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Press release from Business Wire

Sierra Wireless Reports First Quarter 2012 Results

<ul class='bwalignc'> <li class='bwlistitemmargb'> Revenue in the first quarter 2012 of $150.3 million </li> <li class='bwlistitemmargb'> Non-GAAP earnings from operations of $5.2 million </li> <li class='bwlistitemmargb'> Non-GAAP net earnings of $5.0 million, or $0.16 per diluted share </li> </ul>

Thursday, May 03, 2012

Sierra Wireless Reports First Quarter 2012 Results16:35 EDT Thursday, May 03, 2012 VANCOUVER, British Columbia (Business Wire) -- Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported first quarter 2012 results. All results are reported in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (“GAAP”), except as otherwise indicated below. Revenue for the first quarter of 2012 was $150.3 million, an increase of 4% compared to $144.3 million in the first quarter of 2011, and an increase of 2% compared to $147.2 million in the fourth quarter of 2011. The year-over-year revenue increase was driven by growth in both our M2M and Mobile Computing lines of business. M2M revenue was $77.0 million, up 6% compared to $72.7 million in the first quarter of 2011. Mobile Computing revenue was $73.3 million, up 3% compared to $71.6 million in the first quarter of 2011. On a GAAP basis, gross margin was $44.8 million, or 29.8%, in the first quarter of 2012, compared to $39.5 million, or 27.4%, in the first quarter of 2011. Operating expenses were $44.4 million and earnings from operations were $0.3 million in the first quarter of 2012, compared to operating expenses of $48.9 million and a loss from operations of $9.4 million in the first quarter of 2011. Net earnings were $0.3 million, or $0.01 per diluted share, in the first quarter of 2012, compared to net loss of $7.8 million, or $0.25 per diluted share, in the first quarter of 2011. On a non-GAAP basis, gross margin was 29.8% in the first quarter of 2012, compared to 27.4% in the first quarter of 2011. Operating expenses were $39.7 million and earnings from operations were $5.2 million in the first quarter of 2012, compared to operating expenses of $43.2 million and loss from operations of $3.6 million in the first quarter of 2011. Net earnings were $5.0 million, or $0.16 per diluted share, in the first quarter of 2012 compared to a net loss of $2.4 million, or $0.08 per diluted share, in the first quarter of 2011. “Broad based revenue growth and improved gross margin drove stronger than expected financial results in the first quarter of 2012,” said Jason Cohenour, President and Chief Executive Officer. “Overall I am very pleased with our Q1 results and trajectory. We have strengthened our operating model and have good visibility to growth drivers in both M2M and Mobile Computing.” Non-GAAP results exclude the impact of stock-based compensation expense, acquisition amortization, restructuring costs, integration costs, foreign exchange gains or losses on translation of balance sheet accounts, and certain tax adjustments. We disclose non-GAAP amounts as we believe that these measures provide our shareholders with better information about actual operating results and assist in comparisons from one period to another. The reconciliation between our GAAP and non-GAAP results is provided in the accompanying schedules. Financial Guidance The following Non-GAAP guidance for the second quarter of 2012 reflects current business indicators and expectations. In the second quarter of 2012, we expect revenue to increase on a sequential basis, driven primarily by growth in revenue from our 4G AirCard products. We expect gross margin to improve slightly and for operating expenses to increase slightly, compared to first quarter of 2012. Inherent in this guidance are risk factors that are described in greater detail in our regulatory filings. Our actual results could differ materially from those presented below. All figures are approximations based on management's current beliefs and assumptions.         Q2 2012 Guidance   ConsolidatedNon-GAAP   Revenue $157.0 to $162.0 million Earnings from operations $8.5 to $9.5 million Net earnings $5.7 to $6.5 million Earnings per share   $0.18 to $0.21 per share Conference Call, Webcast and Instant Replay Details Sierra Wireless President and CEO, Jason Cohenour, and CFO, David McLennan, will host a conference call and webcast with analysts and investors to review the results on Thursday, May 3, 2012, at 5:30 PM Eastern Standard Time (2:30 PM PST). A live slide presentation will be available for viewing during the call from the link provided below. To participate in this conference call, please dial the following number approximately ten minutes prior to the commencement of the call: Toll-free (Canada and US): 1-877-201-0168 Alternate number: 1-647-788-4901 Conference ID: 53772714 For those unable to participate in the live call, a replay will be available until May 11, 2012. Dial 1-855-859-2056 or 1-800-585-8367 and enter the Conference ID number above to access the replay. To access the webcast, please follow the link below: http://www.snwebcastcenter.com/custom_events/sierrawireless-20120503/site/ The webcast will remain available at the above link for one year following the call. We look forward to having you participate in our call. Cautionary Note Regarding Forward-Looking Statements Certain statements and information in this press release are not based on historical facts and constitute forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and Canadian securities laws (“forward-looking statements”) including statements and information relating to our financial guidance for the second quarter of 2012 and our fiscal year 2012, our business outlook for the short and longer term and our strategy, plans and future operating performance. Forward-looking statements are provided to help you understand our views of our short and longer term prospects. We caution you that forward-looking statements may not be appropriate for other purposes. We will not update or revise our forward-looking statements unless we are required to do so by securities laws. Forward-looking statements: Typically include words and phrases about the future such as “outlook”, “may”, “estimates”, “intends”, “believes”, “plans”, “anticipates” and “expects”. Are not promises or guarantees of future performance. They represent our current views and may change significantly. Are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect: Our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance; Our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times; Expected transition period to our 4G products; Expected cost of goods sold; Expected component supply constraints; Our ability to “win” new business; Expected deployment of next generation networks by wireless network operators; Our operations are not adversely disrupted by component shortages or other development, operating or regulatory risks; and Expected tax rates and foreign exchange rates. Are subject to substantial known and unknown material risks and uncertainties. Many factors could cause our actual results, achievements and developments in our business to differ significantly from those expressed or implied by our forward-looking statements, including without limitation, the following factors. These risk factors and others are discussed in our Annual Information Form and Management's Discussion and Analysis of Financial Condition and Results of Operations, which may be found on SEDAR at www.sedar.com and on EDGAR at www.sec.gov and in our other regulatory filings with the Securities and Exchange Commission in the United States and the Provincial Securities Commissions in Canada. Actual sales volumes or prices for our products and services may be lower than we expect for any reason including, without limitation, the continuing uncertain economic conditions, price and product competition, different product mix, the loss of any of our significant customers, competition from new or established wireless communication companies; The cost of products sold may be higher than planned or necessary component supplies may not be available, are delayed or are not available on commercially reasonable terms; We may be unable to enforce our intellectual property rights or may be subject to litigation that has an adverse outcome; The development and timing of the introduction of our new products may be later than we expect or may be indefinitely delayed. Transition periods associated with the migration to new technologies may be longer than we expect.About Sierra Wireless Sierra Wireless (NASDAQ: SWIR) (TSX: SW) offers industry-leading mobile computing and machine-to-machine (M2M) communications products and solutions that connect people, devices, and applications over cellular networks. Wireless service providers, equipment manufacturers, enterprises and government organizations around the world depend on us for innovative, reliable wireless technology. We offer 2G, 3G and 4G wireless modems, routers and gateways as well as a comprehensive suite of software, tools, and services that ensure our customers can successfully bring wireless applications to market. For more information about Sierra Wireless, visit www.sierrawireless.com. “AirCard” and “AirLink” are registered trademarks of Sierra Wireless. “AirPrime” and “AirVantage” are also trademarks of Sierra Wireless. Other product or service names mentioned herein may be the trademarks of their respective owners. SIERRA WIRELESS, INC.CONSOLIDATED BALANCE SHEETS(in thousands of U.S. dollars)(unaudited)     March 31,   December 31,         2012     2011   Assets Current assets     Cash and cash equivalents $106,773 $ 101,375 Short-term investments – 9,347 Accounts receivable, net of allowance for doubtful accountsof $3,226 (2011 - $3,642) 107,539 107,367 Inventories 13,095 16,168 Deferred income taxes 7,372 6,540 Prepaid expenses and other       20,070         20,674   254,849 261,471 Property, plant and equipment 22,731 22,087 Intangible assets 40,461 42,557 Goodwill 90,953 89,961 Deferred income taxes 6,205 6,205 Other assets       630         606       $   415,829     $   422,887   Liabilities Current liabilities Accounts payable and accrued liabilities $118,239 $ 123,547 Deferred income taxes 135 336 Deferred revenue and credits       1,251         1,721   119,625 125,604 Long-term obligations 24,048 25,143 Deferred income taxes       236         236           143,909         150,983   Equity Shareholders' equity Common stock: no par value; unlimited shares authorized; issued and outstanding: 30,909,707 shares (December 31, 2011 - 31,306,692 shares) 325,423 328,440 Preferred stock: no par value; unlimited shares authorized; issued and outstanding: nil shares – – Treasury stock: at cost 521,995 shares (December 31, 2011 – 877,559 shares) (3,736) (6,141 ) Additional paid-in capital 18,368 20,087 Deficit (62,137) (62,482 ) Accumulated other comprehensive loss       (5,998)       (8,000 )         271,920         271,904       $   415,829     $   422,887   SIERRA WIRELESS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS(in thousands of U.S. dollars, except where otherwise stated)(unaudited)       Three months ended March 31     2012         2011     Revenue$   150,266       $   144,275 Cost of goods sold       105,500             104,811   Gross margin       44,766             39,464   Expenses Sales and marketing 11,861 12,268 Research and development 21,396 23,512 Administration 8,600 9,385 Restructuring 180 325 Integration – 540 Amortization       2,387             2,848           44,424             48,878   Earnings (loss) from operations342 (9,414 ) Foreign exchange gain 206 422 Other expense       (171)           (40 ) Earnings (loss) before income taxes377 (9,032 ) Income tax expense (recovery)       32             (1,199 ) Net earnings (loss)345 (7,833 ) Net loss attributable to non-controlling interest       –             (44 ) Net earnings (loss) attributable to the Company   $   345         $   (7,789 ) Net earnings (loss) per share attributable to the Company's common shareholders     (in dollars) Basic $0.01 $ (0.25 ) Diluted $0.01 $ (0.25 ) Weighted average number of shares outstanding (in thousands) Basic 31,175 31,237 Diluted       31,214             31,237   SIERRA WIRELESS, INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS(in thousands of U.S. dollars)(unaudited)       Three months ended March 31     2012       2011   Net earnings (loss) $   345       $   (7,833 ) Other comprehensive income, net of taxes: Foreign currency translation adjustments, net of taxes of $nil       2,002           4,947   Total comprehensive earnings (loss)2,347 (2,886 ) Comprehensive income (loss) attributable to non-controlling interest: Net earnings (loss) – (44 ) Foreign currency translation adjustments, net of taxes of $nil       –           1   Comprehensive earnings (loss) attributable to the Company   $   2,347       $   (2,843 ) SIERRA WIRELESS, INC.CONSOLIDATED STATEMENTS OF EQUITY(in thousands of U.S. dollars)(unaudited)         Equity attributable to the CompanyCommon stock   Treasury Shares         # ofshares         $       # ofshares         $     Additional paid-incapital       Deficit   Accumulatedothercomprehensive|income (loss)   Non-controlling interest(deficit)       Total Balance as at December 31, 2010 31,222,786   $ 327,668   643,042   $ (3,908 ) $ 16,926   $ (33,167 )   $ (5,471 ) $ 1,139   $ 303,187 Purchase of Wavecom S.A. shares – – – – (796 ) – 42 (1,033 ) (1,787 ) Stock option exercises 83,906 772 – – (253 ) – – – 519 Stock-based compensation – – – – 6,449 – – – 6,449 Purchase of treasury shares for RSU distribution – – 613,638 (4,472 ) – – – – (4,472 ) Distribution of vested RSUs – – (379,121 ) 2,239 (2,239 ) – – – – Net loss – – – – – (29,315 ) – (57 ) (29,372 ) Foreign currency translation adjustments, net of tax   –       –     –       –       –       -       (2,571 )   $ (49 )     (2,620 ) Balance as at December 31, 2011   31,306,692     $ 328,440     877,559     $ (6,141 )   $ 20,087     $ (62,482 )   $ (8,000 )     -     $ 271,904     Common share cancellation(400,000)(3,037)––––––(3,037)Stock option exercises3,01520––(6)–––14Stock-based compensation––––1,679–––1,679Purchase of treasury shares for RSU distribution––133,078(987)––––(987)Distribution of vested RSUs––(488,642)3,392(3,392)––––Net earnings–––––345––345Foreign currency translationadjustments, net of tax   –       –     –       –       –       –       2,002       –       2,002   Balance as at March 31, 2012   30,909,707     $325,423     521,995     $(3,736)   $18,368     $(62,137)   $(5,998)   $–     $271,920   SIERRA WIRELESS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands of U.S. dollars)(unaudited)       Three months ended March 31         2012             2011   Cash flows provided (used) by:           Operating activities Net earnings (loss) $345$ (7,833 ) Items not requiring (providing) cash Amortization 6,982 8,612 Stock-based compensation 1,679 1,631 Deferred income taxes (1,030)– Loss (gain) on disposal of property, plant and equipment 159 (8 ) Changes in non-cash working capital Accounts receivable 613 12,220 Inventories 3,224 1,334 Prepaid expenses and other 716 (1,121 ) Accounts payable and accrued liabilities (7,085) (13,317 ) Deferred revenue and credits       (480)           (42 ) Cash flows provided by operating activities       5,123             1,476   Investing activities Additions to property, plant and equipment (3,603) (1,963 ) Proceeds from sale of property, plant and equipment 61 13 Increase in intangible assets (771) (741 ) Net change in short-term investments       9,345             1,847   Cash flows provided (used) by investing activities       5,032             (844 ) Financing activities Issuance of common shares, net of share issue costs 14 206 Repurchase of common shares (3,037)– Purchase of treasury shares for RSU distribution (987)– Repayment of long-term obligations       (642)           (638 ) Cash flows used by financing activities       (4,652)           (432 ) Effect of foreign exchange rate changes on cash and cash equivalents       (105)           554   Cash and cash equivalents, increase in the period 5,398 754 Cash and cash equivalents, beginning of period       101,375             85,443   Cash and cash equivalents, end of period   $   106,773         $   86,197   Supplemental disclosures: Net Income taxes paid $240$ 301 Net interest paid (received)       43             (1 ) SIERRA WIRELESS, INC.RECONCILLIATION OF GAAP AND NON-GAAP RESULTS(in thousands of U.S. dollars, except where otherwise stated)(unaudited)                 2012               2011   Q1         Q1   Revenue - GAAP and Non-GAAP$150,266             $ 144,275     Gross Margin - GAAP$44,766 $ 39,464 Stock-based compensation   83               113   Gross Margin - Non-GAAP$44,849             $ 39,577     Earnings (loss) from operations - GAAP$342 $ (9,414 ) Stock-based compensation 1,679 1,632 Restructuring and other 180 325 Integration - 540 Acquisition related amortization   2,981               3,288   Earnings (loss) from operations - Non-GAAP$5,182 $ (3,629 ) Amortization (excluding acquisition related amortization)   4,001               5,324   EBITDA$9,183             $ 1,695     Net Earnings (loss) - GAAP$345 $ (7,789 ) Stock -based compensation, restructuring and other, integration, and acquisition related amortization, net of tax 4,769 5,725 Unrealized foreign exchange loss (gain) (101) (335 ) Non-controlling interest - (32 )   Net earnings (loss) - Non-GAAP$5,013             $ (2,431 )   Earnings (loss) per share - GAAP (in dollars) $0.01 $ (0.25 ) Diluted earnings (loss) per share - Non-GAAP (in dollars)           $0.16             $ (0.08 ) SIERRA WIRELESS, INC.SEGMENTED RESULTS(in thousands of U.S. dollars)(unaudited)                 Three months ended March 3120122011M2M Revenue $ 76,943 $ 72,728 Cost of goods sold   52,219       50,048   Gross margin $ 24,724       22,680   Gross margin % 32.1%31.2%   Mobile Computing Revenue $ 73,323 $ 71,547 Cost of goods sold   53,281       54,763   Gross margin $ 20,042     $ 16,784   Gross margin %     27.3%     23.5%SIERRA WIRELESS, INC.REVENUE BY SEGMENT AND PRODUCT(in thousands of U.S. dollars)(unaudited)         Three months ended March 31   2012       2011M2M AirPrime Embedded Wireless Modules (excludes PC OEMs) (1) $ 62,944 $ 59,695 AirLink Intelligent Gateways and Routers 10,622 10,096 AirVantage M2M Cloud Platform and Other   3,377         2,937 $ 76,943       $ 72,728   Mobile Computing AirCard Mobile Broadband Devices (2) $ 56,938 $ 63,854 AirPrime Embedded Wireless Modules for PC OEMs 15,273 6,747 Other   1,112         946         $ 73,323       $ 71,547   (1) Barnes & Noble contributed $nil million in M2M revenue in the three months ended March 31, 2012 compared to $0.7 million in the three months ended March 31, 2011.(2) Clearwire contributed $nil million in mobile computing revenue in the three months ended March 31, 2012 compared to $8.3 million in the three months ended March 31, 2011.Sierra Wireless, Inc.David G. McLennanChief Financial Officer(604) 231-1181Website: www.sierrawireless.comEmail: investor@sierrawireless.comINDUSTRY : CMTSUBJECT : ERNorSharlene MyersManager, Global Public Relations(604) 232-1445smyers@sierrawireless.com