SiriusXM Canada Reports Third Quarter Fiscal 2016 Results

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 % Change5 YTD 2016 YTD 2015 % Change5
------------ ------- ------- --------- -------- -------- ---------

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 7,226 7,850 (7.9)% 29,659 25,834 14.8%
before non-recurring
adjustments (3)

Net Income (loss) and
comprehensive 7,226 7,963 (9.3)% 45,546 (9,153) 597.6%
income (loss)

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 10,196 11,240 56,583 20,853
before income tax

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, May 31, May 31, May 31,
2016 2015 2016 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 - - (407) -
compensation

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 3,252 3,256 (18,888) 13,384
revenue related to
operations


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 (762) 1,289 (3,776) (114)
equivalents during the
period

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.

Sirius XM Canada Holdings Inc.

CONTACT: Odeta Kellici, SiriusXM Canada, Tel: 416-513-7416, Odeta.Kellici@siriusxm.ca; Kristen Dickson, NATIONAL Equicom, 416-848-1429, kdickson@national.ca


-------
Profile: intent