Form 20-F | o | 40-F | ý |
Yes: | o | No: | ý |
Sierra Wireless, Inc. | ||
By: | /s/ David G. McLennan | |
David G. McLennan, Chief Financial Officer and Secretary | ||
Date: August 2, 2013 |
Media Contact: | Investor Contact: |
Sharlene Myers | David G. McLennan |
Manager, Global Public Relations | Chief Financial Officer |
+1 (604) 232-1445 | +1 (604) 231-1181 |
smyers@sierrawireless.com | investor@sierrawireless.com |
• | Record quarterly revenue of $109.6 million, up 14.9% year-over-year |
• | Adjusted EBITDA of $4.9 million, compared to $2.4 million in Q2 2012 |
• | Non-GAAP earnings from operations of $1.5 million, compared to a loss of $0.4 million in Q2 2012 |
• | Non-GAAP diluted earnings per share of $0.03, compared to a loss per share of $0.11 in Q2 2012 |
Q3 2013 Guidance | Consolidated Non-GAAP |
Revenue | $111.0 to $115.0 million |
Earnings from operations | $2.2 to $3.3 million |
Net earnings | $1.5 to $2.3 million |
Earnings per share | $0.05 to $0.07 per share |
• | Toll-free (Canada and US): 1-877-201-0168 |
• | Alternate number: 1-647-788-4901 |
• | Conference ID: 71912330 |
• | 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 cost of goods sold; |
▪ | Expected component supply situation; |
▪ | 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 relative mix of earnings amongst the tax jurisdictions in which we operate, along with 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 |
▪ | We may experience higher than anticipated costs; disruption of, and demands on, our ongoing business; diversion of management's time and attention; adverse effects on existing business relationships with suppliers and customers and employee issues in connection with the divestiture of the AirCard assets and operations; |
▪ | 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, competition, different product mix, the loss of any of our significant customers; |
▪ | 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 claims and litigation that have 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. |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Revenue | $ | 109,589 | $ | 95,398 | $ | 210,990 | $ | 187,733 | |||||||
Cost of goods sold | 73,115 | 65,317 | 141,138 | 129,778 | |||||||||||
Gross margin | 36,474 | 30,081 | 69,852 | 57,955 | |||||||||||
Expenses | |||||||||||||||
Sales and marketing | 10,681 | 8,998 | 21,037 | 18,319 | |||||||||||
Research and development | 17,869 | 14,674 | 36,232 | 29,605 | |||||||||||
Administration | 8,903 | 8,562 | 17,026 | 17,021 | |||||||||||
Restructuring | 26 | 1,531 | 143 | 1,711 | |||||||||||
Integration | — | — | 27 | — | |||||||||||
Acquisition | — | 599 | — | 599 | |||||||||||
Amortization | 2,927 | 2,275 | 6,203 | 4,662 | |||||||||||
40,406 | 36,639 | 80,668 | 71,917 | ||||||||||||
Loss from operations | (3,932 | ) | (6,558 | ) | (10,816 | ) | (13,962 | ) | |||||||
Foreign exchange gain (loss) | 1,709 | 336 | (661 | ) | 542 | ||||||||||
Other income (expense) | 34 | 10 | (98 | ) | (161 | ) | |||||||||
Loss before income taxes | (2,189 | ) | (6,212 | ) | (11,575 | ) | (13,581 | ) | |||||||
Income tax expense | 4,553 | 2,656 | 3,105 | 2,532 | |||||||||||
Net loss from continuing operations | (6,742 | ) | (8,868 | ) | (14,680 | ) | (16,113 | ) | |||||||
Net earnings from discontinued operations | 68,152 | 12,449 | 70,015 | 20,039 | |||||||||||
Net earnings | $ | 61,410 | $ | 3,581 | $ | 55,335 | $ | 3,926 | |||||||
Other comprehensive income (loss): | |||||||||||||||
Foreign currency translation adjustments, net of taxes of $nil | 636 | (3,343 | ) | (268 | ) | (1,341 | ) | ||||||||
Comprehensive income | $ | 62,046 | $ | 238 | $ | 55,067 | $ | 2,585 | |||||||
Basic and diluted net earnings (loss) per share attributable to the Company’s common shareholders (in dollars) | |||||||||||||||
Continuing operations | $ | (0.22 | ) | $ | (0.29 | ) | $ | (0.48 | ) | $ | (0.52 | ) | |||
Discontinued operations | 2.22 | 0.41 | 2.28 | 0.65 | |||||||||||
$ | 2.00 | $ | 0.12 | $ | 2.28 | $ | 0.13 | ||||||||
Weighted average number of shares outstanding (in thousands) | |||||||||||||||
Basic | 30,768 | 30,817 | 30,732 | 30,996 | |||||||||||
Diluted | 30,768 | 30,817 | 30,732 | 30,996 |
June 30, 2013 | December 31, 2012 | ||||||
Assets | |||||||
Current assets | |||||||
Cash and cash equivalents | $ | 166,573 | $ | 63,646 | |||
Short-term investments | 10,000 | — | |||||
Accounts receivable, net of allowance for doubtful accounts of $2,038(December 31, 2012 - $2,435) | 108,886 | 108,624 | |||||
Inventories | 6,170 | 12,675 | |||||
Deferred income taxes | 3,625 | 22,199 | |||||
Prepaids and other | 34,423 | 24,252 | |||||
Assets held for sale | — | 54,340 | |||||
329,677 | 285,736 | ||||||
Property and equipment | 20,936 | 20,039 | |||||
Intangible assets | 47,607 | 56,357 | |||||
Goodwill | 97,447 | 97,961 | |||||
Deferred income taxes | 4,490 | 3,880 | |||||
Other assets | 784 | 790 | |||||
$ | 500,941 | $ | 464,763 | ||||
Liabilities | |||||||
Current liabilities | |||||||
Accounts payable and accrued liabilities | $ | 117,384 | $ | 128,216 | |||
Deferred revenue and credits | 2,303 | 1,312 | |||||
Liabilities held for sale | — | 10,353 | |||||
119,687 | 139,881 | ||||||
Long-term obligations | 25,481 | 26,526 | |||||
Deferred income taxes | 300 | 300 | |||||
145,468 | 166,707 | ||||||
Equity | |||||||
Shareholders’ equity | |||||||
Common stock: no par value; unlimited shares authorized; issued and outstanding 30,618,427 shares (December 31, 2012 - 30,592,423 shares) | 323,211 | 322,770 | |||||
Preferred stock: no par value; unlimited shares authorized; issued and outstanding: nil shares | — | — | |||||
Treasury stock: at cost 270,457 shares (December 31, 2012 – 716,313 shares) | (1,983 | ) | (5,172 | ) | |||
Additional paid-in capital | 22,311 | 23,203 | |||||
Retained earnings (deficit) | 19,664 | (35,283 | ) | ||||
Accumulated other comprehensive loss | (7,730 | ) | (7,462 | ) | |||
355,473 | 298,056 | ||||||
$ | 500,941 | $ | 464,763 |
Common Stock | Treasury Shares | ||||||||||||||||||||||||||||
# of shares | $ | # of shares | $ | Additional paid-in capital | Retained earnings (deficit) | Accumulated other comprehensive income (loss) | Total | ||||||||||||||||||||||
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 | (800,000 | ) | (6,312 | ) | — | — | — | — | — | (6,312 | ) | ||||||||||||||||||
Stock option tax benefit for U.S. employees | — | — | — | — | 71 | — | — | 71 | |||||||||||||||||||||
Stock option exercises | 85,051 | 637 | — | — | (201 | ) | — | — | 436 | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | 6,713 | — | — | 6,713 | |||||||||||||||||||||
Purchase of treasury shares for RSU distribution | — | — | 336,638 | (2,489 | ) | — | — | — | (2,489 | ) | |||||||||||||||||||
Distribution of vested RSUs | 680 | 5 | (497,884 | ) | 3,458 | (3,467 | ) | — | — | (4 | ) | ||||||||||||||||||
Net earnings | — | — | — | — | — | 27,199 | — | 27,199 | |||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | — | — | — | 538 | 538 | |||||||||||||||||||||
Balance as at December 31, 2012 | 30,592,423 | $ | 322,770 | 716,313 | $ | (5,172 | ) | $ | 23,203 | $ | (35,283 | ) | $ | (7,462 | ) | $ | 298,056 | ||||||||||||
Common share cancellation | (510,439 | ) | (5,384 | ) | — | — | — | (388 | ) | — | (5,772 | ) | |||||||||||||||||
Stock option exercises | 494,054 | 5,495 | — | — | (1,734 | ) | — | — | 3,761 | ||||||||||||||||||||
Stock-based compensation | — | — | — | — | 4,689 | — | — | 4,689 | |||||||||||||||||||||
Distribution of vested RSUs | 42,389 | 330 | (445,856 | ) | 3,189 | (3,847 | ) | — | — | (328 | ) | ||||||||||||||||||
Net earnings | — | — | — | — | — | 55,335 | — | 55,335 | |||||||||||||||||||||
Foreign currency translation adjustments, net of tax | — | — | — | — | — | — | (268 | ) | (268 | ) | |||||||||||||||||||
Balance as at June 30, 2013 | 30,618,427 | $ | 323,211 | 270,457 | $ | (1,983 | ) | $ | 22,311 | $ | 19,664 | $ | (7,730 | ) | $ | 355,473 |
Three months ended June 30, | Six months ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Cash flows provided (used) by: | |||||||||||||||
Operating activities | |||||||||||||||
Net earnings | $ | 61,410 | $ | 3,581 | $ | 55,335 | $ | 3,926 | |||||||
Items not requiring (providing) cash | |||||||||||||||
Amortization | 6,766 | 6,731 | 14,277 | 13,713 | |||||||||||
Stock-based compensation | 2,761 | 1,636 | 4,689 | 3,315 | |||||||||||
Gain on sale of AirCard business | (94,095 | ) | — | (94,095 | ) | — | |||||||||
Deferred income taxes | 17,995 | (843 | ) | 17,964 | (1,873 | ) | |||||||||
Loss (gain) on disposal of property, equipment, and intangibles | (20 | ) | (33 | ) | (20 | ) | 126 | ||||||||
Impairment of assets related to discontinued operations | 8 | — | 1,012 | — | |||||||||||
Other | (1,237 | ) | — | 513 | — | ||||||||||
Taxes paid related to net settlement of equity awards | (78 | ) | — | (328 | ) | — | |||||||||
Changes in non-cash working capital | |||||||||||||||
Accounts receivable | 19,628 | (5,027 | ) | 12,985 | (4,414 | ) | |||||||||
Inventories | 5,199 | (2,307 | ) | 12,553 | 917 | ||||||||||
Prepaid expenses and other | (59 | ) | (3,677 | ) | (9,103 | ) | (2,961 | ) | |||||||
Accounts payable and accrued liabilities | (11,176 | ) | 28,557 | (14,255 | ) | 21,472 | |||||||||
Deferred revenue and credits | 969 | (178 | ) | 997 | (658 | ) | |||||||||
Cash flows provided by operating activities | 8,071 | 28,440 | 2,524 | 33,563 | |||||||||||
Investing activities | |||||||||||||||
Additions to property and equipment | (3,696 | ) | (4,957 | ) | (5,895 | ) | (8,560 | ) | |||||||
Proceeds from sale of property, equipment, and intangibles | 21 | 3 | 32 | 64 | |||||||||||
Increase in intangible assets | (455 | ) | (567 | ) | (1,114 | ) | (1,338 | ) | |||||||
Net proceeds from sale of AirCard business | 119,995 | — | 119,995 | — | |||||||||||
Net change in short-term investments | (10,000 | ) | (2,151 | ) | (10,000 | ) | 7,194 | ||||||||
Cash flows provided (used) by investing activities | 105,865 | (7,672 | ) | 103,018 | (2,640 | ) | |||||||||
Financing activities | |||||||||||||||
Issuance of common shares | 1,657 | 255 | 3,761 | 269 | |||||||||||
Repurchase of common shares for cancellation | (4,395 | ) | (3,275 | ) | (5,772 | ) | (6,312 | ) | |||||||
Purchase of treasury shares for RSU distribution | — | (1,502 | ) | — | (2,489 | ) | |||||||||
Decrease in other long-term obligations | (92 | ) | (13 | ) | (719 | ) | (655 | ) | |||||||
Cash flows used by financing activities | (2,830 | ) | (4,535 | ) | (2,730 | ) | (9,187 | ) | |||||||
Effect of foreign exchange rate changes on cash and cash equivalents | (456 | ) | 153 | 115 | 48 | ||||||||||
Cash and cash equivalents, increase in the period | 110,650 | 16,386 | 102,927 | 21,784 | |||||||||||
Cash and cash equivalents, beginning of period | 55,923 | 106,773 | 63,646 | 101,375 | |||||||||||
Cash and cash equivalents, end of period | $ | 166,573 | $ | 123,159 | $ | 166,573 | $ | 123,159 |
(in thousands of U.S. dollars, except where otherwise stated) | |||||||||||||||||||||||||
2013 | 2012 (1) | ||||||||||||||||||||||||
Q2 | Q1 | Total | Q4 | Q3 | Q2 | Q1 | |||||||||||||||||||
Gross margin - GAAP | $ | 36,474 | $ | 33,378 | $ | 125,274 | $ | 36,233 | $ | 31,086 | $ | 30,081 | $ | 27,874 | |||||||||||
Stock-based compensation | 95 | 75 | 304 | 61 | 82 | 78 | 83 | ||||||||||||||||||
Gross margin - Non-GAAP | $ | 36,569 | $ | 33,453 | $ | 125,578 | $ | 36,294 | $ | 31,168 | $ | 30,159 | $ | 27,957 | |||||||||||
Loss from operations - GAAP | $ | (3,932 | ) | $ | (6,884 | ) | $ | (22,206 | ) | $ | (1,516 | ) | $ | (6,728 | ) | $ | (6,558 | ) | $ | (7,404 | ) | ||||
Stock-based compensation | 2,013 | 1,655 | 5,781 | 1,470 | 1,462 | 1,403 | 1,446 | ||||||||||||||||||
Acquisition | — | — | 3,182 | 387 | 2,196 | 599 | — | ||||||||||||||||||
Restructuring | 26 | 117 | 2,251 | 42 | 498 | 1,531 | 180 | ||||||||||||||||||
Integration | — | 27 | — | — | — | — | — | ||||||||||||||||||
Impairment of an asset in R&D | — | 280 | — | — | — | — | — | ||||||||||||||||||
Acquisition related amortization | 3,363 | 3,393 | 11,890 | 3,338 | 2,906 | 2,665 | 2,981 | ||||||||||||||||||
Earnings (loss) from operations - Non-GAAP | $ | 1,470 | $ | (1,412 | ) | $ | 898 | $ | 3,721 | $ | 334 | $ | (360 | ) | $ | (2,797 | ) | ||||||||
Amortization (excluding acquisition related amortization) | 3,403 | 3,212 | 11,747 | 3,293 | 2,904 | 2,717 | 2,833 | ||||||||||||||||||
Adjusted EBITDA | $ | 4,873 | $ | 1,800 | $ | 12,645 | $ | 7,014 | $ | 3,238 | $ | 2,357 | $ | 36 | |||||||||||
Net earnings (loss) from continuing operations - GAAP | $ | (6,742 | ) | $ | (7,938 | ) | $ | (4,202 | ) | $ | 15,523 | $ | (3,612 | ) | $ | (8,868 | ) | $ | (7,245 | ) | |||||
Stock-based compensation, restructuring and other, integration, and acquisition related amortization, net of tax | 5,393 | 5,355 | 22,241 | 5,162 | 6,885 | 5,658 | 4,536 | ||||||||||||||||||
Unrealized foreign exchange loss (gain) | (1,359 | ) | 1,874 | (3,139 | ) | (1,655 | ) | (1,218 | ) | (165 | ) | (101 | ) | ||||||||||||
Income tax adjustments | 3,754 | — | (15,344 | ) | (14,540 | ) | (804 | ) | — | — | |||||||||||||||
Net earnings (loss) from continuing operations - Non-GAAP | $ | 1,046 | $ | (709 | ) | $ | (444 | ) | $ | 4,490 | $ | 1,251 | $ | (3,375 | ) | $ | (2,810 | ) | |||||||
Net earnings from discontinued operations - GAAP | $ | 68,152 | $ | 1,863 | $ | 31,401 | $ | 4,083 | $ | 7,279 | $ | 12,449 | $ | 7,590 | |||||||||||
Stock-based compensation and disposition costs | 876 | 1,733 | 2,395 | 1,696 | 233 | 233 | 233 | ||||||||||||||||||
Gain on sale of AirCard business | (69,077 | ) | — | — | — | — | — | — | |||||||||||||||||
Net earnings (loss) from discontinued operations - Non-GAAP | $ | (49 | ) | $ | 3,596 | $ | 33,796 | $ | 5,779 | $ | 7,512 | $ | 12,682 | $ | 7,823 | ||||||||||
Net earnings (loss) - GAAP | $ | 61,410 | $ | (6,075 | ) | $ | 27,199 | $ | 19,606 | $ | 3,667 | $ | 3,581 | $ | 345 | ||||||||||
Net earnings (loss) - Non-GAAP | 997 | 2,887 | 33,352 | 10,269 | 8,763 | 9,307 | 5,013 | ||||||||||||||||||
Diluted earnings (loss) from continuing operations per share | |||||||||||||||||||||||||
GAAP - (in dollars) | $ | (0.22 | ) | $ | (0.26 | ) | $ | (0.14 | ) | $ | 0.50 | $ | (0.12 | ) | $ | (0.29 | ) | $ | (0.23 | ) | |||||
Non-GAAP - (in dollars) | $ | 0.03 | $ | (0.02 | ) | $ | (0.01 | ) | $ | 0.15 | $ | 0.04 | $ | (0.11 | ) | $ | (0.09 | ) | |||||||
Net earnings (loss) per share - diluted | |||||||||||||||||||||||||
GAAP - (in dollars) | $ | 2.00 | $ | (0.20 | ) | $ | 0.88 | $ | 0.64 | $ | 0.12 | $ | 0.12 | $ | 0.01 | ||||||||||
Non-GAAP - (in dollars) | $ | 0.03 | $ | 0.09 | $ | 1.08 | $ | 0.33 | $ | 0.29 | $ | 0.30 | $ | 0.16 |
Three months ended June 30, | Six months ended June 30, | |||||||||||||||||
2013 | 2012(1) | 2013 | 2012(1) | |||||||||||||||
OEM Solutions | $ | 95,076 | $ | 83,299 | $ | 184,308 | $ | 163,399 | ||||||||||
Enterprise Solutions | 14,513 | 12,099 | 26,682 | 24,334 | ||||||||||||||
$ | 109,589 | $ | 95,398 | $ | 210,990 | $ | 187,733 | |||||||||||