SIRIUS XM Lags on Q4 Earnings - Analyst Blog

By Zacks Equity Research,

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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).

CUMULUS MEDIA (CMLS): Free Stock Analysis Report

PHOENIX NEW MED (FENG): Free Stock Analysis Report

LIN MEDIA LLC (LIN): Free Stock Analysis Report

SIRIUS XM HLDGS (SIRI): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

This article appears in: Investing , Business , Earnings , Stocks
Referenced Stocks: CMLS , FENG , LIN , SIRI

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