SIRIUS XM Lags on Q4 Earnings

Zacks

Sirius XM Holdings Inc. (SIRI) reported record EBITDA in its financial results for the fourth quarter of 2013 despite witnessing significant subscriber loss.

Quarterly GAAP net income came in at $65.2 million or 1 cent per share compared with $156.2 million or 2 cent per share in the prior-year quarter. Fourth-quarter earnings per share of a penny fell below the Zacks Consensus Estimate of 2 cents. Quarterly total revenue of $1,000 million exhibits annualized growth of 12.1% and also outpaced the Zacks Consensus Estimate of $979 million.

Quarterly total operating expenses were $754.7 million compared with $679.3 million in the year-ago quarter. Operating income, in the reported quarter, was around $245.4 million compared with $213.1 million in the prior-year quarter.

SIRIUS XM posted record fourth-quarter adjusted EBITDA growth of 41%, bringing the figure to $326 million. During the fourth quarter of 2013, the company repurchased common stock worth $160 million.

At the end of 2013, SIRIUS XM generated $1,102.8 million of cash from operations compared with $806.8 million at the end of 2012. Quarterly free cash flow was $929.2 million against $709.5 million in the year-ago quarter.

At quarter end, SIRIUS XM had nearly $134.8 million of cash and cash equivalents and $3,093.8 million of outstanding debt compared with $520.9 million and $2,222.1 million, respectively, at the end of 2012. At the end of the reported quarter, the debt-to-capitalization ratio was 0.53 against 0.35 at the end of 2012.

Segment Wise Results

Quarterly Subscriber revenues were $852.5 million, up 10.1% year over year. Advertising revenues stood at $25.4 million, up 13.4% year over year. Equipment revenues were $26 million, up 16.6% year over year. Other revenues were $96.1 million, up 31.3% year over year.

Subscriber Statistics

During the fourth quarter of 2013, SIRIUS XM lost 22,756 (down 104.3% year over year) net subscribers, which reached the company’s total subscriber base to 25,559,310 at the end of 2013, up 7.1% year over year. Payment category wise, Self-Pay subscribers were 21,081,817 (up 7.6% year over year) while Paid Promotional subscribers were 4,477,493 (up 4.7% year over year).

Important Operating Metrics

In the fourth quarter of 2013, average revenue per user came in at $12.46 compared with $12.12 in the year-ago quarter. Average self-pay monthly churn rate was 1.9% against 1.8% in the prior-year quarter. New Vehicle Customer Conversion rate came in at 42% versus 44% in the year-earlier quarter. Subscriber acquisition cost stood at $44 compared with $54 in the year-ago quarter.

Financial Outlook

Management expects full-year 2014 revenues to cross the $4 billion mark. Free cash flow will likely be $1.1 billion. The company estimated that it will add 1.25 million net new subscribers in 2014. Adjusted EBITDA is projected to be around $1.38 billion.

Other Stocks to Consider

SIRIUS XM, the leading broadcast radio service provider in the U.S., currently has a Zacks Rank #3 (Hold). Other TV/Radio broadcasters that also warrant a look include Phoenix New Media Ltd. (FENG), LIN Media LLC. (LIN) and Cumulus Media Inc. (CMLS). All these stocks carry a Zacks Rank #2 (Buy).

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