EX-99.1 2 d482197dex991.htm EX-99.1 EX-99.1

Exhibit 99.1

 

LOGO    NEWS

Sequans Communications Announces Fourth Quarter and Full Year 2012

Financial Results

PARIS, France – February 7, 2013 – Sequans Communications S.A. (NYSE: SQNS), a 4G chipmaker supplying LTE and WiMAX chips to equipment manufacturers for mobile operators worldwide, today announced financial results for the fourth quarter and full year ended December 31, 2012.

Fourth Quarter 2012 Highlights:

Revenue: Revenue of $3.1 million decreased 60.8% sequentially from the third quarter of 2012, reflecting a decrease in shipments of WiMAX products, partially offset by increased LTE shipments. Revenue decreased 72.8% compared to the fourth quarter of 2011, due to lower sales of WiMAX products, following changes in the WiMAX market in the United States beginning in the second half of 2011.

Gross margin: Gross margin was 9.4%, including a provision for excess inventory totaling $0.9 million. This compares to gross margin of 48.0% in the third quarter of 2012 and 52.0% in the fourth quarter of 2011. Excluding this provision, gross margin in the fourth quarter would have been 36.6%.

Operating income (loss): Operating loss was $9.8 million compared to an operating loss of $6.0 million in the third quarter of 2012 and an operating loss of $5.0 million in the fourth quarter of 2011.

Net loss: Net loss was $9.9 million, or ($0.29) per diluted share/ADS, compared to a net loss of $5.8 million, or ($0.17) per diluted share/ADS in the third quarter of 2012 and a net loss of $5.6 million, or ($0.16) per diluted share/ADS in the fourth quarter of 2011.

Non-IFRS Net loss: Excluding stock-based compensation, non-IFRS net loss was $9.7 million, or ($0.28) per diluted share/ADS, compared to a non-IFRS net loss of $5.0 million, or ($0.15) per diluted share/ADS in the third quarter of 2012, and a non-IFRS net loss of $4.3 million, or ($0.12) per diluted share/ADS, in the fourth quarter of 2011.

 

In millions of US$ except percentages,
shares and per share amounts

  Key Metrics  
  Q4 2012     %*     Q3 2012     %*     Q4 2011     %*     Full year
2012
    %*     Full year
2011
    %*  

Revenue

  $ 3.1        $ 8.0        $ 11.5        $ 22.3        $ 93.7     

Gross profit

    0.3        9.4     3.8        48.0     6.0        52.0     10.3        46.3     47.3        50.5

Operating income (loss)

    (9.8     -314.2     (6.0     -74.7     (5.0     -43.4     (32.8     -147.2     1.1        1.1

Net profit (loss)

    (9.9     -316.7     (5.8     -72.2     (5.6     -48.9     (33.0     -148.4     (0.4     -0.5

Diluted EPS

  $ (0.29     $ (0.17     $ (0.16     $ (0.95     $ (0.01  

Number of diluted shares/ADS

    34,683,839          34,683,839          34,626,501          34,680,227          32,610,680     

Cash flow from (used in) operations

    (6.8       (3.3       (3.1       (22.9       2.8     

Cash and cash equivalents at quarter-end

    28.8          36.4          57.2          28.8          57.2     

Additional information:

                   

Stock-based compensation included in operating result

    0.2          0.7          1.3          3.2          4.2     

Non-IFRS diluted EPS (excludes stock-based compensation)

  $ (0.28     $ (0.15     $ (0.12     $ (0.86     $ 0.11     

 

* Percentage of revenue

Full Year 2012 Highlights:

Revenue of $22.3 million in 2012 decreased 76.3% from 2011; gross margin declined to 46.3% in 2012 compared to 50.5% in 2011, primarily due to lower absorption of fixed costs resulting from decreased revenue.

Operating loss was $32.8 million in 2012 compared to operating income of $1.1 million in 2011, while the net loss was $33.0 million ($0.95 loss per diluted share/ADS) in 2012 compared to a net loss of $0.4 million ($0.01 loss per diluted share/ADS) in 2011. Excluding stock-based compensation, non-IFRS net loss was $29.8 million, or $(0.86) per diluted share/ADS in 2012, compared to a non-IFRS net profit of $3.7 million, or $0.11 per diluted share/ADS in 2011.


Sequans reports fourth quarter and full year 2012 financial results

Page 2

 

“Developments during the fourth quarter support our expectation that our LTE revenue will ramp in the second half of 2013,” said Georges Karam, Sequans CEO. “We completed Verizon’s certification process for our high-performance StreamrichLTE product, and we are working with several OEMs to serve the Verizon market opportunity. We won a significant portion of China Mobile’s first bid for expanded LTE field trials in China, and additional bids are expected to follow during this year. Our products performed well in field tests in India, where Reliance Infocomm is expected to launch commercial service in the second half of 2013, and we continue to engage with more operators including Softbank in Japan where we completed a successful trial of our LTE interference cancellation technology. Also, WiMAX operators planning a near-term transition to LTE have been testing our dual-mode WiMAX/LTE solution. We expect WiMAX revenue to continue, although at a low level, primarily in emerging markets where existing networks support the operators’ business case, with the potential to migrate to LTE in the future, leveraging our dual mode technology.

“We continue to expand the number of LTE projects with existing customers, we are adding new customers and we are seeing growing traction for LTE-only devices coming from Tier 1 operators in the U.S., Asia and Europe. This reinforces our decision to focus on maintaining our leadership in 4G and increases our confidence that, once LTE revenues begin to accelerate in the second half of 2013, we will be able to sustain our momentum,” concluded Mr. Karam.

Outlook

The following statements are based on management’s current assumptions and expectations. These statements are forward-looking and actual results may differ materially. Sequans undertakes no obligation to update these statements.

Sequans expects revenue for the first quarter of 2013 to be in the range of $2.5 to $3.5 million, with non-IFRS gross margin around 48%. Based on this revenue range and expected gross margin, non-IFRS net loss per diluted share/ADS is expected to be between ($0.23) and ($0.25) for the first quarter of 2013, based on approximately 34.7 million weighted average number of diluted shares/ADSs. Non-IFRS EPS guidance excludes primarily the impact of stock based compensation.

Conference Call and Webcast

Sequans plans to conduct a teleconference and live webcast to discuss the financial results for the fourth quarter and full year 2012 today, February 7, 2013 at 8:00 a.m. EST /14:00 CET. To participate in the live call, analysts and investors should dial 800-230-1059 (or +1 612-234-9959 if outside the U.S.). A live and archived webcast of the call will be available from the Investors section of the Sequans website at www.sequans.com/investors/. A replay of the conference call will be available until March 7, 2013, by dialing toll free 800-475-6701 in the U.S., or +1 320-365-3844 from outside the U.S., using the following access code: 276747.

Forward Looking Statements

This press release may contain projections or other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: (i) the contraction or lack of growth of markets in which we compete and in which our products are sold, including WiMAX and LTE markets, (ii) unexpected increases in our expenses, including manufacturing expenses, (iii) our inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or cancellations in spending by our customers, (v) unexpected average selling price reductions, (vi) the significant fluctuation to which our quarterly revenue and operating results are subject due to cyclicality in the wireless communications industry and transitions to new process technologies, (vii) our inability to anticipate the future market demands and future needs of our customers, (viii) our inability to achieve new design wins or for design wins to result in shipments of our products at levels and in the timeframes we currently expect, and (ix) other factors detailed in documents we file from time to time with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.


Sequans reports fourth quarter and full year 2012 financial results

Page 3

 

Use of Non-IFRS/non-GAAP Financial Measures

To supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS, or non-GAAP, financial measures. These measures exclude non-cash charges relating to stock-based compensation. We believe that these measures can be useful to facilitate comparisons among different companies. These non-GAAP measures have limitations in that the non-GAAP measures we use may not be directly comparable to those reported by other companies. We seek to compensate for this limitation by providing a reconciliation of the non-GAAP financial measures to the most directly comparable IFRS measures in the table attached to this press release.

About Sequans Communications

Sequans Communications is a 4G chipmaker, supplying LTE and WiMAX chips to equipment manufacturers for mobile operators worldwide. Founded in 2003 to address the WiMAX market, the company expanded in early 2009 to address the LTE market. Sequans chips are inside 4G networks around the world. Sequans is based in Paris, France with additional offices throughout the world, including United States, United Kingdom, Israel, Hong Kong, Singapore, Taiwan, South Korea and China. www.sequans.com

SOURCE: Sequans Communications S.A.

Media Relations: Kimberly Tassin, +1.425.736.0569, Kimberly@sequans.com

Investor Relations: Claudia Gatlin, +1 212.830.9080, Claudia@sequans.com

Condensed financial tables follow


Sequans reports fourth quarter and full year 2012 financial results

Page 4

 

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

     Three months ended  

(in thousands of US$, except share and per share amounts)

   Dec 31,
2012
    Sept 30,
2012
    Dec 31,
2011
 

Revenue :

      

Product revenue

     2,844        7,452        10,996   

Other revenue

     286        530        491   
  

 

 

   

 

 

   

 

 

 

Total revenue

     3,130        7,982        11,487   
  

 

 

   

 

 

   

 

 

 

Cost of revenue

      

Cost of product revenue

     2,793        4,104        5,451   

Cost of other revenue

     44        44        64   
  

 

 

   

 

 

   

 

 

 

Total cost of revenue

     2,837        4,148        5,515   
  

 

 

   

 

 

   

 

 

 

Gross profit

     293        3,834        5,972   
  

 

 

   

 

 

   

 

 

 

Operating expenses :

      

Research and development

     7,271        6,455        5,676   

Sales and marketing

     853        1,470        3,094   

General and administrative

     2,005        1,871        2,190   
  

 

 

   

 

 

   

 

 

 

Total operating expenses

     10,129        9,796        10,960   
  

 

 

   

 

 

   

 

 

 

Operating income (loss)

     (9,836     (5,962     (4,988
  

 

 

   

 

 

   

 

 

 

Financial income (expense):

      

Interest income (expense), net

     38        22        (26

Foreign exchange gain (loss)

     (45     249        (469
  

 

 

   

 

 

   

 

 

 

Profit (loss) before income taxes

     (9,843     (5,691     (5,483
  

 

 

   

 

 

   

 

 

 

Income tax expense

     70        73        132   

Profit (loss)

     (9,913     (5,764     (5,615

Attributable to :

      

Shareholders of the parent

     (9,913     (5,764     (5,615

Minority interests

     —           —           —      
  

 

 

   

 

 

   

 

 

 

Basic earnings (loss) per share

   $ (0.29   $ (0.17   $ (0.16
  

 

 

   

 

 

   

 

 

 

Diluted earnings (loss) per share

   $ (0.29   $ (0.17   $ (0.16
  

 

 

   

 

 

   

 

 

 

Number of shares used for computing:

      

— Basic

     34,683,839        34,683,839        34,626,501   

— Diluted

     34,683,839        34,683,839        34,626,501   
  

 

 

   

 

 

   

 

 

 


Sequans reports fourth quarter and full year 2012 financial results

Page 5

 

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

 

     Year ended December 31,  

(in thousands of US$, except share and per share amounts)

   2012     2011  

Revenue :

    

Product revenue

     19,600        91,742   

Other revenue

     2,654        1,972   
  

 

 

   

 

 

 

Total revenue

     22,254        93,714   
  

 

 

   

 

 

 

Cost of revenue

    

Cost of product revenue

     11,781        46,167   

Cost of other revenue

     176        247   
  

 

 

   

 

 

 

Total cost of revenue

     11,957        46,414   
  

 

 

   

 

 

 

Gross profit

     10,297        47,300   
  

 

 

   

 

 

 

Operating expenses :

    

Research and development

     28,408        24,935   

Sales and marketing

     6,562        12,963   

General and administrative

     8,096        8,327   
  

 

 

   

 

 

 

Total operating expenses

     43,066        46,225   
  

 

 

   

 

 

 

Operating income (loss)

     (32,769     1,075   
  

 

 

   

 

 

 

Financial income (expense):

    

Interest income (expense), net

     137        (389

Foreign exchange gain (loss)

     (158     (744
  

 

 

   

 

 

 

Profit (Loss) before income taxes

     (32,790     (58
  

 

 

   

 

 

 

Income tax expense (benefit)

     234        371   

Profit (Loss)

     (33,024     (429

Attributable to :

    

Shareholders of the parent

     (33,024     (429

Minority interests

     —           —      
  

 

 

   

 

 

 

Basic earnings (loss) per share

   $ (0.95   $ (0.01
  

 

 

   

 

 

 

Diluted earnings (loss) per share

   $ (0.95   $ (0.01
  

 

 

   

 

 

 

Number of shares used for computing:

    

— Basic

     34,680,227        32,610,680   

— Diluted

     34,680,227        32,610,680   
  

 

 

   

 

 

 


Sequans reports fourth quarter and full year 2012 financial results

Page 6

 

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION

 

     At December 31,  

(in thousands of US$)

   2012     2011  

ASSETS

    

Non-current assets

    

Property, plant and equipment

     9,187        9,334   

Intangible assets

     4,184        4,233   

Loan and other receivables

     458        531   

Available for sale assets

     931        677   
  

 

 

   

 

 

 

Total non-current assets

     14,760        14,775   
  

 

 

   

 

 

 

Current assets

    

Inventories

     7,443        11,660   

Trade receivables

     5,528        8,373   

Prepaid expenses and other receivables

     2,873        2,571   

Recoverable value added tax

     415        2,008   

Research tax credit receivable

     8,632        4,423   

Cash and cash equivalents

     28,751        57,220   
  

 

 

   

 

 

 

Total current assets

     53,642        86,255   
  

 

 

   

 

 

 

Total assets

     68,402        101,030   

EQUITY AND LIABILITIES

    

Equity

    

Issued capital, euro 0.02 nominal value, 34,683,839 shares authorized, issued and outstanding at December 31, 2012 (34,667,339 at December 31, 2011)

     912        912   

Share premium

     129,309        129,283   

Other capital reserves

     12,556        9,368   

Accumulated deficit

     (87,715     (54,691

Other components of equity

     409        (628
  

 

 

   

 

 

 

Total equity

     55,471        84,244   
  

 

 

   

 

 

 

Non-current liabilities

    

Government grant advances and interest-free loans

     287        385   

Finance lease obligations

     236        —      

Provisions

     369        259   

Deferred tax liabilities

     85        55   
  

 

 

   

 

 

 

Total non-current liabilities

     977        699   
  

 

 

   

 

 

 

Current liabilities

    

Trade payables

     6,038        8,580   

Government grant advances and interest-free loans

     515        717   

Finance lease obligations

     129        —      

Other current liabilities

     4,133        5,846   

Deferred revenue

     609        869   

Provisions

     530        75   
  

 

 

   

 

 

 

Total current liabilities

     11,954        16,087   
  

 

 

   

 

 

 

Total equity and liabilities

     68,402        101,030   


Sequans reports fourth quarter and full year 2012 financial results

Page 7

 

SEQUANS COMMUNICATIONS S.A.

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 

     Year ended December 31,  

(in thousands of US$)

   2012     2011  

Operating activities

    

Profit (loss) before income taxes

     (32,790     (58

Non-cash adjustment to reconcile income before tax to net cash from (used in) operating activities

    

Depreciation and impairment of property, plant and equipment

     4,442        4,066   

Amortization and impairment of intangible assets

     1,758        1,836   

Share-based payment expense

     3,188        4,174   

Increase (decrease) in provisions

     1,861        (31

Financial expense (income)

     (137     471   

Foreign exchange loss (gain)

     (57     (508

Interest free financing benefit

     —           178   

Working capital adjustments

    

Decrease (Increase) in trade receivables and other receivables

     3,678        5,144   

Decrease (Increase) in inventories

     3,369        (2,870

Decrease (Increase) in research tax credit receivable

     (4,208     (2,422

Increase (Decrease) in trade payables and other liabilities

     (3,317     (6,274

Increase (Decrease) in deferred revenue

     (260     (24

Increase (Decrease) in government grant advances

     (292     (521

Income tax paid

     (104     (398

Net cash flow from (used in) operating activities

     (22,869     2,763   

Investing activities

    

Purchase of intangible assets and property, plant and equipment

     (5,955     (11,042

Purchase of financial assets

     (181     709   

Net cash flow used in investments activities

     (6,136     (10,333

Financing activities

    

IPO proceeds, net of costs

     —           59,934   

Proceeds from exercice of stock options and founders’ warrants

     26        579   

Proceeds from borrowings and finance lease liabilities

     382        —      

Repayment of borrowings and finance lease liabilities

     (17     (3,479

Interest received (paid)

     136        (656

Repayment of interest-free loans

     —           (1,321

Net cash flows from financing activities

     527        55,057   

Net increase (decrease) in cash and cash equivalents

     (28,478     47,487   

Net foreign exchange difference

     9        (6

Cash and cash equivalent at January 1

     57,220        9,739   

Cash and cash equivalents at end of the period

     28,751        57,220   


Sequans reports fourth quarter and full year 2012 financial results

Page 8

 

SEQUANS COMMUNICATIONS S.A.

UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS

 

      Three months ended  

(in thousands of US$, except share and per share amounts)

   Dec 31,
2012
    Sept 30,
2012
    Dec 31,
2011
 

Net IFRS profit (loss) as reported

     (9,913     (5,764     (5,615

Add back

      

Stock-based compensation expense according to IFRS 2

     222        744        1,324   

Non-IFRS profit (loss) adjusted

     (9,691     (5,020     (4,291
  

 

 

   

 

 

   

 

 

 

IFRS basic earnings (loss) per share as reported

   $ (0.29   $ (0.17   $ (0.16

Add back

      

Stock-based compensation expense according to IFRS 2

   $ 0.01      $ 0.02      $ 0.04   
  

 

 

   

 

 

   

 

 

 

Non-IFRS basic earnings (loss) per share

   $ (0.28   $ (0.15   $ (0.12
  

 

 

   

 

 

   

 

 

 

IFRS diluted earnings (loss) per share

   $ (0.29   $ (0.17   $ (0.16

Add back

      

Stock-based compensation expense according to IFRS 2

   $ 0.01      $ 0.02      $ 0.04   
  

 

 

   

 

 

   

 

 

 

Non-IFRS diluted earnings (loss) per share

   $ (0.28   $ (0.15   $ (0.12
  

 

 

   

 

 

   

 

 

 


Sequans reports fourth quarter and full year 2012 financial results

Page 9

 

SEQUANS COMMUNICATIONS S.A.

UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS

 

     Year ended December 31,  

(in thousands of US$, except share and per share amounts)

   2012     2011  

Net IFRS profit (loss) as reported

     (33,024     (429

Add back

    

Stock-based compensation expense according to IFRS 2

     3,189        4,174   

Non-IFRS profit (loss) adjusted

     (29,835     3,745   
  

 

 

   

 

 

 

IFRS basic earnings (loss) per share as reported

   $ (0.95   $ (0.01

Add back

    

Stock-based compensation expense according to IFRS 2

   $ 0.09      $ 0.12   
  

 

 

   

 

 

 

Non-IFRS basic earnings (loss) per share

   $ (0.86   $ 0.11   
  

 

 

   

 

 

 

IFRS diluted earnings (loss) per share

   $ (0.95   $ (0.01

Add back

    

Stock-based compensation expense according to IFRS 2

   $ 0.09      $ 0.12   
  

 

 

   

 

 

 

Non-IFRS diluted earnings (loss) per share

   $ (0.86   $ 0.11