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11/1/2005
SIRIUS Satellite Radio Reports Record Revenue for Third Quarter 2005SIRIUS Satellite Radio |
SIRIUS Satellite Radio today announced strong third quarter financial and operating results, driven by subscriber growth in its retail and automotive OEM distribution channels, and continued demand for its superior programming.
As of September 30, 2005, SIRIUS had 2,173,920 subscribers. The third quarter subscriber figure reflects net additions of 359,294 subscribers, a 97% increase over the year-ago figure of 181,948 net subscriber additions.
The company raised its year-end 2005 subscriber guidance to over 3 million, and reaffirmed its previous guidance on all other key metrics. SIRIUS expects its subscriber growth will be driven by traditionally strong consumer demand in the fourth quarter, and by SIRIUS' exclusive programming as well as the continued appeal of its commercial-free music.
"The third quarter represented another quarter of solid execution by our management team," said Mel Karmazin, CEO of SIRIUS. "We continued to gain retail and overall market share in the quarter, while meeting our guidance for third quarter net subscriber additions. As we move into the important fourth quarter, we believe that our mix of innovative and competitively-priced products at retail, combined with more SIRIUS factory installations by our automotive partners, will yield strong year-end results, and we are raising our subscriber guidance to over 3 million to reflect this expectation. The introduction of Martha Stewart Living Radio and the anticipation of Howard Stern's arrival in January 2006 should also generate unprecedented excitement for our service."
SIRIUS reported revenue of $66.8 million for the third quarter of 2005, a 250% increase over the $19.1 million reported for the year-ago quarter. Average monthly churn for the third quarter and year to date was 1.8% and 1.5%, respectively. Average monthly churn is expected to be approximately 1.5% for the full year.
The company reported subscriber acquisition costs (SAC) per gross subscriber addition of $149 for the third quarter of 2005, a 35% improvement over SAC per gross subscriber addition of $229 in the year-ago quarter. SIRIUS continues to project SAC per gross subscriber addition of under $145 for the year.
During the third quarter of 2005, SIRIUS added 209,920 net subscribers from its retail channel, a 56% increase over 134,442 retail net subscriber additions in the year-ago quarter. The company also added 149,000 net subscribers from its automotive OEM channel, a 230% increase over 45,196 net subscriber additions from that channel in the third quarter of 2004.
SIRIUS reported a net loss of ($180.4) million, or ($0.14) per share, for the third quarter of 2005 compared with a net loss of ($169.4) million, or ($0.14) per share, for the third quarter of 2004.
Automotive OEM Update
SIRIUS recently extended each of its exclusive automotive OEM relationships. On October 31, 2005, SIRIUS announced the extension of its exclusive agreement with DaimlerChrysler to September 1, 2012. The agreement includes all Chrysler Group and Mercedes-Benz vehicles as well as Freightliner trucks. Over 750,000 new subscribers are expected to be generated from the Chrysler Group alone for the 2006 model year, with volumes estimated to increase significantly in the future. In September 2005, SIRIUS and BMW of North America announced an agreement that extends SIRIUS' exclusive relationship with BMW through August 2008. All BMW models are covered by the agreement. During the second quarter of 2005, SIRIUS extended its exclusive relationship with the Ford Motor Company through September 2011. All Ford Motor Company brands in the U.S. are covered by the agreement.
Product Update
SIRIUS will have a number of next generation products available at retail during the fourth quarter including the SIRIUS S50, the company's first wearable product; the sleek Starmate Replay, designed for easy vehicle installation; SIRIUS One and the XACT Visor, two new slim-line products that have multiple installation options including dash, console or visor mounting; and a SiriusConnect product that is backwards compatible with many Sony UniLink(TM)headunits. In the fourth quarter, SIRIUS will also offer a SiriusConnect unit that will make it easy for owners of General Motors vehicles to install SIRIUS. The company is also introducing the Alpine SiriusConnect SIR-ALP10T, its first tuner to incorporate both audio entertainment and traffic data services.
Programming Update
SIRIUS continues to add innovative programming. In August, SIRIUS launched its second season of NFL play-by-play coverage as The Official Satellite Radio Partner of the NFL. On September 29, 2005, SIRIUS launched a new programming lineup, including the addition of five compelling new music channels, and channels for Martha Stewart Living Radio and Howard Stern. Preparations are well underway for Howard Stern's arrival at SIRIUS in January 2006. In its continuing effort to expand programming for women, SIRIUS announced that it will launch a full time channel with Cosmopolitan, the best-selling young women's magazine in the world, early next year. Demonstrating the flexibility derived from its significant bandwidth, SIRIUS dedicates entire 24-hour, commercial-free music channels to some of the world's greatest artists. In addition to "Radio Elvis," its all-Elvis Presley radio channel broadcast live from Graceland in Memphis, SIRIUS launched "Rolling Stones Radio" and recently announced "E Street Radio," the world's first 24-hour channel featuring the music of Bruce Springsteen and the E Street Band.
Offering of $500 million of 9-5/8% Senior Notes and Redemption of 15% and
14-1/2% Notes
During the third quarter of 2005, SIRIUS completed an offering of $500 million in aggregate principal amount of 9-5/8% Senior Notes due 2013. SIRIUS used approximately $63.1 million of the proceeds of this offering to redeem all of its outstanding 15% Senior Secured Discount Notes due 2007 and 14-1/2% Senior Secured Notes due 2009, and will use the balance of the net proceeds for general corporate purposes.
Guidance for 2005
The company raised its year-end subscriber guidance and reaffirmed its previous guidance on all other key guidance metrics for the full year 2005. After adding over one million new subscribers in the first nine months of the year, SIRIUS expects continued strong subscriber growth in the traditionally busy fourth quarter and raised its previous year-end 2005 target to over 3 million subscribers.
Average monthly churn is expected to be approximately 1.5% for full year 2005, in line with previous guidance, given continued high levels of customer satisfaction. The company continues to expect SAC per gross subscriber addition to be under $145 for the full-year 2005, with further declines expected in 2006.
SIRIUS expects to generate $230 million of total revenue and an adjusted loss from operations of approximately ($540) million in 2005. Total operating cash uses, capital expenditures and restricted investment activity are expected to be approximately ($375) million in 2005.
SIRIUS ended the third quarter of 2005 with approximately $934 million in cash, cash equivalents and marketable securities. SIRIUS' first quarter of positive free cash flow could be reached as early as the fourth quarter of 2006, and the company continues to expect to generate positive free cash flow for the full-year 2007.
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