EX-99.1 2 a11-23858_1ex99d1.htm SIERRA WIRELESS REPORTS SECOND QUARTER 2011 RESULTS

Exhibit 99.1

 

NEWS RELEASE TRANSMITTED BY CNW

FOR:  Sierra Wireless, Inc.

 

TSX:  SW

NASDAQ:  SWIR

 

August 4, 2011

 

Sierra Wireless Reports Second Quarter 2011 Results

 

·                  Revenue in the second quarter 2011 of $139.9 million, in-line with guidance

·                  Non-GAAP loss from operations of $0.8 million and diluted loss per share of $0.03

·                  Core M2M revenue up 14% year-over-year

·                  Mobile Computing business launching new 4G LTE AirCard® products in Q3

·                  Company expects significant sequential revenue growth in the second half

 

VANCOUVER, BRITISH COLUMBIA — Sierra Wireless, Inc. (NASDAQ:  SWIR) (TSX:  SW) today reported second quarter 2011 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 second quarter of 2011 was $139.9 million, a decrease of 12% compared to $159.1 million in the second quarter of 2010, and a decrease of 3% compared to $144.3 million in the first quarter of 2011.   The year-over-year revenue decrease was principally driven by the loss of revenue from Barnes & Noble and Clearwire, which together accounted for nearly $25 million in revenue in the second quarter of 2010.    Mobile Computing revenue was $66.0 million, down 13% compared to $75.5 million in the second quarter of 2010.  Machine-to-Machine (“M2M”) revenue was $73.9 million, down 12% compared to $83.6 million in the second quarter of 2010.  Excluding sales to Barnes & Noble, the company’s core M2M business increased 14% in the second quarter of 2011 on a year-over-year basis.

 

“Notwithstanding a slower than expected start to 2011, Sierra Wireless remains well positioned in our two target markets.  In Mobile Computing, we are launching several new 4G LTE products with key operators and PC OEMs.  In M2M, we continue to build on our global leadership position and successfully drive value chain expansion,” said Jason Cohenour, President and Chief Executive Officer.  “Our growth drivers remain intact and despite some product launch delays, we expect significant sequential revenue and earnings growth in the second half of 2011.”

 

On a GAAP basis, gross margin was $39.1 million, or 28.0% of revenue, in the second quarter of 2011 compared to $46.2 million, or 29.0% of revenue, in the second quarter of 2010.   Operating expenses were $45.4 million and loss from operations was $6.3 million in the second quarter of 2011, compared to operating expenses of $49.7 million and a loss from operations of $3.5 million in the second quarter of 2010.  Net loss was $6.8 million, or $0.22 per diluted share, in the second quarter of 2011, compared to a net loss of $8.6 million, or $0.28 per diluted share, in the second quarter of 2010.

 

On a non-GAAP basis, gross margin was 28.0% in the second quarter of 2011, compared to 29.1% in the second quarter of 2010.  Operating expenses were $40.0 million and loss from operations was $0.8 million in the second quarter of 2011, compared to operating expenses of $41.7 million and earnings from operations of $4.7 million in the second quarter of 2010.  Net loss was $1.0 million, or $0.03 per diluted share, in the second quarter of 2011 compared to net earnings of $4.4 million, or $0.14 per diluted share, in the second quarter of 2010.

 

Non-GAAP results exclude the impact of stock-based compensation expense, acquisition amortization, integration costs, restructuring 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 on actual operating results and assist in comparisons from one period to another.  The reconciliation between our GAAP and non-GAAP results of operations is provided in the accompanying schedules.

 

Financial Guidance

 

The following guidance for the third quarter of 2011 reflects current business indicators and expectations.  In the third quarter of 2011, we expect revenue to improve significantly relative to the second quarter, driven by the launch of new 4G AirCard products, as well as continued steady year-over-year growth in our core M2M product lines.

 

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.

 

 

Q3 2011 Guidance

 

Consolidated
Non-GAAP

 

 

 

 

 

 

 

Revenue

 

$150 to 155 million

 

 

Earnings from operations

 

$1.0 to $2.0 million

 

 

Net earnings

 

$0.8 to $1.6 million

 

 

Earnings per share

 

$0.03 to $0.05 per share

 

 

Conference Call, Webcast and Instant Replay Details

 

We will host a conference call to review our results on Thursday, August  4, 2011 at 3:00 p.m. PDT, 6:00 p.m. EDT. You can participate in the conference call either via telephone or webcast. To participate in this conference call, please dial the following number approximately ten minutes prior to the commencement of the call.

 

Telephone participation:

 

Toll free (Canada and U.S.):

1-888-231-8191   Passcode:  Not required

or

 

Outside Canada and the U.S.:

1-647-427-7450   Passcode:  Not required

 

Webcast:

 

We will also broadcast our conference call over the Internet. To access the web broadcast, please follow the link below and choose one of the following options:

 

·                  If you are following the conference call on the phone, please choose the “Non-Streaming” version

·                  If you would prefer to follow online only, with streaming audio, select any of the other options according to your preferred format

http://event.on24.com/r.htm?e=320350&s=1&k=27E9B717B77398D8964785B3B2661291

 

Should you be unable to participate, Instant Replay (audio) will be available following the conference call for 7 business days. The webcast will be available at the above link for 90 days following the call.

 

Audio only dial: 1-800-642-1687 or 1-416-849-0833

Passcode:  73603290 #

 

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 2011 and our fiscal year 2011, 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;

·                  That wireless network operators will deploy next generation networks when expected;

·                  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, most of which are discussed in greater detail.  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 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” is a registered trademark of Sierra Wireless. “AirPrime,” “AirLink,” and “AirVantage” are also trademarks of Sierra Wireless. Other product or service names mentioned herein may be the trademarks of their respective owners.

 

FOR FURTHER INFORMATION PLEASE CONTACT:

 

Sierra Wireless, Inc.

David G. McLennan

Chief Financial Officer

(604) 231-1181

Website: www.sierrawireless.com

Email: investor@sierrawireless.com

INDUSTRY : CMT

SUBJECT : ERN

 



 

SIERRA WIRELESS, INC.

 

CONSOLIDATED STATEMENTS OF OPERATIONS

 

(in thousands of U.S. dollars, except where otherwise stated)

 

(unaudited)

 

 

 

Three months ended
June 30

 

Six months ended
June 30

 

 

 

2011

 

2010

 

2011

 

2010

 

Revenue

 

$

139,888

 

$

159,116

 

$

284,163

 

$

310,433

 

Cost of goods sold

 

100,788

 

112,906

 

205,599

 

217,889

 

Gross margin

 

39,100

 

46,210

 

78,564

 

92,544

 

Expenses

 

 

 

 

 

 

 

 

 

Sales and marketing

 

11,326

 

13,183

 

23,594

 

27,339

 

Research and development

 

22,025

 

21,534

 

45,537

 

42,075

 

Administration

 

8,810

 

8,835

 

18,195

 

18,419

 

Restructuring

 

(350

)

1,581

 

(25

)

3,192

 

Integration

 

765

 

1,631

 

1,305

 

3,477

 

Amortization

 

2,794

 

2,919

 

5,642

 

6,025

 

 

 

45,370

 

49,683

 

94,248

 

100,527

 

Loss from operations

 

(6,270

)

(3,473

)

(15,684

)

(7,983

)

Foreign exchange gain (loss)

 

(221

)

(5,460

)

201

 

(9,118

)

Other expense, net

 

(13

)

(103

)

(53

)

(233

)

Loss before income taxes

 

(6,504

)

(9,036

)

(15,536

)

(17,334

)

Income tax expense (recovery)

 

275

 

(399

)

(924

)

(1,088

)

Net loss

 

(6,779

)

(8,637

)

(14,612

)

(16,246

)

Net loss attributable to non-controlling interest

 

(13

)

(82

)

(57

)

(170

)

Net loss attributable to the Company

 

$

(6,766

)

$

(8,555

)

$

(14,555

)

$

(16,076

)

Basic and diluted net loss per share attributable to the Company’s common shareholders (in dollars)

 

$

(0.22

)

$

(0.28

)

$

(0.47

)

$

(0.52

)

Weighted average number of Company common shares outstanding (in thousands)

 

31,267

 

31,054

 

31,252

 

31,053

 

 



 

SIERRA WIRELESS, INC.

 

CONSOLIDATED BALANCE SHEETS

 

(in thousands of U.S. dollars)

 

(unaudited)

 

 

 

June 30,

 

December 31,

 

 

 

2011

 

2010

 

Assets

 

 

 

 

 

Current assets

 

 

 

 

 

Cash and cash equivalents

 

$

101,685

 

$

85,443

 

Short-term investments

 

17,470

 

26,405

 

Accounts receivable, net of allowance for doubtful accounts of $4,020 (2010 - $4,606)

 

97,029

 

117,397

 

Inventories

 

41,984

 

22,134

 

Deferred income taxes

 

11,805

 

9,577

 

Prepaid expenses and other

 

23,541

 

24,542

 

 

 

293,514

 

285,498

 

Property, plant and equipment

 

23,289

 

22,635

 

Intangible assets

 

66,096

 

69,024

 

Goodwill

 

93,137

 

90,953

 

Deferred income taxes

 

433

 

836

 

Other assets

 

675

 

622

 

 

 

$

477,144

 

$

469,568

 

Liabilities

 

 

 

 

 

Current liabilities

 

 

 

 

 

Accounts payable and accrued liabilities

 

$

150,045

 

$

138,940

 

Deferred revenue and credits

 

932

 

987

 

Current portion of obligations under capital leases

 

290

 

324

 

 

 

151,267

 

140,251

 

Long-term obligations

 

27,742

 

24,724

 

Obligations under capital leases

 

343

 

263

 

Deferred income taxes

 

740

 

1,143

 

 

 

180,092

 

166,381

 

Equity

 

 

 

 

 

Shareholders’ equity

 

 

 

 

 

Common stock:

no par value; unlimited shares authorized; issued and outstanding: 31,294,724 shares (December 31, 2010 - 31,222,786 shares)

 

328,361

 

327,668

 

Preferred stock:

no par value; unlimited shares authorized; issued and outstanding: nil shares

 

 

 

Treasury stock:

at cost 296,542 shares (December 31, 2010 — 643,042 shares)

 

(1,886

)

(3,908

)

Additional paid-in capital

 

17,209

 

16,926

 

Deficit

 

(47,722

)

(33,167

)

Accumulated other comprehensive income (loss)

 

1,090

 

(5,471

)

 

 

297,052

 

302,048

 

Non-controlling interest (deficit)

 

 

1,139

 

 

 

297,052

 

303,187

 

 

 

$

477,144

 

$

469,568

 

 



 

SIERRA WIRELESS, INC.

 

CONSOLIDATED STATEMENTS OF CASH FLOWS

 

(in thousands of U.S. dollars)

 

(unaudited)

 

 

 

Three months ended
June 30

 

Six months ended
June 30

 

 

 

2011

 

2010

 

2011

 

2010

 

Cash flows provided (used) by:

 

 

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

 

 

Net earnings (loss)

 

$

(6,779

)

$

(8,637

)

$

(14,612

)

$

(16,246

)

Items not requiring (providing) cash

 

 

 

 

 

 

 

 

 

Amortization

 

8,456

 

8,763

 

17,068

 

17,484

 

Stock-based compensation

 

1,697

 

1,750

 

3,329

 

3,444

 

Non-cash restructuring and other

 

 

(901

)

 

(897

)

Deferred income taxes

 

(2,219

)

(690

)

(2,219

)

(698

)

Loss (gain) on disposal of property, plant and equipment

 

41

 

(11

)

33

 

(11

)

Changes in non-cash working capital

 

 

 

 

 

 

 

 

 

Accounts receivable

 

9,447

 

(5,016

)

21,667

 

(17,343

)

Inventories

 

665

 

(7,106

)

1,999

 

(6,511

)

Prepaid expenses and other

 

3,624

 

6,169

 

2,503

 

6,120

 

Accounts payable and accrued liabilities

 

2,302

 

6,880

 

(11,016

)

7,881

 

Deferred revenue and credits

 

(50

)

57

 

(92

)

127

 

Cash flows provided (used) by operating activities

 

17,184

 

1,258

 

18,660

 

(6,650

)

Investing activities

 

 

 

 

 

 

 

 

 

Purchase of Wavecom S.A. shares

 

(1,505

)

(1,553

)

(1,505

)

(1,553

)

Additions to property, plant and equipment

 

(6,600

)

(3,803

)

(8,562

)

(5,718

)

Proceeds from sale of property, plant and equipment

 

2

 

6

 

15

 

6

 

Increase in intangible assets

 

(1,216

)

(1,022

)

(1,957

)

(1,999

)

Net change in short-term investments

 

7,089

 

(2,326

)

8,935

 

13,470

 

Cash flows provided (used) by investing activities

 

(2,230

)

(8,698

)

(3,074

)

4,206

 

Financing activities

 

 

 

 

 

 

 

 

 

Issuance of common shares, net of share issue costs

 

259

 

7

 

465

 

28

 

Repayment of long-term obligations

 

11

 

(1,675

)

(627

)

(2,097

)

Cash flows provided (used) by financing activities

 

270

 

(1,668

)

(162

)

(2,069

)

Effect of foreign exchange rate changes on cash and cash equivalents

 

264

 

(140

)

818

 

(969

)

Cash and cash equivalents, increase (decrease) in the period

 

15,488

 

(9,248

)

16,242

 

(5,482

)

Cash and cash equivalents, beginning of period

 

86,197

 

111,257

 

85,443

 

107,491

 

Cash and cash equivalents, end of period

 

$

101,685

 

$

102,009

 

$

101,685

 

$

102,009

 

Supplemental disclosures:

 

 

 

 

 

 

 

 

 

Net Income taxes paid (received)

 

$

(2,212

)

$

478

 

$

(1,911

)

$

501

 

Net interest paid (received)

 

54

 

(9

)

(53

)

238

 

Non-cash purchase of property, plant and equipment (funded by obligation under capital lease)

 

0

 

151

 

0

 

151

 

 



 

SIERRA WIRELESS, INC.

 

RECONCILLIATION OF GAAP AND NON-GAAP RESULTS

 

(Unaudited)

 

(in thousands of U.S. dollars)

 

 

 

2011

 

2010

 

 

 

YTD

 

Q2

 

Q1

 

YTD

 

Q2

 

Q1

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue - GAAP and Non-GAAP

 

$

284,163

 

$

139,888

 

$

144,275

 

$

310,433

 

$

159,116

 

$

151,317

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Margin - GAAP

 

$

78,564

 

$

39,100

 

$

39,464

 

$

92,544

 

$

46,210

 

$

46,334

 

Stock-based compensation

 

210

 

97

 

113

 

259

 

124

 

135

 

Gross Margin - Non-GAAP

 

$

78,774

 

$

39,197

 

$

39,577

 

$

92,803

 

$

46,334

 

$

46,469

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss from operations - GAAP

 

$

(15,684

)

$

(6,270

)

$

(9,414

)

$

(7,983

)

$

(3,473

)

$

(4,510

)

Stock-based compensation

 

3,329

 

1,697

 

1,632

 

3,446

 

1,751

 

1,695

 

Restructuring and other

 

(25

)

(350

)

325

 

3,192

 

1,581

 

1,611

 

Integration

 

1,305

 

765

 

540

 

3,477

 

1,631

 

1,846

 

Acquisition related amortization

 

6,600

 

3,312

 

3,288

 

6,679

 

3,194

 

3,485

 

Earnings (loss) from operations - Non-GAAP

 

$

(4,475

)

$

(846

)

$

(3,629

)

$

8,811

 

$

4,684

 

$

4,127

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss - GAAP

 

$

(14,555

)

$

(6,766

)

$

(7,789

)

$

(16,076

)

$

(8,555

)

$

(7,521

)

Stock -based compensation, restructuring and other, integration, and acquisition related amortization, net of tax

 

11,228

 

5,503

 

5,725

 

15,594

 

7,518

 

8,076

 

Unrealized foreign exchange loss (gain)

 

(97

)

238

 

(335

)

9,118

 

5,460

 

3,658

 

Non-controlling interest

 

(32

)

 

(32

)

(125

)

(40

)

(85

)

Net earnings (loss) - Non-GAAP

 

$

(3,456

)

$

(1,025

)

$

(2,431

)

$

8,511

 

$

4,383

 

$

4,128

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per share - GAAP

 

$

(0.47

)

$

(0.22

)

$

(0.25

)

$

(0.52

)

$

(0.28

)

$

(0.24

)

Diluted earnings (loss) per share - Non-GAAP

 

$

(0.11

)

$

(0.03

)

$

(0.08

)

$

0.27

 

$

0.14

 

$

0.13

 

 



 

SIERRA WIRELESS, INC.

 

REVENUE BY SEGMENT AND PRODUCT LINE

 

(Unaudited)

 

(in thousands of U.S. dollars)

 

 

 

Three months ended June 30

 

Six months ended June 30

 

 

 

2011

 

2010

 

2011

 

2010

 

M2M

 

 

 

 

 

 

 

 

 

AirPrime Embedded Wireless Modules (excludes PC OEMs)

 

$

62,759

 

$

69,529

 

$

122,454

 

$

145,206

 

AirLink Intelligent Gateways and Routers

 

8,886

 

12,217

 

18,982

 

22,728

 

AirVantage M2M Cloud Platform and Other

 

2,263

 

1,865

 

5,200

 

4,344

 

 

 

$

73,908

 

$

83,611

 

$

146,636

 

$

172,278

 

 

 

 

 

 

 

 

 

 

 

Mobile Computing

 

 

 

 

 

 

 

 

 

Aircard Mobile Broadband Devices

 

$

53,135

 

$

68,994

 

$

116,989

 

$

125,965

 

AirPrime Embedded Wireless Modules for PC OEMs

 

11,857

 

5,253

 

18,604

 

10,100

 

Other

 

988

 

1,258

 

1,934

 

2,090

 

 

 

$

65,980

 

$

75,505

 

$

137,527

 

$

138,155