SIRIUS XM Radio Inc.
) declared robust financial results for the third quarter of 2012
with record high revenue, EBITDA (earnings before income, tax,
depreciation, and amortization), and free cash flow. The
outperformance was mainly buoyed by strong management execution
based on rising auto industry sales. As per management, its
growth momentum will further expand in the rest of 2012 and has
raised financial outlook for the rest of 2012.
Quarterly GAAP net income was $74.5 million or 1 cent per
share compared with a net income of $104.3 million or 2 cent per
share in the prior-year quarter. However, third-quarter 2012
adjusted (excluding debt extinguishment charge of around $107.1
million) earnings per share of 3 cents were a penny above the
Zacks Consensus Estimate. Quarterly total revenue of $867.4
million, exhibit an annualized growth of 14%, beating the Zacks
Consensus Estimate of $864 million.
Quarterly total operating expenses were $635.6 million
compared with $578.1 million in the year-ago quarter. Operating
income, in the reported quarter, was around $231.8 million
compared with $184.5 million in the year-ago quarter. Again,
SIRIUS XM posted quarterly adjusted EBITDA of $244.6 million
compared with $197.3 million in the prior-year quarter.
During the first three quarters of 2012, SIRIUS XM generated
$513.5 million of cash from operations compared with $328.6
million in the prior-year period. Free cash flow in the reported
period was a little over $434 million compared with $213.6
million in the year-ago period.
At the end of the third quarter of 2012, SIRIUS XM had $556.3
million of cash and cash equivalents and $2,226 million of
outstanding debt compared with $774 million of cash and cash
equivalents and $2,685.2 million of outstanding debt at the end
of 2011. At the end of the previous quarter,
debt-to-capitalization ratio was 0.35 compared with 0.79 at the
end of 2011.
Segment Wise Results
Quarterly Subscriber revenue was $757.7 million, up 14.7% year
over year. Advertising revenue was $20.4 million, up 8.6% year
over year. Equipment revenue was slightly above $17.8 million, up
14.9% year over year. Other revenue was $71.4 million, up 6% year
During the third quarter of 2012, SIRIUS XM added 445,921 (up
33.6% year over year) net subscribers, which raised the company's
total subscriber base to 23,365,383 at the end of September 30,
2012, up 9.4% year over year. Payment category wise, Self-Pay
subscriber was 19,041,519 (up 8.6% year over year) while Paid
Promotional subscriber was 4,323,864 (up 13.3% year over
Important Operating Metrics
In the third quarter of 2012, ARPU came in at $12.14 compared
with $11.66 in the year-ago quarter. Average self-pay monthly
churn rate was 2% compared with 1.9% in the prior-year quarter.
Customer Conversion rate came in at 44%, remaining same year over
year. Subscriber acquisition cost stood at $51 compared with $55
in the year-ago quarter.
Management projects full-year 2012 revenue of SIRIUS XM to be
approximately $3.4 billion. Free cash flow for 2012 will be $700
million. The company estimated that it will add 1.8 million net
new subscribers in 2012. Adjusted EBITDA, in 2012, is likely to
reach $900 million.
SIRIUS XM is the largest broadcast radio service provider in
the U.S. The company competes with free Internet radio service
Pandora Media Inc.
). We maintain our long-term Neutral recommendation on SIRIUS XM.
Currently, it holds a short-term Zacks #3 Rank (Hold) on the
PANDORA MEDIA (P): Free Stock Analysis Report
SIRIUS XM RADIO (SIRI): Free Stock Analysis
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