Sirius XM Reports 3Q

SIRI reports – an exceptionally noisy, merger transitional 3Q08 that featured some core metrics that held up OK in the face of a tough macro environment. Sirius exited with 18.92m subs, with net adds of 344K including 492K gowth in OEM and a 149K decline in retail, close to ests. Pro Forma core churn was little changed at 1.7%, a positive given macro headwinds hurting other subscriber businesses. However, OEM conversion rates dipped 3.7 pctg pts y/y to 47.0% pro forma. Pro forma revenues of $613m slightly missed; Pro forma adj. EBITDA loss of $36.9m was near ests. Debt levels: Sirius XM exited with $360m of cash and equivalents, expects to generate positive free cash flow in 4Q08, and to have no liquidity issues before the maturity of the Feb 09 converts, where the balance has been reduced from $300m to $210m via debt/equity swaps. The company has another $350m of revolver/term loan due in May 2009, and $400m of 1.75% sr. conv notes due Dec. 2009. Guidance: Sirius XM trimmed 2008 adj. EBITDA loss guidance by $50m to ($300m). The company recently issued long-term guidance for subs growing from 20.6m in 2009 to 28.4m in 2013, and free cash flow growing from breakeven in 2009 to $1.4b by 2013.