Siriusxm Holdings Inc. · NASDAQ:SIRI
Siriusxm — SIRIUS XM Radio — Shareholder Meeting (December 2008)
41 slides from Siriusxm's shareholder meeting presentation, Dec 18, 2008
Slide 1: Annual Meeting of Stockholders December 18, 2008
Annual Meeting of Stockholders December 18, 2008 JOHN MADDEN TONY STEWART MARTHA STEWART HOWARD STERN BOB DYLAN FRANK SINATRA BRUCE SPRINGSTEEN JAMIE FOXX CAL RIPKEN OPRAH WINFREY
Slide 2: Agenda
Agenda I. Operations II. Liquidity III. Stock Price IV. Questions and Answers
Slide 3: I. Operations
I. Operations Operational Overview
Slide 4: Quote of the Week
Quote of the Week “The historic slowdown in the economy and its effect on our business over the past 90 days have been the most challenging consumer environment our company has ever faced.” - Best Buy CEO Brad Anderson
Slide 5: SIRIUS XM: navigating a challenging business environment
SIRIUS XM: navigating a challenging business environment Deep recession now underway Financial markets remain disrupted Unemployment at 6.7% - highest since 1993 - and expected to increase as layoffs accelerate Consumer confidence at all time lows Weakest car sales in 26 years - November down 37% Re
Slide 6: SIRIUS XM
SIRIUSH | (om)
Slide 7: Scale creates greater operating leverage
Scale creates greater operating leverage Ranks among largest U.S. subscription media businesses Total subscribers as of 3Q08 (millions) Source: Company filings 3.3 5.5 13.2 13.8 17.3 18.9 24.4 Cablevision Charter Time Warner Cable Dish Network DirecTV SIRIUS XM Comcast
Slide 8: Strong subscriber growth, 2003 - 2008E
Ending SIRIUS XM subs (millions) Strong subscriber growth, 2003 - 2008E Source: Company filings 1.6 4.4 9.3 13.7 17.4 19.1 2008E
Slide 9: Ending subscribers by channel (millions)
Ending subscribers by channel (millions) 13.7 17.3 19.1 Source: Company filings 2008E OEM Ending Subs (millions) Aftermarket Ending Subs (millions) 5.2 8.5 9.2 9.0 8.1 10.1
Slide 10: OEM industry sales and gross add trends
OEM industry sales and gross add trends Source: Company filings and estimates 16.6 3.6 16.2 5.3 13.2 5.8 2008E OEM Industry Sales (millions) SIRIUS XM OEM Gross Adds (millions)
Slide 11: Stable self-pay churn rates
Stable self-pay churn rates Source: Company filings and estimates 1.70% 1.77% 1.73% 2008E
Slide 12: Substantial revenue growth
Substantial revenue growth Revenue Guidance: Approximately $2.4 b in 2008 Source: Company filings and estimates $0.3 $0.8 $1.6 $2.1 $2.4 $0.1 2008E
Slide 13: Lower headcount driven by merger efficiencies
Lower headcount driven by merger efficiencies Total company headcount will be 22% lower by year-end 2008 Source: Company estimates. 2,058 1,600 Ending 2008 Pre-Merger
Slide 14: Growth statistics
Growth statistics In millions except per unit metrics Actual Actual Estimate Ending Subscribers Growth Rate 48% 27% 10% Revenue Growth Rate 96% 31% 17% Total Cash Operating Expense Growth Rate 44% 16% 0% Source: Company filings and estimates
Slide 15: Improved 2008 adjusted EBITDA guidance
Improved 2008 adjusted EBITDA guidance Source: Company filings and estimates New adjusted EBITDA guidance of ($200) mm in 2008, revised from ($300) mm 3Q08 adjusted EBITDA ex. merger costs close to break-even before substantial synergy benefits Guidance implies 4Q08 adjusted EBITDA of ($32) mm versu
Slide 16: November channel rationalization - reduced costs and improved user experience
November channel rationalization - reduced costs and improved user experience Line-ups largely combined - best audio experience being made available to both SIRIUS and XM listeners at no extra cost, and with no new hardware required Total cost savings of over $35 million annually (<10k consumer canc
Slide 17: SIRIUS XM
SIRIUSH | (om)
Slide 18: Faster growth than other subscription media
Faster growth than other subscription media Among the fastest growing U.S. media businesses 2009E Revenue Growth Source: Company, Merrill Lynch or Consensus Estimates 3% 6% 6% 8% 9% 13% -9% Radio Industry Dish Network Comcast Time Warner Cable Cablevision DirecTV SIRIUS XM
Slide 19: Combined OEM penetration as a percentage of U.S. auto sales
Combined OEM penetration as a percentage of U.S. auto sales Penetration gains at every major automaker Penetration gains expected to continue to drive net subscriber additions Source: Global Insight estimate as of June 2008 and company filings. Actual 2008 and 2009 numbers may differ materially. 15%
Slide 20: Continued subscriber growth despite weak OEM sales
Continued subscriber growth despite weak OEM sales… Subscriber Guidance: Approximately 19.1 mm in 2008 and 20.6 mm in 2009 Source: Company filings and estimates. 9.3 13.7 17.4 19.1 20.6 2008E 2009E
Slide 21: Drives revenue growth in 2008 and 2009
…Drives revenue growth in 2008 and 2009 Revenue Guidance: Approximately $2.4 b in 2008 and $2.7 b in 2009 Source: Company filings and estimates. $0.8 $1.6 $2.1 $2.4 $2.7 2008E 2009E
Slide 22: Synergies: approx. $425 mm in 2009 and growing
Synergies: approx. $425 mm in 2009 and growing Synergies expected to grow in 2010 and beyond Expected approximate 2009 synergies: Satellite & Transmission: $20 mm Programming: $60 mm Customer Service & Billing: $20 mm SAC: $50 mm Sales & Marketing: $150 mm General & Administrative: $50 mm Research &
Slide 23: Price plans to drive subscriber revenue growth
Price plans to drive subscriber revenue growth Best of SIRIUS/XM upgrade launched October 2 $4 premium upgrade to be marketed to over 18 million existing subscribers Best of SIRIUS on XM includes: Howard 100, Howard 101, SIRIUS NFL Radio*, SIRIUS NASCAR Radio*, Martha Stewart Living Radio and Playbo
Slide 24: Substantial EBITDA improvement in 2009
Substantial EBITDA improvement in 2009 Adjusted EBITDA turns positive in 2009 Approximately ($200) mm in 2008 Approximately $300 mm in 2009 Driven by revenue growth and cost cuts / synergies, offset by royalty and revenue share increases Source: Company filings and estimates.
Slide 25: Current long range guidance
Current long range guidance Subs (millions), $s in billions Guidance Guidance Guidance Guidance Guidance Ending Subscribers 20.6 22.1 24.0 26.2 28.4 Total Revenue $2.7 $3.0 $3.4 $3.8 $4.1 Adjusted EBITDA $0.3 $0.6 $0.9 $1.3 $1.5 Free Cash Flow $0.0 $0.4 $0.6 $1.0 $1.4 Source: Company filings and est
Slide 26: II. Liquidity
II. Liquidity Liquidity Overview
Slide 27: Debt Maturities: 2009 - 2013
Debt Maturities: 2009 - 2013 $995 Source: Company filings $783 $212 $0 $230 $248 $500 $1,334 SIRIUS ($ millions) XM ($ millions)
Slide 28: 2009 Debt Maturities
2009 Debt Maturities Debt Instrument Due Date Amount (millions) SIRIUS 2.5% Convertible Notes Feb-09 $209 8.75% Convertible Notes Sep-09 $2 XM Revolving Credit Facility May-09 $250 UBS Term Loan May-09 $100 10% Convertible Notes Dec-09 $400 10% Secured Conv. Notes Dec-09 $33 Total debt maturing in 2
Slide 29: High yield debt market overview
High yield debt market overview Sep. 15 bankruptcy of Lehman Brothers brought markets to a virtual standstill - no new CCC paper since then Rates are at all time high spreads to Treasuries Source: Morgan Stanley Feb-07 Jul-08 Dec-08 Leveraged Loan Index (Yield) 7.76% 9.40% 24.29% CCC Rated Pricing Y
Slide 30: CBOE Volatility Index: up five fold from February 2007
CBOE Volatility Index: up five fold from February 2007 - present 2/16/07: $10.02 12/16/08: $52.37
Slide 31: Capital structure initiatives
Capital structure initiatives JPMorgan and Evercore working on overall financing plan 3 areas of activity: Operational improvements Existing debt holder discussions New investor discussions Looking to complete all by March 1
Slide 32: III. Stock Price
III. Stock Price Stock Price and Market Performance
Slide 33: Benefits of the merger are significant
Benefits of the merger are significant Renewals of programming agreements at lower rates Channel rationalization improves audio experience and lowers programming cost Early success up-selling customers to new “Best of” packages Distribution contract improvements in OEM and Retail Volume benefits fro
Slide 34: Benefits of the merger are significant
Benefits of the merger are significant Best practices implementation at call centers and in retention programs should over time improve churn and conversion rates Employee head count down significantly Significant reduction in marketing spending Rationalization of price points for aftermarket produc
Slide 35: Enterprise value / revenue comparison
Enterprise value / revenue comparison Source: Company filings, Capital IQ, or Yahoo 1.43 1.45 1.46 1.98 0.84 Dish Network DirecTV TWX SIRIUS XM Apple
Slide 36: Financial performance disconnected from valuation
Financial performance disconnected from valuation SIRIUS 2003 SIRIUS 2005 SIRIUS XM 2008E Subs: 261K Revenue: $12.9 M = Debt + Equity: $3.4B Subs: 3.3 M Revenue: $242 M = Debt + Equity: $10.0B Subs: 19.1 M Revenue: $2.4 B = Debt + Equity: $3.5B Source: Company filings, Capital IQ, or Yahoo
Slide 37: Management priorities
Management priorities Resolving 2009 liquidity Maximizing synergies, EBITDA, and FCF Maintaining growth Enhancing shareholder value
Slide 38: IV. Q & A
IV. Q & A Questions and Answers
Slide 39: GAAP reconciliation
GAAP reconciliation In order to provide projections with respect to non-GAAP measures, we are required to estimate GAAP measures that are components of these reconciliations. The provision of these estimates is in no way meant to indicate that the company is explicitly or implicitly providing projec
Slide 40: Disclaimer on forward-looking statements
Disclaimer on forward-looking statements The guidance contained herein are based upon a number of assumptions and estimates that, while considered reasonable by us when taken as a whole, are inherently subject to significant business, economic and competitive uncertainties and contingencies, many of
Slide 41: JOHN MADDEN
JOHN MADDEN TONY STEWART MARTHA STEWART HOWARD STERN BOB DYLAN FRANK SINATRA BRUCE SPRINGSTEEN JAMIE FOXX CAL RIPKEN OPRAH WINFREY
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