Sirius XM Canada Holdings Inc., parent of Sirius XM Canada Inc., today released unaudited financial results for its fiscal 2024 third quarter and year-to-date period ended May 31, 2024 prepared in accordance with International Financial Reporting Standards. 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 2024 |
Q3 2024 |
% Change5 |
YTD 2024 |
YTD 2024 |
% Change5 |
|
in 000’s |
May 31, 2024 |
May 31, 2024 |
May 31, 2024 |
May 31, 2024 |
||
|
(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% |
|
Net Income (loss) and comprehensive |
7,226 |
7,963 |
(9.3)% |
45,546 |
(9,153) |
597.6% |
|
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 $66,424for 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, 2024, the Company had total cash and cash equivalents of $22,352 compared to $26,128 as at August 31, 2024. 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, 2024, the Company announced that it had entered into a definitive agreement 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, 2024, 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, 2024. Additional details regarding the proposed recapitalization transaction can be found in the Company’s press release dated May 13, 2024, 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.
Reconciliations
The following is a reconciliation of EBITDA and Adjusted EBITDA to net income and comprehensive income before income tax.
|
Adjusted EBITDA: Reconciliation |
Q3 2024 |
Q3 2024 |
YTD 2024 |
YTD 2024 |
||
|
(in thousands of Canadian dollars) |
May 31, 2024 |
May 31, 2024 |
May 31, 2024 |
May 31, 2024 |
||
|
Net income and comprehensive income |
10,196 |
11,240 |
56,583 |
20,853 |
||
|
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, 2024 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.
|
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, 2024 |
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, 2024 |
178,432 |
8,469 |
(319,672) |
(132,771) |
||||
|
Balance, September 1, 2024 |
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, 2024 |
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, |
|||||
|
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 |
|||||||||
|
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) |
— |
|||||
|
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 |
|||||
|
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) |
|||||
|
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. 
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