 1,688,649
|
Add: advertising
revenue (GAAP)
|
28,839
|
|
25,498
|
|
55,712
|
|
47,712
|
Add: other
subscription-related revenue (GAAP)
|
100,300
|
|
82,990
|
|
192,954
|
|
163,758
|
|
$ 1,044,450
|
|
$
964,334
|
|
$ 2,052,358
|
|
$ 1,900,119
|
|
|
|
|
|
|
|
|
Daily weighted
average number of subscribers
|
28,031
|
|
26,006
|
|
27,720
|
|
25,805
|
|
|
|
|
|
|
|
|
ARPU
|
$
12.42
|
|
$
12.36
|
|
$
12.34
|
|
$
12.27
|
Average self-pay monthly churn - is defined as the
monthly average of self-pay deactivations for the period divided by
the average number of self-pay subscribers for the period.
Customer service and billing expenses, per average
subscriber - is derived from total customer service and billing
expenses, excluding connected vehicle customer service and billing
expenses and share-based payment expense, divided by the number of
months in the period, divided by the daily weighted average number
of subscribers for the period. We believe the exclusion of
share-based payment expense in our calculation of customer service
and billing expenses, per average subscriber, is useful as
share-based payment expense is not directly related to the
operational conditions that give rise to variations in the
components of our customer service and billing expenses. Customer
service and billing expenses, per average subscriber, is calculated
as follows (in thousands, except per subscriber amounts):
|
Unaudited
|
|
For the Three
Months Ended
June 30,
|
|
For the Six Months
Ended
June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Customer service and
billing expenses, excluding connected vehicle (GAAP)
|
$
84,203
|
|
$
82,705
|
|
$
168,264
|
|
$
166,809
|
Less: share-based
payment expense (GAAP)
|
(676)
|
|
(587)
|
|
(1,371)
|
|
(1,164)
|
|
$
83,527
|
|
$
82,118
|
|
$
166,893
|
|
$
165,645
|
|
|
|
|
|
|
|
|
Daily weighted
average number of subscribers
|
28,031
|
|
26,006
|
|
27,720
|
|
25,805
|
|
|
|
|
|
|
|
|
Customer service and
billing expenses, per average subscriber
|
$
0.99
|
|
$
1.05
|
|
$
1.00
|
|
$
1.07
|
|
|
|
|
|
|
|
|
Free cash flow and free cash flow per diluted
share - are derived from cash flow provided by operating
activities, capital expenditures and restricted and other
investment activity. The calculation for free cash flow and free
cash flow per diluted share are as follows (in thousands, except
per share data):
|
Unaudited
|
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
|
2015
|
|
2014
|
|
2015
|
|
2014
|
|
|
|
|
|
|
|
|
Cash Flow
information
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
402,312
|
|
$
340,682
|
|
$
712,341
|
|
$
592,072
|
Net cash used in
investing activities
|
$
(31,398)
|
|
$
(5,638)
|
|
$
(65,195)
|
|
$
(33,095)
|
Net cash used in
financing activities
|
$
(558,904)
|
|
$
(286,235)
|
|
$
(500,817)
|
|
$
(523,802)
|
Free Cash
Flow
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
402,312
|
|
$
340,682
|
|
$
712,341
|
|
$
592,072
|
Additions to property
and equipment
|
(31,398)
|
|
(29,816)
|
|
(61,229)
|
|
(58,417)
|
Purchases of
restricted and other investments
|
-
|
|
-
|
|
(3,966)
|
|
-
|
Return of capital
from investment in unconsolidated entity
|
-
|
|
24,178
|
|
-
|
|
24,178
|
Free cash
flow
|
$
370,914
|
|
$
335,044
|
|
$
647,146
|
|
$
557,833
|
|
|
|
|
|
|
|
|
Diluted weighted
average common shares outstanding
|
5,507,601
|
|
6,210,078
|
|
5,570,445
|
|
6,054,771
|
|
|
|
|
|
|
|
|
Free cash flow per
diluted share
|
$
0.07
|
|
$
0.05
|
|
$
0.12
|
|
$
0.09
|
|
|
|
|
|
|
|
|
New vehicle consumer conversion rate - is defined as
the percentage of owners and lessees of new vehicles that receive
our satellite radio service and convert to become self-paying
subscribers after the initial promotion period. At the time
satellite radio enabled vehicles are sold or leased, the owners or
lessees generally receive trial subscriptions ranging from three to
twelve months. We measure conversion rate three months after the
period in which the trial service ends. The metric excludes rental
and fleet vehicles.
Subscriber acquisition cost, per installation - or SAC,
per installation, is derived from subscriber acquisition costs and
margins from the sale of radios and accessories, divided by the
number of satellite radio installations in new vehicles and
shipments of aftermarket radios for the period. SAC, per
installation, is calculated as follows (in thousands, except per
installation amounts):
|
Unaudited
|
|
For the Three
Months Ended June 30,
|
|
For the Six Months
Ended June 30,
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
Subscriber
acquisition costs (GAAP)
|
$
136,504
|
|
$
124,407
|
|
$
258,764
|
|
$
247,429
|
Less: margin from
direct sales of radios and accessories (GAAP)
|
(18,333)
|
|
(15,586)
|
|
(34,329)
|
|
(31,760)
|
|
$
118,171
|
|
$
108,821
|
|
$
224,435
|
|
$
215,669
|
|
|
|
|
|
|
|
|
Installations
|
3,655
|
|
3,280
|
|
6,876
|
|
6,358
|
|
|
|
|
|
|
|
|
SAC, per
installation
|
$
32
|
|
$
33
|
|
$
33
|
|
$
34
|
|
|
|
|
|
|
|
|
About SiriusXM
Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world's largest
radio broadcaster measured by revenue and has 28.4 million
subscribers. SiriusXM creates and broadcasts commercial-free
music; premier sports talk and live events; comedy; news; exclusive
talk and entertainment; and the most comprehensive Latin music,
sports and talk programming in radio. SiriusXM is available in
vehicles from every major car company in the U.S. and from
retailers nationwide as well as at shop.siriusxm.com. SiriusXM
programming is available through the SiriusXM Internet Radio App
for smartphones and other connected devices as well as online at
siriusxm.com. SiriusXM also provides premium traffic, weather, data
and information services for subscribers in cars, trucks, RVs,
boats and aircraft through SiriusXM Trafficâ„¢, SiriusXM Travel Link,
NavTraffic®, NavWeather™, SiriusXM Aviation, SiriusXM Marine™,
Sirius Marine Weather, XMWX
Aviationâ„¢, and XMWX Marineâ„¢. SiriusXM holds a minority
interest in SiriusXM Canada which has more than 2 million
subscribers.
On social media, join the SiriusXM community on Facebook,
Twitter, Instagram, and YouTube.
This communication contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements include, but are not limited to,
statements about future financial and operating results, our plans,
objectives, expectations and intentions with respect to future
operations, products and services; and other statements identified
by words such as "will likely result," "are expected to," "will
continue," "is anticipated," "estimated," "believe," "intend,"
"plan," "projection," "outlook" or words of similar meaning.
Such forward-looking statements are based upon the current beliefs
and expectations of our management and are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and generally
beyond our control. Actual results may differ materially from
the results anticipated in these forward-looking
statements.
The following factors, among others, could cause actual
results to differ materially from the anticipated results or other
expectations expressed in the forward-looking statements: our
competitive position versus other radio and audio entertainment
providers; our ability to attract and retain subscribers, which is
uncertain; our dependence upon the auto industry; general economic
conditions; failure of our satellites, which, in most cases, are
not insured; the interruption or failure of our information and
communications systems; the security of the personal information
about our customers; royalties we pay for music rights, which
increase over time; the unfavorable outcome of pending or future
litigation; our failure to realize benefits of acquisitions; rapid
technological and industry change; failure of third parties to
perform; changes in consumer protection laws and their enforcement;
failure to comply with FCC requirements and other government
regulations; and our indebtedness. Additional factors that
could cause our results to differ materially from those described
in the forward-looking statements can be found in our Annual Report
on Form 10-K for the year ended December 31,
2014, which is filed with the Securities and Exchange
Commission (the "SEC") and available at the SEC's Internet site
(http://www.sec.gov). The information set forth
herein speaks only as of the date hereof, and we disclaim any
intention or obligation to update any forward looking statements as
a result of developments occurring after the date of this
communication.
E - SIRI
Contact Information for Investors and Financial Media:
Investors:
Hooper Stevens
212 901 6718
hooper.stevens@siriusxm.com
Media:
Patrick Reilly
212 901 6646
patrick.reilly@siriusxm.com
Logo -
http://photos.prnewswire.com/prnh/20101014/NY82093LOGO
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/siriusxm-reports-second-quarter-2015-results-and-increases-guidance-300119389.html
SOURCE Sirius XM Holdings Inc.