Sirius XM Delivers on Earnings

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Sirius XM Radio Inc. (NASDAQ: SIRI) had already raised its subscriber growth and it has already announced that Mel Karmazin will be stepping aside in early 2013. Now the satellite radio giant has announced earnings that were better than expectations. Net income fell to $74.5 million from $104.2 million, which is down to $0.01 EPS from $0.02 EPS; revenues rose by some 14% to $867.4 million. We would note that the drop in reported net income is said to be after a debt extinguishment charge of $107 million.

Thomson Reuters was calling for estimates of $0.02 EPS and $865.62 million in revenues for the quarter. Sirius previously said that its subscriber count was up by 446,00 net subscribers in the quarter. The company also raised its full 2012 subscriber forecast to 1.8 million net additions.

Self-pay net subscriber additions improved by 2% from last year to 371,000, pushing the self-pay subscriber base to an all-time high of 19.0 million subscribers. The self-pay monthly churn was 2.0% in the third quarter, up from 1.9% a a year ago. New vehicle consumer conversion rate was 44% in the third quarter of 2012, unchanged from a year ago.

Sirius XM now has no debt maturing for the next two years after the repurchase of approximately $868 million of debt, and it ended the quarter with $556 million of cash. Its leverage is shown to be down significantly at 2.8-times adjusted EBITDA from 4.3-times at the end of the third quarter of 2011. More guidance issues are as follows:

  • Net subscriber growth approaching 1.8 million
  • Revenue approaching $3.4 billion
  • Adjusted EBITDA of approximately $900 million
  • Free cash flow of approximately $700 million

Sirius XM shares are indicated up 1.4% at $2.84 so far this Thursday, against a 52-week range of $1.61 to $2.97.

JON C. OGG

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