NEW YORK, Jan. 31, 2018 /PRNewswire/ -- SiriusXM today
announced fourth quarter and full-year 2017 operating and financial
results, including record revenue of $1.4
billion and $5.4 billion,
respectively, each increasing 8% versus the prior year periods.
The Company's net (loss) income totaled $(37) million and $648
million in the fourth quarter and full-year 2017,
respectively, compared to $205
million and $746 million in
the fourth quarter and full-year 2016, respectively. Net (loss)
income per diluted common share was $(0.01) and $0.14
in the fourth quarter and full-year 2017, respectively, compared to
$0.04 and $0.15 in the fourth quarter and full-year 2016,
respectively. The fourth quarter and full-year 2017 net income
results reflect a $185 million, or
$0.04 per diluted share, charge
associated with the revaluation of the Company's deferred tax
assets as a result of the Tax Cuts and Jobs Act. In the fourth
quarter 2017, the Company also recorded a decrease of approximately
$72 million, or approximately
$0.02 per diluted share, in the fair
value of its investment in Pandora, reversing the prior quarter's
unrealized gains.
Adjusted EBITDA grew 14% and 13% in the fourth quarter and
full-year 2017, respectively, to a record $542 million and $2.12
billion. Free cash flow and operating cash flow in the
fourth quarter 2017 increased 7% and 8%, respectively, to
$460 million and $542 million. Full-year 2017 free cash flow and
operating cash flow grew 3% and 8%, respectively, to $1.56 billion and $1.86
billion.
"The fourth quarter capped a strong year for SiriusXM and was
our best quarter for self-pay subscriber growth in five years. We
exceeded all of our 2017 subscriber and financial guidance, even
after increasing these targets during the year. I am particularly
pleased that we achieved this growth in an environment of slowing
auto sales. Earlier this month, we outlined our goals to grow
subscribers, revenue and adjusted EBITDA in 2018, and at the
Detroit Auto Show, we unveiled with Fiat Chrysler the new Ram 1500,
which will soon be available to consumers with our new 360L
interface," commented Jim Meyer,
Chief Executive Officer, SiriusXM.
"SiriusXM didn't let up in the fourth quarter in finding and
delivering outstanding new programming for our national
audience. We see this as a true competitive advantage and
simply part of our DNA. From the launch of new college sports
channels from major conferences, to a new comedy
channel with Kevin Hart and
a new show with Ricky Gervais,
to our newly launched 24/7 channel with Barstool Sports, to
breaking new artists across multiple genres, and to
exclusive concerts with icons such as the Eagles and
Duran Duran in special venues, we
never stop delivering the best radio for our subscribers," added
Meyer.
FULL-YEAR 2017 HIGHLIGHTS
- Self-Pay Subscribers Exceed 27.5 Million. The Company
added 527,000 net new self-pay subscribers in the fourth quarter
and 1.56 million for the full-year to end 2017 with approximately
27.5 million self-pay subscribers. Total net additions in the
fourth quarter and full-year were 569,000 and 1.39 million,
respectively, taking the Company's total subscriber count to
approximately 32.7 million at year-end. As of December 31, 2017, SiriusXM Canada had
approximately 2.8 million subscribers. SiriusXM Canada's
subscribers are not included in the Company's subscriber count or
subscriber-based operating metrics. The Company also provides
traffic services to approximately 7.5 million vehicles.
- Strong Revenue and ARPU Growth. Full-year 2017 revenue
climbed 8% compared to the year ago period to a record $5.4 billion. The growth was driven primarily by
a 4% increase in subscribers and a 3% increase in average revenue
per user (ARPU) to $13.25.
- Record Adjusted EBITDA. Adjusted EBITDA in 2017 reached
a record $2.12 billion, up 13% from
$1.88 billion in 2016. The Company's
adjusted EBITDA margin was an all-time high of 38.9% in 2017, a 160
basis point increase from 37.3% in 2016.
- Free Cash Flow Reached a Record $1.56
Billion. Free cash flow for 2017 totaled $1.56 billion, up 3% from $1.51 billion in 2016. Operating cash flow for
2017 totaled $1.86 billion, up 8%
from 2016.
"2017 was an aggressive year for capital deployment at SiriusXM.
The Company deployed approximately $2.45
billion to return capital to our stockholders and to make
strategic investments in Pandora, SiriusXM Canada and connected
vehicle services through Automatic. During the year, we repurchased
nearly 271 million shares of our common stock for approximately
$1.4 billion. We also paid
$190 million in dividends to
stockholders last year, and increased the dividend by 10% in
November 2017. Additionally, our
Board of Directors recently approved an additional $2 billion of common stock repurchases, taking
our total authorization to $12
billion. At the end of last year, our debt to adjusted
EBITDA was just 3.2 times, and we had cash on hand of approximately
$69 million and undrawn revolver
capacity of nearly $1.5
billion," noted David
Frear, Chief Financial Officer, SiriusXM.
2018 GUIDANCE
The Company's full-year 2018 guidance for net subscribers,
revenue, adjusted EBITDA and free cash flow, as issued on
January 10, 2018, is as follows:
- Self-pay net subscriber additions of approximately 1
million,
- Revenue of approximately $5.7
billion,
- Adjusted EBITDA of approximately $2.15
billion, and
- Free cash flow of approximately $1.5
billion.
As a reminder, in 2018, the adoption of the new revenue
recognition accounting standard (FASB ASU 2014-09) that was
effective January 1, 2018, will
reclassify approximately $90 million
of revenue to offset expenses principally related to automaker
agreements.
CAPITAL RETURN PROGRAM
Shares of common stock may be purchased from time to time on the
open market, pursuant to pre-set trading plans meeting the
requirements of Rule 10b5-1 under the Exchange Act of 1934, as
amended, in privately negotiated transactions, including in
accelerated stock repurchase transactions and transactions with
Liberty Media and its affiliates, or otherwise. The Company expects
to fund the repurchases through a combination of cash on hand, cash
generated by operations and future borrowings. The size and timing
of these purchases will be based on a number of factors, including
price and business and market conditions.
The Company's dividend policy may change at any time without
notice to stockholders. The declaration and payment of dividends is
at the discretion of the Company's Board of Directors in accordance
with applicable law after taking into account various factors,
including the Company's financial condition, operating results,
current and anticipated cash needs, limitations imposed by its
indebtedness, legal requirements and other factors that the Board
of Directors deems relevant.
FOURTH QUARTER AND FULL-YEAR 2017 RESULTS
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per share data)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
(Unaudited)
|
|
(Unaudited)
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Subscriber
revenue
|
$
|
1,147,227
|
|
|
$
|
1,084,140
|
|
|
$
|
4,472,522
|
|
|
$
|
4,196,852
|
|
Advertising
revenue
|
42,691
|
|
|
38,901
|
|
|
160,347
|
|
|
138,231
|
|
Equipment
revenue
|
39,917
|
|
|
32,662
|
|
|
131,586
|
|
|
118,947
|
|
Other
revenue
|
174,063
|
|
|
147,295
|
|
|
660,674
|
|
|
563,190
|
|
Total
revenue
|
1,403,898
|
|
|
1,302,998
|
|
|
5,425,129
|
|
|
5,017,220
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Cost of
services:
|
|
|
|
|
|
|
|
Revenue share and
royalties
|
343,632
|
|
|
319,563
|
|
|
1,210,323
|
|
|
1,108,515
|
|
Programming and
content
|
97,995
|
|
|
96,019
|
|
|
388,033
|
|
|
353,779
|
|
Customer service and
billing
|
98,677
|
|
|
101,629
|
|
|
385,431
|
|
|
387,131
|
|
Satellite and
transmission
|
21,190
|
|
|
22,411
|
|
|
82,747
|
|
|
103,020
|
|
Cost of
equipment
|
10,911
|
|
|
11,701
|
|
|
35,448
|
|
|
40,882
|
|
Subscriber
acquisition costs
|
127,295
|
|
|
131,293
|
|
|
499,492
|
|
|
512,809
|
|
Sales and
marketing
|
119,604
|
|
|
107,446
|
|
|
437,739
|
|
|
386,724
|
|
Engineering, design
and development
|
31,394
|
|
|
24,558
|
|
|
112,427
|
|
|
82,146
|
|
General and
administrative
|
88,028
|
|
|
92,054
|
|
|
334,023
|
|
|
341,106
|
|
Depreciation and
amortization
|
68,466
|
|
|
66,764
|
|
|
298,602
|
|
|
268,979
|
|
Total operating
expenses
|
1,007,192
|
|
|
973,438
|
|
|
3,784,265
|
|
|
3,585,091
|
|
Income from
operations
|
396,706
|
|
|
329,560
|
|
|
1,640,864
|
|
|
1,432,129
|
|
Other income
(expense):
|
|
|
|
|
|
|
|
Interest
expense
|
(88,735)
|
|
|
(80,337)
|
|
|
(345,820)
|
|
|
(331,225)
|
|
Loss on
extinguishment of debt
|
—
|
|
|
(24,229)
|
|
|
(43,679)
|
|
|
(24,229)
|
|
Other
income
|
(71,053)
|
|
|
(748)
|
|
|
12,844
|
|
|
14,985
|
|
Total other
expense
|
(159,788)
|
|
|
(105,314)
|
|
|
(376,655)
|
|
|
(340,469)
|
|
Income before income
taxes
|
236,918
|
|
|
224,246
|
|
|
1,264,209
|
|
|
1,091,660
|
|
Income tax
expense
|
(273,914)
|
|
|
(19,619)
|
|
|
(616,301)
|
|
|
(345,727)
|
|
Net (loss)
income
|
$
|
(36,996)
|
|
|
$
|
204,627
|
|
|
$
|
647,908
|
|
|
$
|
745,933
|
|
Foreign currency
translation adjustment, net of tax
|
12,120
|
|
|
(57)
|
|
|
18,546
|
|
|
363
|
|
Total comprehensive
income
|
$
|
(24,876)
|
|
|
$
|
204,570
|
|
|
$
|
666,454
|
|
|
$
|
746,296
|
|
Net (loss) income per
common share:
|
|
|
|
|
|
|
|
Basic
|
$
|
(0.01)
|
|
|
$
|
0.04
|
|
|
$
|
0.14
|
|
|
$
|
0.15
|
|
Diluted
|
$
|
(0.01)
|
|
|
$
|
0.04
|
|
|
$
|
0.14
|
|
|
$
|
0.15
|
|
Weighted average
common shares outstanding:
|
|
|
|
|
|
|
|
Basic
|
4,570,821
|
|
|
4,795,628
|
|
|
4,637,553
|
|
|
4,917,050
|
|
Diluted
|
4,570,821
|
|
|
4,847,261
|
|
|
4,723,535
|
|
|
4,964,728
|
|
Dividends declared
per common share
|
$
|
0.011
|
|
|
$
|
0.010
|
|
|
$
|
0.041
|
|
|
$
|
0.010
|
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED BALANCE
SHEETS
|
|
|
As of December
31,
|
(in thousands,
except per share data)
|
2017
|
|
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
69,022
|
|
|
$
|
213,939
|
|
Receivables,
net
|
241,727
|
|
|
223,029
|
|
Inventory,
net
|
20,199
|
|
|
20,363
|
|
Related party current
assets
|
10,284
|
|
|
6,170
|
|
Prepaid expenses and
other current assets
|
129,669
|
|
|
179,148
|
|
Total current
assets
|
470,901
|
|
|
642,649
|
|
Property and
equipment, net
|
1,462,766
|
|
|
1,398,693
|
|
Intangible assets,
net
|
2,522,846
|
|
|
2,544,801
|
|
Goodwill
|
2,286,582
|
|
|
2,205,107
|
|
Related party
long-term assets
|
962,080
|
|
|
8,918
|
|
Deferred tax
assets
|
505,528
|
|
|
1,084,330
|
|
Other long-term
assets
|
118,671
|
|
|
119,097
|
|
Total
assets
|
$
|
8,329,374
|
|
|
$
|
8,003,595
|
|
LIABILITIES AND
STOCKHOLDERS' (DEFICIT) EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts payable and
accrued expenses
|
$
|
794,341
|
|
|
$
|
713,034
|
|
Accrued
interest
|
137,428
|
|
|
114,633
|
|
Current portion of
deferred revenue
|
1,881,825
|
|
|
1,832,609
|
|
Current maturities of
long-term debt
|
5,105
|
|
|
5,485
|
|
Related party current
liabilities
|
2,839
|
|
|
2,840
|
|
Total current
liabilities
|
2,821,538
|
|
|
2,668,601
|
|
Deferred
revenue
|
174,579
|
|
|
176,319
|
|
Long-term
debt
|
6,741,243
|
|
|
5,842,764
|
|
Related party
long-term liabilities
|
7,364
|
|
|
7,955
|
|
Deferred tax
liabilities
|
8,169
|
|
|
6,418
|
|
Other long-term
liabilities
|
100,355
|
|
|
93,553
|
|
Total
liabilities
|
9,853,248
|
|
|
8,795,610
|
|
Stockholders'
(deficit) equity:
|
|
|
|
Common stock, par
value $0.001; 9,000,000 shares authorized; 4,530,928 and 4,746,047
shares issued; 4,527,742 and 4,740,947 outstanding at December 31,
2017 and December 31, 2016, respectively
|
4,530
|
|
|
4,745
|
|
Accumulated other
comprehensive income (loss), net of tax
|
18,407
|
|
|
(139)
|
|
Additional paid-in
capital
|
1,713,816
|
|
|
3,117,666
|
|
Treasury stock, at
cost; 3,186 and 5,100 shares of common stock at December 31, 2017
and December 31, 2016, respectively
|
(17,154)
|
|
|
(22,906)
|
|
Accumulated
deficit
|
(3,243,473)
|
|
|
(3,891,381)
|
|
Total stockholders'
(deficit) equity
|
(1,523,874)
|
|
|
(792,015)
|
|
Total liabilities and
stockholders' (deficit) equity
|
$
|
8,329,374
|
|
|
$
|
8,003,595
|
|
SIRIUS XM HOLDINGS
INC. AND SUBSIDIARIES
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
|
For the Twelve
Months Ended
December 31,
|
(in
thousands)
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
647,908
|
|
|
$
|
745,933
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
298,602
|
|
|
268,979
|
|
Non-cash interest
expense, net of amortization of premium
|
9,050
|
|
|
8,608
|
|
Provision for
doubtful accounts
|
55,715
|
|
|
55,941
|
|
Amortization of
deferred income related to equity method investment
|
(2,776)
|
|
|
(2,772)
|
|
Loss on
extinguishment of debt
|
43,679
|
|
|
24,229
|
|
Gain on
unconsolidated entity investments, net
|
(4,561)
|
|
|
(12,529)
|
|
Dividend received
from unconsolidated entity investment
|
3,606
|
|
|
7,160
|
|
Loss on disposal of
assets
|
—
|
|
|
12,912
|
|
Share-based payment
expense
|
124,069
|
|
|
108,604
|
|
Deferred income
taxes
|
583,520
|
|
|
323,562
|
|
Changes in operating
assets and liabilities:
|
|
|
|
Receivables
|
(73,777)
|
|
|
(44,188)
|
|
Inventory
|
1,874
|
|
|
1,932
|
|
Related party,
net
|
(2,210)
|
|
|
(3,485)
|
|
Prepaid expenses and
other current assets
|
50,194
|
|
|
7,156
|
|
Other long-term
assets
|
7,333
|
|
|
38,835
|
|
Accounts payable and
accrued expenses
|
41,367
|
|
|
78,920
|
|
Accrued
interest
|
22,795
|
|
|
22,978
|
|
Deferred
revenue
|
41,894
|
|
|
79,404
|
|
Other long-term
liabilities
|
7,307
|
|
|
(2,942)
|
|
Net cash provided by
operating activities
|
1,855,589
|
|
|
1,719,237
|
|
Cash flows from
investing activities:
|
|
|
|
Additions to property
and equipment
|
(287,970)
|
|
|
(205,829)
|
|
Purchases of
restricted and other investments
|
(7,847)
|
|
|
(4,295)
|
|
Acquisition of
business, net of cash acquired
|
(107,736)
|
|
|
—
|
|
Investments in
related parties
|
(612,465)
|
|
|
—
|
|
Loan to related
party
|
(130,794)
|
|
|
—
|
|
Net cash used in
investing activities
|
(1,146,812)
|
|
|
(210,124)
|
|
Cash flows from
financing activities:
|
|
|
|
Proceeds from
exercise of stock options
|
774
|
|
|
348
|
|
Taxes paid in lieu of
shares issued for stock-based compensation
|
(92,619)
|
|
|
(42,824)
|
|
Net (repayments)
borrowings related to revolving credit facility
|
(90,000)
|
|
|
50,000
|
|
Proceeds from
long-term borrowings, net of costs
|
2,473,071
|
|
|
987,143
|
|
Principal payments of
long-term borrowings
|
(1,512,578)
|
|
|
(660,985)
|
|
Payment of premiums
on redemption of debt
|
(33,065)
|
|
|
(19,097)
|
|
Common stock
repurchased and retired
|
(1,409,035)
|
|
|
(1,673,518)
|
|
Dividends
paid
|
(190,242)
|
|
|
(48,079)
|
|
Net cash used in
financing activities
|
(853,694)
|
|
|
(1,407,012)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(144,917)
|
|
|
102,101
|
|
Cash and cash
equivalents at beginning of period
|
213,939
|
|
|
111,838
|
|
Cash and cash
equivalents at end of period
|
$
|
69,022
|
|
|
$
|
213,939
|
|
Key Financial and Operating Performance Metrics
Subscribers and subscription related revenues and expenses
associated with our connected vehicle services and Sirius XM Canada
are not included in our subscriber count or subscriber-based
operating metrics.
Set forth below are our subscriber balances as of
December 31, 2017 compared to December 31, 2016:
|
As of December
31,
|
|
2017 vs 2016
Change
|
(in
thousands)
|
2017
|
|
2016
|
|
Amount
|
|
%
|
Self-pay
subscribers
|
27,513
|
|
|
25,951
|
|
|
1,562
|
|
|
6
|
%
|
Paid promotional
subscribers
|
5,223
|
|
|
5,395
|
|
|
(172)
|
|
|
(3)
|
%
|
Ending
subscribers
|
32,736
|
|
|
31,346
|
|
|
1,390
|
|
|
4
|
%
|
The following table contains our Non-GAAP financial and
operating performance measures which are based on our adjusted
results of operations for the three and twelve months ended
December 31, 2017 and 2016:
|
|
|
|
|
2017 vs 2016
Change
|
(in thousands,
except per subscriber and per installation amounts)
|
For the Three
Months Ended
December 31,
|
|
For the Years
Ended
December 31,
|
|
Three
Months
|
|
12
Months
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
Amount
|
|
%
|
|
Amount
|
|
%
|
Self-pay
subscribers
|
527
|
|
|
423
|
|
|
1,562
|
|
|
1,663
|
|
|
104
|
|
|
25
|
%
|
|
(101)
|
|
|
(6)
|
%
|
Paid promotional
subscribers
|
42
|
|
|
(68)
|
|
|
(172)
|
|
|
89
|
|
|
110
|
|
|
(162)
|
%
|
|
(261)
|
|
|
(293)
|
%
|
Net
additions
|
569
|
|
|
355
|
|
|
1,390
|
|
|
1,752
|
|
|
214
|
|
|
60
|
%
|
|
(362)
|
|
|
(21)
|
%
|
Daily weighted
average number of subscribers
|
32,309
|
|
|
31,100
|
|
|
31,866
|
|
|
30,494
|
|
|
1,209
|
|
|
4
|
%
|
|
1,372
|
|
|
4
|
%
|
Average self-pay
monthly churn
|
1.8
|
%
|
|
1.9
|
%
|
|
1.8
|
%
|
|
1.9
|
%
|
|
(0.1)
|
%
|
|
(5)
|
%
|
|
(0.1)
|
%
|
|
(5)
|
%
|
New vehicle consumer
conversion rate
|
39
|
%
|
|
40
|
%
|
|
40
|
%
|
|
39
|
%
|
|
(1)
|
%
|
|
(3)
|
%
|
|
1
|
%
|
|
3
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ARPU
|
$
|
13.43
|
|
|
$
|
13.16
|
|
|
$
|
13.25
|
|
|
$
|
12.91
|
|
|
$
|
0.27
|
|
|
2
|
%
|
|
$
|
0.34
|
|
|
3
|
%
|
SAC, per
installation
|
$
|
28.07
|
|
|
$
|
29.04
|
|
|
$
|
29.53
|
|
|
$
|
30.61
|
|
|
$
|
(0.97)
|
|
|
(3)
|
%
|
|
$
|
(1.08)
|
|
|
(4)
|
%
|
Customer service and
billing expenses, per average subscriber
|
$
|
0.95
|
|
|
$
|
1.03
|
|
|
$
|
0.94
|
|
|
$
|
1.00
|
|
|
$
|
(0.08)
|
|
|
(8)
|
%
|
|
$
|
(0.06)
|
|
|
(6)
|
%
|
Adjusted
EBITDA
|
$
|
541,566
|
|
|
$
|
474,751
|
|
|
$
|
2,115,886
|
|
|
$
|
1,875,775
|
|
|
$
|
66,815
|
|
|
14
|
%
|
|
$
|
240,111
|
|
|
13
|
%
|
Free cash
flow
|
$
|
460,320
|
|
|
$
|
429,423
|
|
|
$
|
1,559,772
|
|
|
$
|
1,509,113
|
|
|
$
|
30,897
|
|
|
7
|
%
|
|
$
|
50,659
|
|
|
3
|
%
|
Diluted weighted
average common shares outstanding (GAAP)
|
4,570,821
|
|
|
4,847,261
|
|
|
4,723,535
|
|
|
4,964,728
|
|
|
(276,440)
|
|
|
(6)
|
%
|
|
(241,193)
|
|
|
(5)
|
%
|
Glossary
Adjusted EBITDA - EBITDA is defined as net income
before interest expense, income tax expense and depreciation and
amortization. We adjust EBITDA to exclude the impact of other
income as well as certain other charges discussed below.
Adjusted EBITDA is a Non-GAAP financial measure that excludes (if
applicable): (i) certain adjustments as a result of the
purchase price accounting for the merger of Sirius and XM, (ii)
share-based payment expense and (iii) other significant operating
expense (income) that do not relate to the on-going performance of
our business. 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 capital structure and purchase price
accounting. We believe investors find this Non-GAAP financial
measure useful when analyzing our past operating performance with
our current performance and comparing our operating performance to
the performance of other communications, entertainment and media
companies. We believe investors use adjusted EBITDA to
estimate our current enterprise value and to make investment
decisions. As a result of large capital investments in our
satellite radio system, our results of operations reflect
significant charges for depreciation expense. We believe the
exclusion of share-based payment expense is useful as it is not
directly related to the operational conditions of our
business. We also believe the exclusion of the legal
settlements and reserves related to the historical use of sound
recordings, loss on extinguishment of debt and loss on disposal of
assets, to the extent they occur during the period, is useful as
they are significant expenses not incurred as part of our normal
operations for the period.
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 merger of Sirius and XM.
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 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:
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net (loss)
income:
|
$
|
(36,996)
|
|
|
$
|
204,627
|
|
|
$
|
647,908
|
|
|
$
|
745,933
|
|
Add back items
excluded from Adjusted EBITDA:
|
|
|
|
|
|
|
|
Purchase price
accounting adjustments:
|
|
|
|
|
|
|
|
Revenues
|
1,813
|
|
|
1,813
|
|
|
7,251
|
|
|
7,251
|
|
Sound recording legal
settlements and reserves
|
45,100
|
|
|
45,900
|
|
|
45,100
|
|
|
45,900
|
|
Loss on disposal of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
12,912
|
|
Share-based payment
expense (1)
|
29,481
|
|
|
30,714
|
|
|
124,069
|
|
|
108,604
|
|
Depreciation and
amortization
|
68,466
|
|
|
66,764
|
|
|
298,602
|
|
|
268,979
|
|
Interest
expense
|
88,735
|
|
|
80,337
|
|
|
345,820
|
|
|
331,225
|
|
Loss on
extinguishment of debt
|
—
|
|
|
24,229
|
|
|
43,679
|
|
|
24,229
|
|
Other
income
|
71,053
|
|
|
748
|
|
|
(12,844)
|
|
|
(14,985)
|
|
Income tax
expense
|
273,914
|
|
|
19,619
|
|
|
616,301
|
|
|
345,727
|
|
Adjusted
EBITDA
|
$
|
541,566
|
|
|
$
|
474,751
|
|
|
$
|
2,115,886
|
|
|
$
|
1,875,775
|
|
|
(1) Allocation
of share-based payment expense
|
|
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Programming and
content
|
$
|
6,076
|
|
|
$
|
7,072
|
|
|
$
|
27,047
|
|
|
$
|
21,203
|
|
Customer service and
billing
|
1,018
|
|
|
1,041
|
|
|
4,229
|
|
|
3,735
|
|
Satellite and
transmission
|
1,232
|
|
|
1,214
|
|
|
4,772
|
|
|
4,587
|
|
Sales and
marketing
|
5,214
|
|
|
5,685
|
|
|
25,177
|
|
|
21,294
|
|
Engineering, design
and development
|
4,049
|
|
|
3,728
|
|
|
15,510
|
|
|
13,121
|
|
General and
administrative
|
11,892
|
|
|
11,974
|
|
|
47,334
|
|
|
44,664
|
|
Total share-based
payment expense
|
$
|
29,481
|
|
|
$
|
30,714
|
|
|
$
|
124,069
|
|
|
$
|
108,604
|
|
ARPU - is derived from total earned subscriber
revenue, advertising revenue and other subscription-related
revenue, excluding revenue associated with our connected vehicle
services, 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:
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per subscriber amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Subscriber revenue,
excluding connected vehicle services
|
$
|
1,124,883
|
|
|
$
|
1,064,109
|
|
|
$
|
4,388,676
|
|
|
$
|
4,108,547
|
|
Add: advertising
revenue
|
42,691
|
|
|
38,901
|
|
|
160,347
|
|
|
138,231
|
|
Add: other
subscription-related revenue
|
133,979
|
|
|
124,457
|
|
|
518,457
|
|
|
478,063
|
|
|
$
|
1,301,553
|
|
|
$
|
1,227,467
|
|
|
$
|
5,067,480
|
|
|
$
|
4,724,841
|
|
Daily weighted
average number of subscribers
|
32,309
|
|
|
31,100
|
|
|
31,866
|
|
|
30,494
|
|
ARPU
|
$
|
13.43
|
|
|
$
|
13.16
|
|
|
$
|
13.25
|
|
|
$
|
12.91
|
|
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:
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per subscriber amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Customer service and
billing expenses, excluding connected vehicle services
|
$
|
93,034
|
|
|
$
|
97,014
|
|
|
$
|
365,005
|
|
|
$
|
367,978
|
|
Less: share-based
payment expense
|
(1,018)
|
|
|
(1,041)
|
|
|
(4,229)
|
|
|
(3,735)
|
|
|
$
|
92,016
|
|
|
$
|
95,973
|
|
|
$
|
360,776
|
|
|
$
|
364,243
|
|
Daily weighted
average number of subscribers
|
32,309
|
|
|
31,100
|
|
|
31,866
|
|
|
30,494
|
|
Customer service and
billing expenses, per average subscriber
|
$
|
0.95
|
|
|
$
|
1.03
|
|
|
$
|
0.94
|
|
|
$
|
1.00
|
|
Free cash flow - is derived from cash flow provided
by operating activities, net of additions to property and equipment
and restricted and other investment activity. Free cash flow
is a metric that our management and board of directors use to
evaluate the cash generated by our operations, net of capital
expenditures and other investment activity. In a capital
intensive business, with significant investments in satellites, we
look at our operating cash flow, net of these investing cash
outflows, to determine cash available for future subscriber
acquisition and capital expenditures, to repurchase or retire debt,
to acquire other companies and to evaluate our ability to return
capital to stockholders. We believe free cash flow is an
indicator of the long-term financial stability of our
business. Free cash flow, which is reconciled to "Net
cash provided by operating activities," is a Non-GAAP financial
measure. This measure can be calculated by deducting
amounts under the captions "Additions to property and equipment"
and deducting or adding Restricted and other investment activity
from "Net cash provided by operating activities" from the
consolidated statements of cash flows. Free cash flow should
be used in conjunction with other GAAP financial performance
measures and may not be comparable to free cash flow measures
presented by other companies. Free cash flow should be
viewed as a supplemental measure rather than an alternative measure
of cash flows from operating activities, as determined in
accordance with GAAP. Free cash flow is limited and does
not represent remaining cash flows available for discretionary
expenditures due to the fact that the measure does not deduct the
payments required for debt maturities. We believe free cash
flow provides useful supplemental information to investors
regarding our current cash flow, along with other GAAP measures
(such as cash flows from operating and investing activities), to
determine our financial condition, and to compare our operating
performance to other communications, entertainment and media
companies. Free cash flow is calculated as follows:
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in
thousands)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Cash Flow
information
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
541,825
|
|
|
$
|
503,133
|
|
|
$
|
1,855,589
|
|
|
$
|
1,719,237
|
|
Net cash used in
investing activities
|
$
|
(81,765)
|
|
|
$
|
(73,710)
|
|
|
$
|
(1,146,812)
|
|
|
$
|
(210,124)
|
|
Net cash used in
financing activities
|
$
|
(464,591)
|
|
|
$
|
(787,866)
|
|
|
$
|
(853,694)
|
|
|
$
|
(1,407,012)
|
|
Free Cash
Flow
|
|
|
|
|
|
|
|
Net cash provided by
operating activities
|
$
|
541,825
|
|
|
$
|
503,133
|
|
|
$
|
1,855,589
|
|
|
$
|
1,719,237
|
|
Additions to property
and equipment
|
(81,253)
|
|
|
(73,583)
|
|
|
(287,970)
|
|
|
(205,829)
|
|
Purchases of
restricted and other investments
|
(252)
|
|
|
(127)
|
|
|
(7,847)
|
|
|
(4,295)
|
|
Free cash
flow
|
$
|
460,320
|
|
|
$
|
429,423
|
|
|
$
|
1,559,772
|
|
|
$
|
1,509,113
|
|
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 promotional period 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 (excluding
connected vehicle services), 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:
|
For the Three
Months Ended
December 31,
|
|
For the Twelve
Months Ended
December 31,
|
(in thousands,
except per installation amounts)
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Subscriber
acquisition costs, excluding connected vehicle services
|
$
|
127,306
|
|
|
$
|
131,293
|
|
|
$
|
499,492
|
|
|
$
|
512,809
|
|
Less: margin from
sales of radios and accessories, excluding connected vehicle
services
|
(29,217)
|
|
|
(20,961)
|
|
|
(96,110)
|
|
|
(78,065)
|
|
|
$
|
98,089
|
|
|
$
|
110,332
|
|
|
$
|
403,382
|
|
|
$
|
434,744
|
|
Installations
|
3,495
|
|
|
3,799
|
|
|
13,662
|
|
|
14,203
|
|
SAC, per
installation
|
$
|
28.07
|
|
|
$
|
29.04
|
|
|
$
|
29.53
|
|
|
$
|
30.61
|
|
About SiriusXM
Sirius XM Holdings Inc. (NASDAQ: SIRI) is the world's largest
radio company measured by revenue and has approximately 32.7
million subscribers. SiriusXM creates and offers commercial-free
music; premier sports talk and live events; comedy; news; exclusive
talk and entertainment, and a wide-range of Latin music, sports and
talk programming. SiriusXM is available in vehicles from every
major car company and on smartphones and other connected devices as
well as online at siriusxm.com. SiriusXM radios and accessories are
available from retailers nationwide and online at SiriusXM.
SiriusXM also provides premium traffic, weather, data and
information services for subscribers through SiriusXM Trafficâ„¢,
SiriusXM Travel Link, NavTraffic®, NavWeather™. SiriusXM delivers
weather, data and information services to aircraft and boats
through SiriusXM Aviationâ„¢ and SiriusXM Marineâ„¢. In addition,
SiriusXM Music for Business provides commercial-free music to a
variety of businesses. SiriusXM holds a minority interest in
SiriusXM Canada which has approximately 2.8 million subscribers.
SiriusXM is also a leading provider of connected vehicles services,
giving customers access to a suite of safety, security, and
convenience services including automatic crash notification, stolen
vehicle recovery assistance, enhanced roadside assistance and
turn-by-turn navigation.
To download SiriusXM logos and artwork, visit
http://www.siriusxm.com/LogosAndPhotos.
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 and the timing of events may
differ materially from the results anticipated in these
forward-looking statements. SiriusXM is providing non-GAAP
information on a prospective basis that excludes certain items
because of the nature of these items and the impact they have on
the analysis of underlying business performance and
trends. We believe investors find these Non-GAAP
financial measures useful in evaluating our core trends because
they provide a direct view of our underlying contractual costs.
This information should be viewed in addition to, and not as an
alternative for or superior to, our results prepared in accordance
with GAAP. In addition, SiriusXM's Non-GAAP financial
measures may not be comparable to similarly-titled measures by
other companies. SiriusXM does not provide a non-GAAP
reconciliation for Adjusted EBITDA guidance to Net income or Free
cash flow guidance to Net cash provided by operating activities
because it does not provide guidance for the reconciling items
between adjusted EBITDA to Net income, which includes the provision
for income taxes, interest expense and other income, nor does the
Company provide guidance for the reconciling items between Free
cash flow to Net cash provided by operating activities, which
includes additions to property and equipment. As items that
impact Net income and Net cash provided by operating activities are
out of the Company's control and/or cannot be reasonably predicted,
the Company is unable to provide such guidance as the most directly
comparable GAAP financial measures may vary materially from the
corresponding GAAP financial measures. Accordingly, a
reconciliation to Net income and Net cash provided by operating
activities is not available without unreasonable effort.
The following factors, among others, could cause actual
results and the timing of events to differ materially from the
anticipated results or other expectations expressed in the
forward-looking statements: our substantial competition, which is
likely to increase over time; our ability to retain subscribers or
increase the number of subscribers, which is uncertain; our ability
to profitably attract and retain subscribers as our marketing
efforts reach more price-sensitive consumers is uncertain; the
security of the personal information about our customers;
interference to our service from wireless operations; we engage in
substantial marketing efforts and the continued effectiveness of
those efforts are an important part of our business; consumer
protection laws and their enforcement; our failure to realize
benefits of acquisitions or other strategic initiatives;
unfavorable outcomes of pending or future litigation; the market
for music rights, which is changing and subject to uncertainties;
our dependence upon the auto industry; general economic conditions;
existing or future government laws and regulations could harm our
business; failure of our satellites would significantly damage our
business; the interruption or failure of our information technology
and communications systems; rapid technological and industry
changes; failure of third parties to perform; our failure to comply
with FCC requirements; modifications to our business plan; our
indebtedness; our studios, terrestrial repeater networks, satellite
uplink facilities or other ground facilities could be damaged by
natural catastrophes or terrorist activities; our principal
stockholder has significant influence over our affairs and over
actions requiring stockholder approval and its interests may differ
from interests of other holders of our common stock; we are a
"controlled company" within the meaning of the NASDAQ listing
rules; impairment of our business by third-party intellectual
property rights; and changes to our dividend policies which could
occur at any time. 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, 2017, 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.
Source: SiriusXM
Contact for SiriusXM:
Hooper Stevens
212-901-6718
Hooper.stevens@siriusxm.com
Patrick Reilly
212-901-6646
patrick.reilly@siriusxm.com
View original content with
multimedia:http://www.prnewswire.com/news-releases/siriusxm-reports-fourth-quarter-and-full-year-2017-results-300590680.html
SOURCE Sirius XM Holdings Inc.