Sirius XM looks at its future


Economic conditions, particularly the slowdown in new car sales, has caused Sirius XM to cut its subscriber projections for this year and next. Nevertheless, the satellite radio company is sticking with its guidance to Wall Street that it will produce $300 million in EBITDA in 2009.

“Current economic conditions, particularly the dramatic and recent slow down in auto sales, have negatively impacted subscriber growth for 2008 and 2009. The company expects to end 2008 with 19.1 million subscribers and end 2009 with 20.6 million subscribers. The company remains confident in its Revenue and Adjusted EBITDA guidance for 2008 and 2009, which remains unchanged,” Sirius XM said yesterday. It will report Q3 results on Monday.

Sirius XM issued the updated guidance because it is in in discussions with several financial institutions regarding a financing to replace its 2.5% Convertible Notes due 2009. In all, the company has to refinance about a billion bucks of its debt in the coming months.

It is now projecting $2.7 million in revenues for 2009, producing $300 million of EBITDA, making the company break-even for free cash flow (FCF). The, 2010 is supposed to bring $400 million of FCF on revenues of $3 billion and EBITDA of $600 million. The final year of the five-year projection, 2013, shows the company with 28.4 million subscribers, $4.1 billion in revenues, $1.5 billion in EBITD and $1.4 billion in FCF.

RBR/TVBR observation: OEM sales are slowing. The retail channel has been down dramatically for some time. The economic meltdown has to impact churn. And yet a company that has yet to produce a single penny of EBITDA will make $300 million magically appear in 2009. Yeah, right. We’ll believe that when we see it.