XM Satellite Radio Holdings Inc. Announces First Quarter 2007 Results
First Quarter Ending Subscribers Exceed 7.9 Million; First Quarter Revenue Increased 27 Percent Year over Year to $264 Million; First Quarter Net Loss Narrowed Year over Year by 18 Percent to $122 Million; Company Recently Surpassed 8 Million Subscribers
WASHINGTON, April 26 /PRNewswire-FirstCall/ — XM Satellite Radio Holdings Inc. (NASDAQ: XMSR) today announced earnings for the three-month period ended March 31, 2007. Revenue for the 2007 first quarter increased 27 percent year over year to $264 million compared to $208 million in the 2006 first quarter. XM’s 2007 first quarter net loss narrowed to $122 million, representing an 18 percent improvement compared to the 2006 first quarter net loss of $149 million.
XM ended the 2007 first quarter with more than 7.9 million subscribers compared to 6.5 million subscribers in the prior year period. Additionally, XM announced that it recently surpassed 8 million subscribers.
“During the quarter, we improved our retail performance, experienced strong OEM gross additions, extended our distribution agreements with Toyota and Honda, enhanced our customer service, maintained our churn rate at approximately 1.8 percent for the third consecutive quarter and strengthened key financial metrics for our business,” said Hugh Panero, chief executive officer, XM Satellite Radio. “These results were driven by the operational initiatives we put in place over the last several quarters.”
For the first quarter of 2007, adjusted operating loss (formerly adjusted
EBITDA) improved by 45 percent to a loss of $27 million from a loss of $49 million in the prior year period. The 2007 first quarter adjusted operating loss includes $8 million in expenses related to the company’s pending merger with Sirius Satellite Radio.
The primary differences between net loss and adjusted operating loss are non-operating amounts and certain operating non-cash charges. For a full reconciliation of XM’s net loss to adjusted operating loss, see the attached financial schedules.
In the 2007 first quarter, XM recorded gross subscriber additions of 868 thousand and net subscriber additions of 285 thousand which compare to 1 million gross additions and 569 thousand net subscriber additions in the 2006 first quarter.
In the 2007 first quarter, XM’s subscriber acquisition costs (SAC), a component of cost per gross addition (CPGA), was $65 compared to $59 in the first quarter of 2006. CPGA in the 2007 first quarter was $103 compared to $93 in the first quarter of 2006.
As of March 31, 2007, the company had $319 million in cash compared to $218 million at the end of December 31, 2006. In February 2007, we completed the
XM-4 satellite sale leaseback transaction. As of March 31, 2007, the
company had full availability of its $400 million credit facilities resulting in total available liquidity of $719 million.
OEM and Retail
During the first quarter of 2007, the company achieved the following in its OEM and retail channels:
* Honda and Toyota signed new ten-year deals in which XM will be their
factory-installed satellite radio provider;
* GM produced its 5 millionth XM equipped vehicle in January;
* Honda and XM launched a certified pre-owned remarketing program, which
complements the program that Acura and XM launched in the Fourth
Quarter of 2006;
* Infiniti announced that XM will be a standard factory-installed
feature in all 2008 models;
* Hyundai announced that the all-new Hyundai Veracruz midsize crossover
will join the Azera, Elantra, Santa Fe and Sonata as Hyundai vehicles
with XM as a standard factory-installed feature; and
* Despite a soft retail segment, the company’s overall retail market
share showed sequential improvement based on findings from industry
NPD data.
Programming
During the 2007 first quarter, the company:
* Kicked off its third season of Major League Baseball, broadcasting
every game for every team to customers nationwide;
* Signed a long-term broadcasting and marketing agreement with the
Southeastern Conference, adding to the company’s premier college
sports portfolio, which includes the ACC, Big East, Big Ten, and Pac-
10;
* Aired exclusive radio coverage of the 49th Annual Grammy Awards; and
* Renewed its contract with Bob Dylan, who will continue to host his
acclaimed radio show exclusively on XM.
Pending Merger with Sirius Satellite Radio
On February 19, 2007, XM Satellite Radio and Sirius Satellite Radio announced they have entered into a definitive agreement, under which the companies will be combined in a tax-free, all-stock merger. Under the terms of the agreement, XM shareholders will receive a fixed exchange ratio of 4.6 shares of Sirius common stock for each share of XM. XM and Sirius shareholders will each own approximately 50 percent of the combined company.
The transaction is subject to approval by both companies’ shareholders, the satisfaction of customary closing conditions and regulatory review and approvals, including antitrust agencies and the FCC. Pending timely regulatory approval, the companies expect the transaction to be completed by the end of 2007.
The companies filed their Merger Agreement with the Securities and Exchange Commission on February 21, 2007.
Business Outlook
XM Satellite Radio reaffirmed the following financial guidance for the full-year 2007:
* Subscribers between 9.0 million and 9.2 million with higher seasonal
growth expected to occur in the latter part of the year;
* Subscription revenue in the 1 billion dollar range; and
* Improved cash flow from operations in 2007. Full-year positive cash
flow from operations in 2008.
The company has made the following refinements to its prior guidance for the full-year 2007:
* CPGA in the range of $111-$114; and
* Adjusted operating loss, excluding any merger-related or legal
settlement costs, in the range of $170 million to $180 million.
Webcast and Conference Call Information
Gary Parsons, chairman, Hugh Panero, chief executive officer and Nate Davis, president and chief operating officer, will host an earnings conference call to discuss XM Satellite Radio’s 2007 first quarter results today, Thursday, April 26, 2007, at 10:00 AM Eastern Time. Prior to the call, you can access XM Radio’s first quarter 2007 results on the Company’s website at http://www.xmradio.com/. To listen to the conference call via telephone, please call one of the following numbers approximately 10 minutes prior to the planned start of the call:
* Call-in number: (877) 265-5808
* Local call-in number: (706) 679-7931
* Conference ID#: 5409333
The conference call can also be accessed through a live webcast on the Company’s website at http://www.xmradio.com/ (click on “Investor Info” link at the bottom of the page). The webcast of the call will also be archived on the Company’s Web site.
If you are unable to participate in the scheduled call, a replay of the conference call will be available after 11:30 a.m. ET on Thursday, April 26,
2007 until July 26, 2007. You can access the replay of the conference call
via the following numbers:
* Playback Numbers: (800) 642-1687
* Local playback number: (706) 645-9291
* Conference ID#: 5409333
About XM
XM (NASDAQ: XMSR) is America’s number one satellite radio company with more than 8 million subscribers. Broadcasting live daily from studios in Washington, DC, New York City, Chicago, the Country Music Hall of Fame in Nashville, Toronto and Montreal, XM’s 2007 lineup includes more than 170 digital channels of choice from coast to coast: commercial-free music, premier sports, news, talk radio, comedy, children’s and entertainment programming; and the most advanced traffic and weather information.
XM, the leader in satellite-delivered entertainment and data services for the automobile industry through partnerships with General Motors, Honda, Hyundai, Nissan, Porsche, Subaru, Suzuki and Toyota is available in 140 different vehicle models for 2007. XM’s industry-leading products are available at consumer electronics retailers nationwide. For more information about XM hardware, programming and partnerships, please visit http://www.xmradio.com/