With Simplified Capital Structure and a Clear
Path Forward, North America's
Leading Audio Entertainment Company is Well-Positioned to Continue
its Transformation
SiriusXM Updates Free Cash Flow Guidance to
Reflect the Impact of the Closing of the Liberty Media
Transaction
Company Confirms Quarterly Dividend and
Announces $1.166 Billion Stock
Repurchase Authorization
NEW
YORK, Sept. 10, 2024 /PRNewswire/ -- Sirius XM
Holdings Inc. (NASDAQ: SIRI) today kicked off a new chapter as an
independent public company with a simplified capital structure and
strategy for continued success following the closing of its
transaction with Liberty Media.
"Today SiriusXM embarks on a new phase in our journey as an
independent public company, building on our leading position in
audio entertainment," said Jennifer
Witz, Chief Executive Officer of SiriusXM. "We've created a
strong and profitable business, anchored by a subscription service
that fosters deep and loyal connections with our listeners and a
growing digital audio advertising platform which extends our reach
to fans around the world, and we are excited about the future as we
look to expand and strengthen both platforms."
"As we look ahead, we remain committed to three key objectives:
enhancing subscriber value with a focus on content, technology and
pricing; growing our advertising offerings to both engage new
listeners and deliver effective results for advertisers; and
driving efficiency across the organization to continue our strong
track record of financial performance. We look forward to building
upon SiriusXM's twenty-year history as the audio platform of choice
for millions of North Americans in their vehicles, at home, and on
the go, with the goal of creating long-term value for our
stockholders."
Financial Update
SiriusXM reiterated its full-year
2024 revenue and adjusted EBITDA guidance. As the company has
stated in past earnings releases, the company planned to update its
free cash flow guidance for transaction impacts. The company
estimates these costs to be approximately $200 million and include transaction costs,
incremental interest expense related to the debt assumed and
incurred in connection with the Liberty Media transaction, and cash
outflows at Liberty Sirius XM Holdings Inc. prior to the
closing.
"As we enter our next phase as an independent company, we expect
SiriusXM to continue delivering solid, profitable results," said
Thomas Barry, Chief Financial
Officer of SiriusXM. "After completing the transaction, which had
the effect of reducing our outstanding common stock by
approximately 12% before giving effect to the 1 for 10 adjustment,
our capital allocation priorities are consistent: investing in our
business, focusing in the near- to mid-term on reducing debt to
return to our long-term target leverage, and continuing our capital
return posture. In connection with our first day as an independent
company, we have reiterated our revenue and adjusted EBITDA
guidance and incorporated the impact of the transaction in our
updated free cash flow guidance."
The company's 2024 financial guidance is as follows:
- Total revenue of approximately $8.75
billion,
- Adjusted EBITDA of approximately $2.7
billion, and
- Free cash flow of approximately $1.0
billion.
The company's $200 million change
to its free cash flow guidance reflects approximately $70 million associated with closing costs and
go-forward incremental interest and approximately $130 million associated with historical,
year-to-date cash outflows at Liberty Sirius XM Holdings Inc. prior
to the closing of the transaction.
Adjusted EBITDA and free cash flow are non-GAAP financial
measures. The company has not provided a reconciliation of adjusted
EBITDA to projected net income (loss) or free cash flow to net cash
provided by operating activities because full-year net income
(loss) and net cash provided by operating activities will include
special items that have not occurred and are difficult to predict
with reasonable certainty prior to year-end. Due to this
uncertainty, the company cannot reconcile adjusted EBITDA and free
cash flow to their comparable GAAP measures without unreasonable
effort.
Capital Return Program
SiriusXM plans to continue its
recurring dividend, which adjusted for the 1 for 10 change in the
Liberty Media transaction exchange ratio would be approximately
27 cents per quarter.
Upon completion of the Liberty Media transaction, the Board of
SiriusXM authorized a $1.166 billion
common stock repurchase program. The $1.166
billion common stock repurchase program is a continuation of
the stock repurchase program of the former SiriusXM.
This newly authorized amount represents the amount that remained
available under former SiriusXM's $18
billion stock repurchase program that began in December 2012. Shares of common stock may be
purchased from time to time on the open market and in privately
negotiated transactions, including in accelerated stock repurchase
transactions. SiriusXM expects to fund any repurchases through cash
on hand, future cash flow from operations and borrowings under its
revolving credit facility.
The timing and amount of any shares repurchased will be
determined based on SiriusXM's evaluation of market conditions and
other factors and the program may be discontinued or suspended at
any time. Repurchases will be made in compliance with all SEC
rules and other legal requirements and may be made in part under a
Rule 10b5-1 plan, which permits stock repurchases when SiriusXM
might otherwise be precluded from doing so.
Target Leverage Ratio
The company also reiterated its
long-term target leverage ratio of mid-to-low three times adjusted
EBITDA. After appropriate investments in the business and its
continuing regular dividend, SiriusXM expects to focus excess cash
flows on debt reduction until it reaches this long-term leverage
target while continuing to be mindful of strategic investment and
capital return opportunities.
SiriusXM Evaluating Non-Cash Goodwill and other Intangible
Assets
SiriusXM also announced that, with the
completion of the Liberty Media transaction, the company will
perform an evaluation of its goodwill and other intangible assets,
particularly the goodwill and other intangible assets attributed
from the Liberty Media transaction. The company has regularly
assessed any asset impairments or impairment indicators of its
legacy assets, and, as a result, any such post-transaction charges
would primarily relate to goodwill and intangible assets associated
with the Liberty Media transaction. The company expects to complete
its analysis of this goodwill and the other intangible assets in
the third quarter of 2024.
Such impairment charge, if any, would represent a non-cash
charge to earnings, and it would not affect the company's
liquidity, cash flows from operating activities or debt covenants,
or have any impact on future operations.
Transaction Closing Details
On September 9, 2024, at 4:05
p.m., New York City time,
Liberty Media completed its previously announced split-off (the
"Split-Off") of its former wholly owned subsidiary, Liberty Sirius
XM Holdings Inc. ("New Sirius"). The Split-Off was
accomplished by Liberty Media redeeming each outstanding share of
Liberty Media's Series A, Series B and Series C Liberty SiriusXM
common stock, par value $0.01 per
share, in exchange for 0.8375 of a share of New Sirius common
stock, par value $0.001 per share
(the "Redemption"), with cash being paid to entitled record holders
of Liberty SiriusXM common stock in lieu of any fractional shares
of common stock of New Sirius.
Following the Split-Off, on September 9,
2024 at 6:00 p.m.,
New York City time, a wholly owned
subsidiary of New Sirius merged with and into Sirius XM Holdings
Inc. ("Old Sirius XM"), with Old Sirius XM surviving the merger as
a wholly owned subsidiary of New Sirius (the "Merger" and together
with the Split-Off, the "Transactions"). Upon consummation of the
Merger, each share of common stock of Old Sirius XM, par value
$0.001 per share, issued and
outstanding immediately prior to the merger effective time (other
than shares owned by New Sirius and its subsidiaries) was converted
into one-tenth (0.1) of a share of New Sirius common stock, with
cash being paid to entitled record holders of Old Sirius XM common
stock in lieu of any fractional shares of common stock of New
Sirius. Concurrently with the merger effective time, Old Sirius XM
was renamed "Sirius XM Inc." and New Sirius was renamed "Sirius XM
Holdings Inc."
As a result of the Transactions, Sirius XM Holdings Inc. is an
independent, publicly traded company. Sirius XM Holdings Inc.
common stock begins trading on Nasdaq under the ticker symbol
"SIRI" on September 10, 2024.
Additional information regarding the Transactions is available
in a Current Report on Form 8-K that the company filed yesterday
with the U.S. Securities and Exchange Commission.
1 for 10 Adjustment
Upon consummation of the Liberty
Media transaction, each share of common stock of Sirius XM issued
and outstanding immediately prior to closing and held by the former
minority stockholders of the company was converted into one-tenth
(0.1) of a share of SiriusXM common stock. As a result, a holder of
100 shares of SiriusXM common stock, which closed on the Nasdaq
Global Select Market at $2.67 prior
to the transaction closing, received in exchange for such 100
shares 10 shares of SiriusXM common stock.
Share Reduction
Following the closing of the Liberty
Media transaction, Sirius XM had approximately 339.1 million shares
of common stock outstanding. The former holders of Liberty SiriusXM
common stock own approximately 81% of Sirius XM and former Sirius
XM minority stockholders own the remaining 19% of the new
company.
The Liberty Media transaction resulted in the net reduction of
approximately 12% of the company's outstanding shares before giving
effect to the 1 for 10 adjustment. The former holders of Liberty
SiriusXM common stock surrendered a portion of their shares in the
calculation of the exchange ratio in the new company in exchange
for the assumption of certain net liabilities by the new company in
the transaction.
About Sirius XM Holdings Inc.
SiriusXM is the leading audio entertainment company in North America with a portfolio of audio
businesses including its flagship subscription entertainment
service SiriusXM; the ad-supported and premium music streaming
services of Pandora; an expansive podcast network; and a suite of
business and advertising solutions. Reaching a combined monthly
audience of approximately 150 million listeners, SiriusXM offers a
broad range of content for listeners everywhere they tune in with a
diverse mix of live, on-demand, and curated programming across
music, talk, news, and sports. For more about SiriusXM, please go
to: www.siriusxm.com.
This communication contains "forward-looking statements"
within the meaning of the Private Securities Litigation Reform Act
of 1995. Such statements include, but are not limited to,
statements about future financial and operating results, our plans,
objectives, expectations and intentions with respect to future
operations, products and services; and other statements identified
by words such as "will likely result," "are expected to," "will
continue," "is anticipated," "estimated," "believe," "intend,"
"plan," "projection," "outlook" or words of similar meaning. Such
forward-looking statements are based upon the current beliefs and
expectations of our management and are inherently subject to
significant business, economic and competitive uncertainties and
contingencies, many of which are difficult to predict and generally
beyond our control. Actual results and the timing of events may
differ materially from the results anticipated in these
forward-looking statements.
The following factors, among others, could cause actual
results and the timing of events to differ materially from the
anticipated results or other expectations expressed in the
forward-looking statements: Risks Relating to our Business and
Operations: We face substantial competition and that
competition is likely to increase over time; if our efforts to
attract and retain subscribers and listeners, or convert listeners
into subscribers, are not successful, our business will be
adversely affected; we engage in extensive marketing efforts and
the continued effectiveness of those efforts is an important part
of our business; we rely on third parties for the operation of our
business, and the failure of third parties to perform could
adversely affect our business; we are migrating our billing system
and payment processing function to a new service provider; failure
to successfully monetize and generate revenues from podcasts and
other non-music content could adversely affect our business,
operating results, and financial condition; we may not realize the
benefits of acquisitions or other strategic investments and
initiatives; the impact of economic conditions may adversely affect
our business, operating results, and financial condition; and we
may be adversely affected by the war in Ukraine. Risks Relating to our Sirius XM
Business: A substantial number of our Sirius XM service
subscribers periodically cancel their subscriptions and we cannot
predict how successful we will be at retaining customers; our
ability to profitably attract and retain subscribers to our Sirius
XM service is uncertain; our business depends in part upon the auto
industry; failure of our satellites would significantly damage our
business; and our Sirius XM service may experience harmful
interference from wireless operations. Risks Relating to our
Pandora and Off-platform Business: Our Pandora ad-supported
business has suffered a substantial and consistent loss of monthly
active users, which may adversely affect our Pandora and
Off-platform business; our Pandora and Off-platform business
generates a significant portion of its revenues from advertising,
and reduced spending by advertisers could harm our business; our
failure to convince advertisers of the benefits of our Pandora
ad-supported service could harm our business; if we are unable to
maintain revenue growth from our advertising products our results
of operations will be adversely affected; changes to mobile
operating systems and browsers may hinder our ability to sell
advertising and market our services; and if we fail to accurately
predict and play music, comedy or other content that our Pandora
listeners enjoy, we may fail to retain existing and attract new
listeners. Risks Relating to Laws and Governmental
Regulations: Privacy and data security laws and regulations may
hinder our ability to market our services, sell advertising and
impose legal liabilities; consumer protection laws and our failure
to comply with them could damage our business; failure to comply
with FCC requirements could damage our business; environmental,
social and governance expectations and related reporting
obligations may expose us to potential liabilities, increased
costs, reputational harm, and other adverse effects; and we may
face lawsuits, incur liability or suffer reputational harm as a
result of content published or made available through our services.
Risks Associated with Data and Cybersecurity and the Protection
of Consumer Information: If we fail to protect the security of
personal information about our customers, we could be subject to
costly government enforcement actions and private litigation and
our reputation could suffer; we use artificial intelligence in our
business, and challenges with properly managing its use could
result in reputational harm, competitive harm, and legal liability
and adversely affect our results of operations; and interruption or
failure of our information technology and communications systems
could impair the delivery of our service and harm our business.
Risks Associated with Certain Intellectual Property Rights:
The market for music rights is changing and is subject to
significant uncertainties; our Pandora services depend upon
maintaining complex licenses with copyright owners, and these
licenses contain onerous terms; failure to protect our intellectual
property or actions by third parties to enforce their intellectual
property rights could substantially harm our business and operating
results; some of our services and technologies may use "open
source" software, which may restrict how we use or distribute our
services or require that we release the source code subject to
those licenses; and rapid technological and industry changes and
new entrants could adversely impact our services. Risks Related
to our Capital and Ownership Structure: We have a significant
amount of indebtedness, and our debt contains certain covenants
that restrict our operations; and while we currently pay a
quarterly cash dividend to holders of our common stock, we may
change our dividend policy at any time. Other Operational
Risks: If we are unable to attract and retain qualified
personnel, our business could be harmed; our facilities could be
damaged by natural catastrophes or terrorist activities; the
unfavorable outcome of pending or future litigation could have an
adverse impact on our operations and financial condition; we may be
exposed to liabilities that other entertainment service providers
would not customarily be subject to; and our business and prospects
depend on the strength of our brands. Additional factors that could
cause our results to differ materially from those described in the
forward-looking statements can be found in Sirius XM Holdings
Inc.'s Annual Report on Form 10-K for the year ended December 31,
2023, which is filed with the Securities and Exchange Commission
(the "SEC") and available at the SEC's Internet site
(http://www.sec.gov). The information set forth herein speaks only
as of the date hereof, and we disclaim any intention or obligation
to update any forward looking statements as a result of
developments occurring after the date of this
communication.
Source: SiriusXM
Investor contacts:
Hooper Stevens
212-901-6718
hooper.stevens@siriusxm.com
Natalie Candela
212-901-6672
natalie.candela@siriusxm.com
Media Contact:
Maggie
Mitchell
617-797-1443
maggie.mitchell@siriusxm.com
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SOURCE Sirius XM Holdings Inc.