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SIRIUS XM Radio Inc. (SIRI - Analyst Report) declared mixed financial results for the first quarter of 2013. Quarterly GAAP net income was $123.4 million or 2 cents per share compared with a net income of $107.7 million or 2 cents per share in the prior-year quarter. First-quarter earnings per share of 2 cents were exactly in line with the Zacks Consensus Estimate. Quarterly total revenue of $897.4 million, exhibits an annualized growth of 11.5%, but fell short of the Zacks Consensus Estimate of $904 million.

Quarterly total operating expenses were $650.5 million compared with $605.5 million in the year-ago quarter. Operating income, in the reported quarter, was around $246.9 million compared with $199.2 million in the year-ago quarter. SIRIUS XM posted a record-high first-quarter adjusted EBITDA of $261.9 million compared with $208.2 million in the prior-year quarter.

During the first quarter of 2013, SIRIUS XM generated $168.9 million of cash from operations compared with $40 million in the prior-year quarter. Free cash flow was a first-quarter record-high of $142.5 million compared with a mere $14.8 million in the year-ago quarter.

At the end of the first quarter of 2013, SIRIUS XM had nearly $206.7 million of cash and cash equivalents and $2,179.2 million of outstanding debt compared with $521 million of cash and cash equivalents and $2,226.3 million of outstanding debt at the end of 2012. At the end of the reported quarter, the debt-to-capitalization ratio was 0.37 compared with 0.36 at the end of 2012.

Segment Wise Results

Quarterly Subscriber revenues were $783.3 million, up 11.9% year over year. Advertising revenues were $20.2 million, up 8.3% year over year. Equipment revenues were $18.2 million, up 7.1% year over year. Other revenues were $75.7 million, up 9.9% year over year.

Subscriber Statistics

During the first quarter of 2013, SIRIUS XM added 452,890 (up 11.9% year over year) net subscribers, which raised the company’s total subscriber base to 24,353,226 at the end of Mar 31, 2013, up 9.2% year over year. Payment category wise, Self-Pay subscribers were 19,874,660 (up 9.2% year over year) while Paid Promotional subscribers were 4,478,566 (up 9.5% year over year).

Important Operating Metrics

In the first quarter of 2013, ARPU came in at $12.05 compared with $11.77 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% compared with 45% in the prior-year quarter. Subscriber acquisition cost stood at $51 compared with $60 in the year-ago quarter.

Financial Outlook

Management projects full-year 2013 revenues of SIRIUS XM to be approximately $3.7 billion. Free cash flow for 2013 will be $915 million. Self-pay net subscriber additions will be approximately 1.6 million. The company estimated that it will add 1.4 million net new subscribers in 2013. Adjusted EBITDA, in 2013, will be more than $1.1 billion.

Other Stocks to Consider

SIRIUS XM, the largest broadcast radio service provider in the U.S., currently has a Zacks Rank #3 (Hold). Other major entertainment broadcasters include Sinclair Broadcast Group Inc. (SBGI - Snapshot Report), Phoenix New Media Ltd. (FENG - Snapshot Report) and CTC Media Inc. (CTCM - Snapshot Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

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