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Original Source: FD (FAIR DISCLOSURE) WIRE
. Joe Titlebaum, XM Satellite Radio, EVP, General Counsel, Secretary
. Hugh Panero, XM Satellite Radio, President, CEO . Joe Euteneuer, XM Satellite Radio, CFO, EVP . Gary Parsons, XM Satellite Radio, Chairman . Steve Cook, XM Satellite Radio, EVP of Sales, Marketing, and Customer Operations
Co. reported 1Q04 EBITDA loss of $78m on revenues of $43m. Subscribers increased to 1,681,903 at qtr. end, up 250% vs. 1Q03. Q&A focus: market share; churn, subscriber acquisition and cost per gross add numbers; and, next-generation chipsets.
A. Key Data From Call 1. 1Q04 Total Revenue = $43m 2. 1Q04 Variable Expenses = $25m 3. 1Q04 Gross Margin on subscriber business = 43% of revenue 4. 1Q04 Fixed Expenses = $37m 5. 1Q04 Net Cash for operations = $32m 6. 1Q04 EBITDA loss = $78m 7. 1Q04 Net Loss = $170m 8. 1Q04 qtr. end cash and short-term investments = $385m
S1. 1Q04 Business and Operating Results (H.P.) 1. 1Q04 Highlights:
1. Continued rapid growth in number of subscribers. 2. Accelerated revenue growth. 3. Control of subscriber-rated costs, including use of cash. 4. Expanded OEM penetration and increased production across vehicle models. 5. Strong aftermarket performance.
6. New content and services. 2. Subscribers: 1. As of March 31, 2004, co. had 1,681,903 subscribers 1. Compares to 483,075 subscribers at end of 1Q03. 2. Approx. 250% increase during year.
2. Co. added 321,675 subscribers 1Q04, more than double the
135,916 subscribers added in 1Q03. 3. At qtr. end, co. had 83% of all satellite radio subscribers. 1. Co. had 84% market share at end of 2003. 4. Co. had 70% market share of net new retail subscribers added in 1Q04. 5. Co. making progress towards 2004 guidance of exceeding 2.8m subscribers. 1. Both retail aftermarket and new car market contributed to 1Q04 performance.
2. Each segment exceeded expectations; collectively enabled XM
to outpace avg. Wall Street estimates by nearly 55,000 subscribers.
3. This in spite of usual seasonal 1Q slowdown. 3. Operating Highlights: 1. Co. was successful in increasing revenue, controlling fixed costs, reducing cost to acquire next subscriber and retaining
existing subscribers. 2. 1Q04 Revenues were $43m. 3. 1Q04 Fixed expenses were $37m. 1. Represents first time revenues exceeded fixed expenses in any single quarter. 4. 1Q04 Fully loaded cost of capturing each new subscriber -- CPGA -- decreased to $106 per subscriber. 1. CPGA = cost per gross addition.
5. 1Q04 Subscriber acquisition costs (SAC) decreased to $67 per
subscriber. 6. 1Q04 Churn was 1.3%, even better than full year 2003 turn. 7. Co. will soon add original production. 8. Co. raised $177m in net new equity proceeds in 1Q04. 1. In April, 2004, co. completed $200m offering of senior secured floating rate notes due 2009. 4. Channels of Distribution: 1. Factory-installed OEM XM equipment expanding to more than 80 2005 automobile models.
1. Includes more than 50 General Motors brands, seven Honda Acura models. 2. Honda plans to increase production of its 2005 Acuras from 200,000 vehicles to 400,000 vehicles. 3. In 2004 model year, GM and Honda combined are manufacturing over 1m XM factory-equipped vehicles. 1. Number expected to increase to 1.5m vehicles during 2005
model year. 4. XM will be either a factory- or dealer-installed option on select VWs, AUDIs, SAABs during 2004. 1. Addition of factory-installed XM option on SAAB 97X SUV means XM will be on every nameplate manufactured by GM in U.S. market. 2. Co. enhancing OEM promotional program with GM and Honda. 1. Streamlining process by eliminating most manual activities required at dealership. 2. Will result in more new car buyers now exposed to co.'s product. 5. Retail:
1. Co. plans to integrate next generation chipset into new products beginning early this summer. 1. Products will incorporate features such as a built in wireless FM modulator, the ability to stream personalized stock quotes, etc. 2. Retail partners include Best Buy, Circuit City, Wal-Mart. 1. Number of radios sold per store per month at major consumer electronics retailers has increased substantially; Best Buy increased per store sales by over 50% during the last year. 6. New National Ad Campaign: 1. Launched this past Monday. 2. Highlights attractiveness of commercial-free lineup.
3. Includes spots on network and cable television; not on
"Friends" episode but on some other finales occurring in next
week or so. 4. Campaign timed to coincide with strong seasonal demand usually experienced in early summer. 1. Highlighted by Father's Day and Graduation Day. 7. Content: 1. In February, co. launched 100% commercial-free music programming lineup.
1. 68 commercial-free music channels are most anywhere in satellite radio. 2. Also beginning in February, co. launched radio's first
advanced instant traffic and weather service. 1. 21 dedicated audio channels of traffic and weather information continuously updated to nation's most traffic-congested metropolitan areas. 1. Has proved to be popular in initial launch of 16 cities; co. …