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SiriusXM Reports Record Third Quarter 2011 Results

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– Subscribers Exceed 21.3 Million, Net Adds of 334,000
— Record Revenue of $763 Million, Up 6%
— Record Adjusted EBITDA of $197 Million, Up 16%
— Free Cash Flow of $75 Million, Up 22%
— Net Income of $104 Million, Up 54%

Sirius XM Radio today announced third quarter 2011 results, including 21.3 million subscribers, net subscriber additions of 334,000, revenue of $763 million, up 6% over third quarter 2010 revenue of $718 million, and adjusted EBITDA of $197 million, up 16% from $170 million in the third quarter of 2010.

“In the third quarter, we once again delivered record levels of subscribers, revenue and adjusted EBITDA, and we are confident our positive momentum will continue in the fourth quarter.  This has been an exciting year for SiriusXM, but I’m even more excited by the many opportunities awaiting us in 2012.  We plan to accelerate our revenue and adjusted EBITDA growth, deliver more free cash flow than ever before, and we are thrilled to offer exciting new content and innovations to our existing and future subscribers,” said Mel Karmazin, Chief Executive Officer, SiriusXM.

Highlights from the quarter include:

  • Free cash flow improves. Free cash flow in the third quarter of 2011 was $75 million, a 22% improvement from the $62 million reported in the third quarter of 2010.
  • Subscribers reach new record high. Subscribers increased by 7% year-over-year to 21,349,858 at September 30, 2011. Self-pay net additions in the third quarter of 2011 were 364,004, up 41% from 258,105 in the third quarter of 2010, and the self-pay subscriber base reached an all-time high of 17,534,310, up 7% year-over-year.
  • Churn stable. Average self-pay monthly churn was 1.9% in the third quarter of 2011, in-line with 1.9% in the second quarter of 2011 and the third quarter of 2010.
  • Cost Efficient Growth. Total cash operating expenses increased only 2.7% over the prior year quarter, while revenues increased 6% over the prior year quarter, resulting in an expansion of our adjusted EBITDA margin to a record 25.8%.

Net income in the third quarters of 2011 and 2010 was $104 million and $68 million, respectively, or $0.02 and $0.01 per diluted share, respectively.

“We ended the third quarter with more than $600 million of cash and cash equivalents,” said David Frear, SiriusXM’s Executive Vice President and Chief Financial Officer.  “Our ratio of net debt to adjusted EBITDA declined to 3.4x at the end of the third quarter of 2011 from 4.5x at the end of the third quarter of 2010.  Our free cash flow for the first nine months of 2011 of $224 million exceeded the $210 million of free cash flow generated for the entire year of 2010.  With the seasonally strong cash flow of the fourth quarter ahead of us, declining capital expenditures, the anticipated substantial 2012 growth in EBITDA and free cash flow, and declining debt maturities in 2012 our liquidity will continue to rapidly improve,” added Frear.

The discussion of adjusted EBITDA excludes the effects of stock-based compensation and certain purchase price accounting adjustments. A reconciliation of non-GAAP items to their nearest GAAP equivalent is contained in the financial supplements included with this release.

2011 AND 2012 GUIDANCE

SiriusXM reiterated the following subscriber and financial guidance for 2011:

  • Net subscriber additions of 1.6 million,
  • Full year self-pay churn and conversion rates for 2011 should be broadly similar to those seen in 2010,
  • Revenue of approximately $3 billion,
  • Adjusted EBITDA of approximately $715 million, and
  • Free cash flow approaching $400 million.

For 2012, the company reiterates its existing financial guidance:

  • Revenue growth of 10% to approximately $3.3 billion,
  • Adjusted EBITDA growth of 20% to approximately $860 million, and
  • Free cash flow growth of 75% to approximately $700 million.
You can read the rest of the results here.