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Sirius XM Holdings Inc. (SIRI)
Industry: Consumer Services
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SIRIUS XM Radio (SIRI)
Q2 2009 Earnings Call
May 7, 2009 8:00 am ET
Paul Blalock - Senior Vice President Investor Relations
David J. Frear - Executive Vice President, Chief Financial Officer
James E. Meyer - President, Operations and Sales
Scott A. Greenstein - President, Chief Content Officer
Mel Karmazin - Chief Executive Officer
Les Palinksy - J.P. Morgan
David Bank - RBC Capital Markets
Brett Harriss - Gabelli & Company
Jim Goss - Barrington Research
Murray Arenson - Janco Partners
Previous Statements by SIRI
» Sirius XM Radio Q1 2009 Earnings Call Transcript
» SIRIUS XM Radio Q4 2008 Earnings Call Transcript
» Sirius Satellite Radio Inc. Q3 2008 Earnings Call Transcript
Paul Blalock
Thank you. Good morning, everyone and welcome to SIRIUS XM Radio's second quarter 2009 earnings conference call. Today Mel Karmazin, our CEO, will be joined by David Frear, our EVP and CFO, and they will review SIRIUS XM's 2009 second quarter financial results. At the conclusion of our prepared remarks, management will be glad to take your questions.
First I would like to remind everyone that certain statements made during this call might be forward-looking as that term is defined in the Private Securities Litigation Reform Act of 1995. These and all forward-looking statements are based on management's current beliefs and expectations and necessarily depend upon assumptions, data or methods that may be incorrect or imprecise. Such forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. For information about those risks and uncertainties and more information on the company is contained in SIRIUS XM's SEC filings. We caution listeners not to rely unduly on forward-looking statements and disclaim any intent or obligation to update them.
As we begin, I would like to caution our listeners today that some of the results may include discussions of both actual results and pro forma results. Listeners are cautioned to take special care to ensure accuracy in looking at today's report.
I'll now hand the call over to Mel.
Mel Karmazin
Thanks, Paul. Good morning, everyone and thanks for joining us. Last week marked the one-year anniversary of Sirius and XM. What the company has accomplished in the last 12 months is extraordinary. We successfully integrated the two companies, captured a significant amount of synergies, offered consumers programming and price choices, now provide a significantly better listening experience for our subscribers, and very importantly addressed the legacy liquidity issues facing the company as a result of the debt maturities. This was all accomplished during the most difficult business environment in recent history.
Earlier this year we communicated to investors that as a result of our merger, we are able to rationalize our cost structure and as a result, SIRIUS XM is truly a cash flow growth story, and a great story it is. As you saw in our press release this morning, we increased for the third time since our merger our guidance for 2009 adjusted income from operations, which we also refer to as adjusted EBITDA.
We anticipate over $400 million this year compared with a loss of $136 million in 2008, which is a swing of over $536 million in one year. I believe you will all agree that will be astonishing performance.
Second quarter 2009 results marks our third consecutive quarter of significant growth in positive adjusted EBITDA, with $132 million in second quarter adjusted EBITDA, it is clear that the merger of Sirius and XM is paying off. Compared to one year ago, our adjusted EBITDA improved by approximately $193 million. More specifically, expenses that included in the adjusted EBITDA decreased $187 million, or approximately 28% compared with the second quarter of 2008. Year-to-date, we have produced $241 million in positive adjusted EBITDA. The company also generated positive free cash flow in the second quarter of $13 million as compared with negative pro forma free cash flow of $169 million in the second quarter of 2008. We grew revenue slightly, which is something very few consumer dependent companies were able to do in Q2. Revenue up 1% and expenses down 28% yields the outstanding financial results we achieved.
Other highlights of the quarter include a 3% increase in subscription revenue over last year, a 4% increase in self-pay subscribers, as compared with the second quarter of 2008, and I am pleased that the self-pay subscribers are virtually unchanged from the first quarter of this year. Total subscribers results included paid promotional subscribers were down 1% from second quarter of 2008, which is a decrease of 185,000 subscribers from the first quarter of 2009, mostly from the promotional bucket and a significant improvement compared to the first quarter decline we experienced.
I am also pleased to report that our monthly churn improved to 2% in the second quarter, down from the first quarter 2009 churn of 2.2%. Average revenue per subscriber, ARPU, also improved to $10.66 in the second quarter of 2009, up from $10.55 a year ago and also up from $10.43 in the first quarter of this year. Tiered selling, including best of, contributed to this increase.
We are also currently restructuring our advertising sales department and expect that advertising will be in the long-term an increased ARPU driver as well.
It also appears that the auto world is improving. Both General Motors and Chrysler emerged from the bankruptcy process relatively quickly. SAR declines appear to have bottomed out. Production schedules are resuming. Cash for clunker programs are working and we are cautiously optimistic that the second half of 2009 will show improvement. Our overall satellite radio penetration into vehicles manufactured in the second quarter was approximately 52%. We are also pleased with the progress we are seeing at Toyota, with a significant ramp of installs into its model year 2010 vehicles, and this should drive our overall penetration rate into the upper 50s in the second half of the year.
Read the rest of this transcript for free on seekingalpha.com


text: I was made aware that the sorting code I wrote for min-cscope a few years ago (primarily targeted at Windows) was not performing very well on Linux and FreeBSD. I re-wrote the code which now runs faster than GNU sort (at least for the postings list produced by Cscope and compared with the sort version on Ubuntu 12.04). The code is also much more compact and fits nicely within a single source file. Consequently, I would like to propose its inclusion in the main Cscope code. The attached patch provides the new sort.c and sort.h files, the necessary changes to build.c, crossref.c, invlib.c and Makefile.am. It also replaces a linear search within invmake() with a binary search, which gives an additional performance boost. Performance results: Ran a clean Cscope build on the Linux 3.13.7 tree (~35K files) with a warm cache (i.e., ran a clean build first and discarded the results). Vanilla Cscope: elahav@...:~/src/linux-3.13.7$ time /usr/bin/cscope -b -k -q real 0m52.349s user 1m13.193s sys 0m2.680s Modified Cscope: elahav@...:~/src/linux-3.13.7$ time ~/tmp/cscope/src/cscope -b -k -q real 0m33.800s user 0m30.874s sys 0m1.224s Verified that the generated DB is sane by running a query for all references to '.*kernel.*' (there are 7647 of those) and made sure the vanilla and modified versions produced the same results. Note: after applying the patch, you need to run autoreconf to update the various build configuration files. --Elad P.S., There are annoying inconsistencies in indentation throughout the code, with a mixture of tabs and spaces, even within single files. Should probably be cleaned-up at some point.

subset: commoncrawl


text:
The Class Ceiling (Radio 4), presented by the Guardian's own Polly Toynbee, began with a depressing premise. "Class consciousness has declined at a time when inequality has increased," Peter York suggested. "The ability to hardwire inequality through things you do for your kids has very greatly increased." But it goes beyond middle-class parents slurping up houses in the best catchment areas.
According to recent research, Toynbee noted, "two-thirds of us never rise or fall much beyond our parents". There was a spurt of social mobility between 1958 and 1970, but things have stagnated since then. The programme included personal anecdotes about class, too. One man thought his father's name, Albert, was working class so when he was asked in school what it was, he fibbed: "I said, 'I can't remember, but I know his middle name is Edward.'"
Much of the programme concerned class as it shapes life from childhood. Researchers explained that even at 22 months, development "varies hugely by socio-economic backgrounds". Between third and fifth birthdays, this discrepancy widens sharply in verbal skills. Middle-class parents spoke of baby yoga and "a strong educational platform" that might lead to medical school, while one expert recalled seeing a woman wallop her son round the head in public. "You look at that kid and think, crumbs," he said. "That's a huge hurdle."