SIRIUS XM Radio Inc. (SIRI - Analyst Report) declared solid financial results for the second quarter of 2013. This strong performance was primarily attributed to record-high revenues, adjusted EBITDA, free cash flow and net addition of subscribers.
Quarterly GAAP net income was $125.4 million or 2 cents per share compared with $3,134.2 million (including $3 billion of tax-benefit) or 48 cents per share in the prior-year quarter. Second-quarter earnings per share of 2 cents were exactly in line with the Zacks Consensus Estimate. Quarterly total revenue of $940.1 million, exhibits an annualized growth of 12.3%, surpassing the Zacks Consensus Estimate of $933 million.
Quarterly total operating expenses were $672.4 million compared with $609.6 million in the year-ago quarter. Operating income, in the reported quarter, was around $267.7 million compared with $227.9 million in the year-ago quarter. SIRIUS XM posted second-quarter adjusted EBITDA of $283 million compared with $237.1 million in the prior-year quarter. During the second quarter of 2013, the company repurchased 195 million shares of its common stock for $650 million.
During the second quarter of 2013, SIRIUS XM generated $273.1 million of cash from operations compared with $253.8 million in the prior-year quarter. Quarterly free cash flow was $236.6 million compared with $230 million in the year-ago quarter.
At quarter end, SIRIUS XM had nearly $651.8 million of cash and cash equivalents and $3,040.5 million of outstanding debt compared with $521 million and $2,226.3 million, respectively, at the end of 2012. At the end of the reported quarter, the debt-to-capitalization ratio was 0.48 compared with 0.36 at the end of 2012.
Segment Wise Results
Quarterly Subscriber revenues were $814.7 million, up 11.6% year over year. Advertising revenues were $21.8 million, up 4.7% year over year. Equipment revenues were $18.4 million, up 12.3% year over year. Other revenues were $85.2 million, up 21.6% year over year.
During the second quarter of 2013, SIRIUS XM added 715,762 (up 15.1% year over year) net subscribers, which raised the company’s total subscriber base to 25,068,988 at the end of Jun 30, 2013, up 9.4% year over year. Payment category wise, Self-Pay subscribers were 20,297,736 (up 8.7% year over year) while Paid Promotional subscribers were 4,711,252 (up 12.3% year over year).
Important Operating Metrics
In the second quarter of 2013, average revenue per user came in at $12.28 compared with $11.97 in the year-ago quarter. Average self-pay monthly churn rate was 1.7% compared with 1.9% in the prior-year quarter. Customer Conversion rate came in at 45%, remaining same year over year. Subscriber acquisition cost stood at $52 compared with $54 in the year-ago quarter.
Management projects full-year 2013 revenues to be approximately $3.7 billion. Free cash flow for 2013 will likely be $915 million. Self-pay net subscriber additions are expected to be approximately 1.6 million. The company estimated that it will add 1.5 million net new subscribers in 2013. Adjusted EBITDA, in 2013, is estimated to be around $1.14 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 TV/Radio broadcasters that warrant a look include Belo Corp. , LIN TV Corp. and Nexstar Broadcasting Group Inc. (NXST - Snapshot Report) . All these stocks carry a Zacks Rank #1 (Strong Buy).