EX-99.1 2 a10-14967_1ex99d1.htm SIERRA WIRELESS REPORTS SECOND QUARTER 2010 RESULTS

Exhibit 99.1

 

NEWS RELEASE TRANSMITTED BY CNW

FOR:      Sierra Wireless, Inc.

 

TSX:  SW

NASDAQ:  SWIR

 

July 29, 2010

 

Sierra Wireless Reports Second Quarter 2010 Results

 

·                  Exceeded earnings guidance for the quarter on record revenue and lower non-GAAP operating expenses

·                  Record quarterly revenue of  $159.1 million, up 18%  compared to the second quarter of 2009

·                  GAAP loss from operations of $3.5 million and loss per share of $0.28

·                  Non-GAAP earnings from operations of $4.7 million and non-GAAP diluted earnings per share of $0.14

 

VANCOUVER, BRITISH COLUMBIA — Sierra Wireless, Inc. (NASDAQ:  SWIR, TSX:  SW) today reported second quarter 2010 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 2010 was $159.1 million, an increase of 18% compared to $135.3 million in the second quarter of 2009 and an increase of 5% compared to $151.3 million in the first quarter of 2010.   Our record revenue was driven by strong demand for both Machine-to-Machine (“M2M”) and Mobile Computing products in the quarter.  M2M revenue increased to $83.6 million, up 53% compared to $54.6 million in second quarter of 2009.   Mobile Computing revenue was $75.5 million, down 6% compared to $80.7 million in the second quarter of 2009, but up 21% sequentially from the first quarter of 2010.

 

“Strong, broad based demand, combined with lower operating expenses, enabled us to deliver record quarterly revenue and better than expected earnings, despite industry wide component supply constraints” said Jason Cohenour, President and Chief Executive Officer. “Our sequential revenue growth was driven by the launch of new AirCard products with key customers, while our M2M business experienced exceptional year over year growth across a number of key market segments.”

 

On a GAAP basis, gross margin was 29.0% in the second quarter of 2010, compared to 35.8% in the same period of 2009.  Operating expenses were $49.7 million and loss from operations was $3.5 million in the second quarter of 2010, compared to $64.7 million and $16.2 million, respectively, in the same period of 2009.  Our net loss was $8.6 million, or loss per share of $0.28, compared to a net loss of $5.9 million, or loss per share of $0.19, in the second quarter of 2009.

 

On a non-GAAP basis, gross margin in the second quarter of 2010 was 29.1%, compared to 35.9% in the second quarter of 2009.  Operating expenses and earnings from operations were $41.7 million and $4.7 million, respectively, compared to $45.8 million and $2.8 million, respectively, in the second quarter of 2009.     Net earnings were $4.4 million, or $0.14 per diluted share, compared to net earnings of $1.5 million, or $0.05 per diluted share, in the second quarter of 2009.

 

Non-GAAP results exclude transaction costs related the Wavecom acquisition, restructuring costs, acquisition related integration costs, stock based compensation expense, acquisition related

 



 

amortization, foreign exchange gains or losses, tax adjustments and non-controlling interest related to non-GAAP adjustments.  The reconciliation between GAAP and non-GAAP results of operations is provided in the accompanying schedules.

 

Financial Guidance

 

The following guidance for the third quarter of 2010 reflects current business indicators and expectations.  Relative to Q2, we expect further revenue growth driven by higher demand, particularly for our AirCard® products.    Our guidance also reflects the uncertain macroeconomic environment and expected component supply constraints.  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.

 

 

 

Consolidated

 

Q3 2010 Guidance

 

Non-GAAP

 

 

 

 

 

Revenue

 

$168.0 - $173.0 million

 

Earnings from operations

 

$5.4 - $6.4 million

 

Net earnings

 

$4.5 - $5.4 million

 

Diluted earnings per share

 

$0.15 - $0.17/share

 

 

Conference Call, Webcast and Instant Replay

 

Sierra Wireless will host a conference call and webcast today, Thursday, July 29 2010 at 2:30 PM PDT/5:30 PM EDT to review its second quarter 2010 results.  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.  A live slide presentation will be available for viewing during the call from the link provided below.

 

Telephone participation:

 

Toll free (Canada and US):

 

1-888-231-8191      (passcode not required)

Outside Canada and the US:

 

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=218669&s=1&k=CA8CF12C48755ABFF6F27C77C947A4FC

 

The webcast will be available at the above link for 90 days following the call.

 



 

Should you be unable to participate, Instant Replay (audio) will be available following the conference call for 7 business days.

 

Audio only dial:  1-800-642-1687 (Canada and U.S.) or 1-416-849-0833

Passcode:  79283474  followed by the pound key (#)

 

We look forward to having you participate in our call.

 

Cautionary Note Regarding Forward-Looking Statements

 

Certain statements in this press release that are not based on historical facts constitute forward-looking statements or forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and applicable Canadian securities laws (“forward-looking statements”). These forward-looking statements are not promises or guarantees of future performance but are only predictions that relate to future events, conditions or circumstances or our future results, performance, achievements or developments and are subject to substantial known and unknown risks, assumptions, uncertainties and other factors that could cause our actual results, performance, achievements or developments in our business or in our industry to differ materially from those expressed, anticipated or implied by such forward-looking statements. Forward-looking statements in this press release include all financial guidance for the third quarter of 2010, and all other disclosure regarding possible events, conditions, circumstances or results of operations that are based on assumptions about future economic conditions, courses of action and other future events. We caution you not to place undue reliance upon any such forward-looking statements, which speak only as of the date they are made. These forward-looking statements appear in a number of different places in this press release and can be identified by words such as “may”, “estimates”, “projects”, “expects”, “intends”, “believes”, “plans”, “anticipates”, “continue”, “growing”, “expanding”, or their negatives or other comparable words. Forward-looking statements include statements regarding the outlook for our future operations, plans and timing for the introduction or enhancement of our services and products, statements concerning strategies or developments, statements about future market conditions, supply conditions, end customer demand conditions, channel inventory and sell through, revenue, gross margin, operating expenses, profits, forecasts of future costs and expenditures, the outcome of legal proceedings, and other expectations, intentions and plans that are not historical fact. The risk factors and uncertainties that may affect our actual results, performance, achievements or developments are many and include, amongst others, our ability to develop, manufacture, supply and market new products that we do not produce today that meet the needs of customers and gain commercial acceptance, our reliance on the deployment of next generation networks by major wireless operators, the continuous commitment of our customers, and increased competition. 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. Many of these factors and uncertainties are beyond our control. Consequently, all forward-looking statements in this press release are qualified by this cautionary statement and we cannot assure you that actual results, performance, achievements or developments that we anticipate will be realized. Forward-looking statements are based on management’s current plans, estimates, projections, beliefs and opinions and we do not undertake any obligation to update forward-looking statements should the assumptions related to these plans, estimates, projections, beliefs and opinions change, except as required by law.

 



 

About Sierra Wireless

 

Sierra Wireless (NASDAQ: SWIR — TSX: SW) is expanding the wireless world with a comprehensive offering of hardware, software, and connected services for mobile lifestyles and machine-to-machine communications. Our customers count on us to help them succeed with early access to new wireless technologies and innovative, reliable, high-performing solutions for a broad range of applications. For more information about Sierra Wireless, visit www.sierrawireless.com.

 

AirCard is a registered trademark, and AirPrime, AirLink, and AirVantage are trademarks belonging to Sierra Wireless. Other product or service names mentioned herein may be the trademarks of their respective owners.

 

FOR FURTHER INFORMATION PLEASE CONTACT:

 

Investor Contact:

Media Contact:

David G. McLennan

Sharlene Myers

Chief Financial Officer

Public & Media Relations

(604) 231-1181

(604) 232-1445

 

Sierra Wireless, Inc.

Website: www.sierrawireless.com

Email: investor@sierrawireless.com

INDUSTRY : CMT

SUBJECT : ERN

 



 

SIERRA WIRELESS, INC.

 

Consolidated Statements of Operations and Retained Earnings (Deficit)

(Expressed in thousands of United States (“U.S.”) dollars, except per share amounts)

(Prepared in accordance with United States generally accepted accounting principles (“U.S. GAAP”))

(Unaudited)

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

$

159,116

 

$

135,348

 

$

310,433

 

$

246,755

 

Cost of goods sold

 

112,906

 

86,895

 

217,889

 

166,781

 

Gross margin

 

46,210

 

48,453

 

92,544

 

79,974

 

 

 

 

 

 

 

 

 

 

 

Expenses:

 

 

 

 

 

 

 

 

 

Sales and marketing

 

13,183

 

15,590

 

27,339

 

24,952

 

Research and development

 

21,534

 

22,672

 

42,075

 

37,636

 

Administration

 

8,835

 

10,792

 

18,419

 

17,339

 

Acquisition costs

 

 

804

 

 

7,326

 

Restructuring

 

1,581

 

8,869

 

3,192

 

10,595

 

Integration

 

1,631

 

936

 

3,477

 

1,190

 

Amortization

 

2,919

 

5,001

 

6,025

 

7,421

 

 

 

49,683

 

64,664

 

100,527

 

106,459

 

Loss from operations

 

(3,473

)

(16,211

)

(7,983

)

(26,485

)

 

 

 

 

 

 

 

 

 

 

Foreign exchange gain (loss)

 

(5,460

)

10,957

 

(9,118

)

1,034

 

Other expense

 

(103

)

(10

)

(233

)

(4,032

)

Net loss before income taxes

 

(9,036

)

(5,264

)

(17,334

)

(29,483

)

Income tax expense (recovery)

 

(399

)

1,229

 

(1,088

)

962

 

Net loss

 

(8,637

)

(6,493

)

(16,246

)

(30,445

)

Net loss attributable to the non-controlling interest

 

(82

)

(622

)

(170

)

(909

)

Net loss attributable to Sierra Wireless, Inc.

 

(8,555

)

(5,871

)

(16,076

)

(29,536

)

Retained earnings (deficit), beginning of period

 

(26,147

)

(2,392

)

(18,626

)

21,273

 

Deficit, end of period

 

$

(34,702

)

$

(8,263

)

$

(34,702

)

$

(8,263

)

 

 

 

 

 

 

 

 

 

 

Loss per share attributable to Sierra Wireless, Inc.:

 

 

 

 

 

 

 

 

 

Basic

 

$

(0.28

)

$

(0.19

)

$

(0.52

)

$

(0.95

)

Diluted

 

$

(0.28

)

$

(0.19

)

$

(0.52

)

$

(0.95

)

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares (in thousands):

 

 

 

 

 

 

 

 

 

Basic

 

31,054

 

31,032

 

31,053

 

31,032

 

Diluted

 

31,054

 

31,032

 

31,053

 

31,032

 

 



 

SIERRA WIRELESS, INC.

 

Consolidated Balance Sheets

(Expressed in thousands of U.S. dollars)

(Prepared in accordance with U.S. GAAP)

 

 

 

June 30,
2010

 

December  31,
2009

 

 

 

(Unaudited)

 

 

 

Assets

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

102,009

 

$

107,491

 

Short-term investments

 

13,428

 

26,898

 

Accounts receivable, net of allowance for doubtful accounts of $4,208 (2009 — $6,504)

 

102,620

 

86,466

 

Inventories

 

29,308

 

24,708

 

Deferred income taxes

 

6,485

 

6,168

 

Prepaid expenses

 

10,780

 

14,039

 

 

 

264,630

 

265,770

 

 

 

 

 

 

 

Fixed assets

 

23,653

 

27,956

 

Intangible assets

 

70,820

 

86,674

 

Goodwill

 

88,504

 

95,064

 

Deferred income taxes

 

1,642

 

1,794

 

Other

 

2,971

 

7,261

 

 

 

$

452,220

 

$

484,519

 

 

 

 

 

 

 

Liabilities and Shareholders’ Equity

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Accounts payable

 

$

81,195

 

$

71,035

 

Accrued liabilities

 

52,190

 

54,419

 

Deferred revenue and credits

 

615

 

750

 

Current portion of long-term obligations

 

1,437

 

3,371

 

Current portion of obligations under capital leases

 

204

 

293

 

 

 

135,641

 

129,868

 

 

 

 

 

 

 

Long-term obligations

 

2,045

 

3,197

 

Obligations under capital leases

 

249

 

245

 

Other long-term liabilities

 

24,491

 

32,663

 

Deferred income taxes

 

1,547

 

1,950

 

 

 

 

 

 

 

Shareholders’ equity:

 

 

 

 

 

Share capital

 

326,084

 

326,043

 

Shares held for restricted share unit (“RSU”) distribution, at cost

 

(4,461

)

(6,442

)

Additional paid-in capital

 

14,182

 

13,133

 

Deficit

 

(34,702

)

(18,626

)

Accumulated other comprehensive loss

 

(14,016

)

(37

)

 

 

287,087

 

314,071

 

Non-controlling interest in Wavecom S.A.

 

1,160

 

2,525

 

Total shareholders’ equity

 

288,247

 

316,596

 

 

 

$

452,220

 

$

484,519

 

 



 

SIERRA WIRELESS, INC.

 

Consolidated Statements of Cash Flows

(Expressed in thousands of U.S. dollars)

(Prepared in accordance with U.S. GAAP)

(Unaudited)

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

Cash flows from operating activities:

 

 

 

 

 

 

 

 

 

Net loss

 

$

(8,637

)

$

(6,493

)

$

(16,246

)

$

(30,445

)

Adjustments to reconcile net loss to net cash provided by (used in) operating activities

 

 

 

 

 

 

 

 

 

Amortization

 

8,763

 

11,620

 

17,484

 

18,366

 

Stock-based compensation

 

1,750

 

2,631

 

3,444

 

4,734

 

Non-cash restructuring and other

 

(901

)

 

(897

)

 

Deferred income taxes

 

(690

)

5

 

(698

)

 

Gain on disposal

 

(11

)

(50

)

(11

)

(49

)

Unrealized foreign exchange (gain) loss on restricted cash

 

 

(66

)

 

15,653

 

Unrealized foreign exchange loss on term loan

 

 

 

 

1,215

 

Changes in operating assets and liabilities

 

 

 

 

 

 

 

 

 

Accounts receivable

 

(5,016

)

15,317

 

(17,343

)

34,175

 

Inventories

 

(7,106

)

12,287

 

(6,511

)

12,804

 

Prepaid expenses and other assets

 

6,169

 

(6,293

)

6,120

 

(17

)

Accounts payable

 

11,338

 

(8,437

)

14,801

 

(17,517

)

Accrued liabilities

 

(4,458

)

(1,863

)

(6,920

)

(10,102

)

Deferred revenue and credits

 

57

 

(204

)

127

 

91

 

Net cash provided by (used in) operating activities

 

1,258

 

18,454

 

(6,650

)

28,908

 

 

 

 

 

 

 

 

 

 

 

Cash flows from investing activities:

 

 

 

 

 

 

 

 

 

Business acquisition, net of cash acquired of $139,785

 

 

(19,575

)

 

(26,493

)

Acquisition of OCEANE convertible bonds

 

 

 

 

(104,767

)

Decrease in restricted cash

 

 

29,543

 

 

175,820

 

Purchase of Wavecom S.A. shares

 

(1,553

)

 

(1,553

)

 

Proceeds on disposal

 

6

 

96

 

6

 

96

 

Purchase of fixed assets

 

(3,803

)

(4,343

)

(5,718

)

(6,819

)

Increase in intangible assets

 

(1,022

)

(453

)

(1,999

)

(1,480

)

Purchase of short-term investments

 

(7,409

)

(2,497

)

(14,499

)

(24,447

)

Proceeds on maturity of short-term investments

 

5,083

 

23,591

 

27,969

 

24,060

 

Net cash provided by (used in) investing activities

 

(8,698

)

26,362

 

4,206

 

35,970

 

 

 

 

 

 

 

 

 

 

 

Cash flows from financing activities:

 

 

 

 

 

 

 

 

 

Proceeds on issuance of term loan

 

 

 

 

102,716

 

Repayment of term loan

 

 

 

 

(103,931

)

Financing costs

 

 

7

 

 

(3,914

)

Issuance of common shares, net of share issue costs

 

7

 

 

28

 

 

Purchase of treasury shares for RSU distribution

 

 

 

 

(2,518

)

Proceeds on exercise of Wavecom options

 

 

 

 

4,148

 

Repayment of long-term liabilities

 

(1,675

)

(34

)

(2,097

)

(566

)

Net cash used in financing activities

 

(1,668

)

(27

)

(2,069

)

(4,065

)

 

 

 

 

 

 

 

 

 

 

Effect of foreign exchange changes on cash and cash equivalents

 

(140

)

(7,847

)

(969

)

(11,088

)

 

 

 

 

 

 

 

 

 

 

Net increase (decrease) in cash and cash equivalents

 

(9,248

)

36,942

 

(5,482

)

49,725

 

Cash and cash equivalents, beginning of period

 

111,257

 

76,041

 

107,491

 

63,258

 

Cash and cash equivalents, end of period

 

$

102,009

 

$

112,983

 

$

102,009

 

$

112,983

 

 



 

SIERRA WIRELESS, INC.

 

Reconciliation of GAAP and Non-GAAP Results

(Unaudited)

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

(in millions of U.S. dollars)

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

Revenue — GAAP and Non-GAAP

 

$

159.1

 

$

135.3

 

$

310.4

 

$

246.8

 

 

 

 

 

 

 

 

 

 

 

Gross margin — GAAP

 

$

46.2

 

$

48.5

 

$

92.5

 

$

80.0

 

Stock-based compensation

 

0.1

 

0.1

 

0.3

 

0.2

 

Gross margin — Non-GAAP

 

$

46.3

 

$

48.6

 

$

92.8

 

$

80.2

 

 

 

 

 

 

 

 

 

 

 

Loss from operations — GAAP

 

$

(3.5

)

$

(16.2

)

$

(8.0

)

$

(26.5

)

Stock-based compensation

 

1.8

 

2.6

 

3.4

 

4.7

 

Transaction costs

 

 

0.8

 

 

7.3

 

Restructuring and other costs

 

1.6

 

8.5

 

3.2

 

9.7

 

Integration costs

 

1.6

 

0.9

 

3.5

 

1.2

 

Acquisition related amortization

 

3.2

 

6.2

 

6.7

 

8.6

 

Earnings from operations — Non-GAAP

 

$

4.7

 

$

2.8

 

$

8.8

 

$

5.0

 

 

 

 

 

 

 

 

 

 

 

Net loss — GAAP

 

$

(8.6

)

$

(5.9

)

$

(16.1

)

$

(29.5

)

Stock-based compensation, transaction, restructuring, integration and acquisition amortization costs, net of tax

 

7.5

 

18.8

 

15.6

 

30.9

 

Foreign exchange (gain) loss

 

5.5

 

(11.0

)

9.1

 

(1.0

)

Interest expense

 

 

 

 

4.3

 

Non-controlling interest

 

 

(0.4

)

(0.1

)

(0.7

)

Net earnings — Non-GAAP

 

$

4.4

 

$

1.5

 

$

8.5

 

$

4.0

 

 

 

 

 

 

 

 

 

 

 

Loss per share — GAAP

 

$

(0.28

)

$

(0.19

)

$

(0.52

)

$

(0.95

)

Diluted earnings per share — Non-GAAP

 

$

0.14

 

$

0.05

 

$

0.27

 

$

0.13

 

 



 

SIERRA WIRELESS, INC.

REVENUE BY BUSINESS LINE

(Expressed as a percentage of revenue)

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

M2M

 

53

%

40

%

55

%

35

%

Mobile computing

 

47

 

60

 

45

 

65

 

 

 

100

%

100

%

100

%

100

%

 

SIERRA WIRELESS, INC.

REVENUE BY PRODUCT LINE

(Expressed as a percentage of revenue)

 

 

 

Three months ended
June 30,

 

Six months ended
June 30,

 

 

 

2010

 

2009

 

2010

 

2009

 

 

 

 

 

 

 

 

 

 

 

AirPrime Intelligent Embedded Modules

 

47

%

33

%

50

%

28

%

AirCard Mobile Broadband Devices

 

43

 

57

 

41

 

62

 

AirLink Intelligent Gateways and Routers

 

8

 

8

 

7

 

8

 

AirVantage Solutions and Other

 

2

 

2

 

2

 

2

 

 

 

100

%

100

%

100

%

100

%