Sirius XM boasts record Q4, ends 2013 with $927 million of free cash

By Lisa Kerner

Charlotte, N.C., Feb. 4 - Sirius XM chief executive officer Jim Meyer said 2013 was "an exciting year" for the company in which fourth-quarter revenue exceeded $1 billion and free cash flow for the year rose 31% to $927 million.

"In short, our business is healthy, and our model is working," said Meyer during the company's earnings call on Tuesday.

"We are running the business to focus on free cash flow while continuing to make investments in key growth initiatives," he said. "On that measure, we had a very good 2013."

Chief financial officer David Frear said it was the best fourth quarter in Sirius XM's history. Free cash flow topped $303 million for the period.

Sirius XM is very conservatively capitalized, according to Frear.

"From August 2012 through the end of 2013, we refinanced $2.5 billion of debt, pushing the average maturities out from 4.7 years to 6.7 years and reducing weighted average interest rates from 9.2% to 5.1%," he said. "Our 3.6 billion of total debt includes $500 million of deep-in-the-money converts that mature in December of this year."

In January, Sirius XM lifted its targeted leverage ratio to 4 times from 3.5 times, leaving the company with $2.4 billion of borrowing capacity. The ratio stood at 3.1 times at year-end.

Frear said the company has $3.5 billion in total liquidity to pursue acquisitions and return cash to shareholders.

In 2013, the New York-based satellite radio provider returned $1.8 billion to shareholders through stock buybacks.

During the fourth quarter, Sirius XM completed the first $160 million of the $500 million of share repurchases from Liberty Media, leaving more than $2.2 billion remaining under the current authorization, according to Frear.

Financial highlights

Sirius XM reported full-year revenue of $3.8 billion, a 12% increase from 2012.

Net income for the fourth quarter and full year were $65 million and $377 million, respectively, or $0.01 and $0.06 per diluted common share, respectively, according to the company's earnings news release.

Adjusted EBITDA increased 41% in the fourth quarter to a record $326 million, while full-year adjusted EBITDA rose 27% to $1.17 billion from 2012.

Sirius XM's guidance for 2014 includes revenue of more than $4 billion, adjusted EBITDA of about $1.38 billion and free cash flow approaching $1.1 billion.

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