Sierra Wireless Reports Second Quarter 2011 Results
TSX: SW
NASDAQ: SWIR
- 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, Aug. 4, 2011 /PRNewswire/ - 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 Earnings from operations Net earnings Earnings per share |
$150 to 155 million $1.0 to $2.0 million $0.8 to $1.6 million $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.): or Outside Canada and the U.S.: |
1-888-231-8191 1-647-427-7450 |
Passcode: Not required 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.
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 Research and development Administration Restructuring Integration Amortization |
11,326 22,025 8,810 (350) 765 2,794 |
13,183 21,534 8,835 1,581 1,631 2,919 |
|
23,594 45,537 18,195 (25) 1,305 5,642 |
27,339 42,075 18,419 3,192 3,477 6,025 |
|||
| 45,370 | 49,683 | 94,248 | 100,527 | |||||
| Loss from operations Foreign exchange gain (loss) Other expense, net |
(6,270) (221) (13) |
(3,473) (5,460) (103) |
|
(15,684) 201 (53) |
(7,983) (9,118) (233) |
|||
| Loss before income taxes Income tax expense (recovery) |
(6,504) 275 |
(9,036) (399) |
|
(15,536) (924) |
(17,334) (1,088) |
|||
| Net loss Net loss attributable to non-controlling interest |
|
|
|
(6,779) (13) |
(8,637) (82) |
|
(14,612) (57) |
(16,246) (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, 2011 |
|
December 31, 2010 |
|||
| Assets Current assets Cash and cash equivalents Short-term investments Accounts receivable, net of allowance for doubtful accounts of $4,020 (2010 - $4,606) Inventories Deferred income taxes Prepaid expenses and other |
$ 101,685 17,470 97,029 41,984 11,805 23,541 |
|
$ 85,443 26,405 117,397 22,134 9,577 24,542 |
|||
| 293,514 | 285,498 | |||||
| Property, plant and equipment Intangible assets Goodwill Deferred income taxes Other assets |
23,289 66,096 93,137 433 675 |
|
22,635 69,024 90,953 836 622 |
|||
| $ 477,144 | $ 469,568 | |||||
| Liabilities Current liabilities Accounts payable and accrued liabilities Deferred revenue and credits Current portion of obligations under capital leases |
$ 150,045 932 290 |
|
$ 138,940 987 324 |
|||
| Long-term obligations Obligations under capital leases Deferred income taxes |
|
|
|
151,267 27,742 343 740 |
|
140,251 24,724 263 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) 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) Additional paid-in capital Deficit Accumulated other comprehensive income (loss) |
328,361 - (1,886) 17,209 (47,722) 1,090 |
|
327,668 - (3,908) 16,926 (33,167) (5,471) |
|||
| Non-controlling interest (deficit) |
|
|
|
297,052 - |
|
302,048 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) Items not requiring (providing) cash Amortization Stock-based compensation Non-cash restructuring and other Deferred income taxes Loss (gain) on disposal of property, plant and equipment Changes in non-cash working capital Accounts receivable Inventories Prepaid expenses and other Accounts payable and accrued liabilities Deferred revenue and credits |
$ (6,779) 8,456 1,697 - (2,219) 41 9,447 665 3,624 2,302 (50) |
$ (8,637) 8,763 1,750 (901) (690) (11) (5,016) (7,106) 6,169 6,880 57 |
$ (14,612) 17,068 3,329 - (2,219) 33 21,667 1,999 2,503 (11,016) (92) |
$ (16,246) 17,484 3,444 (897) (698) (11) (17,343) (6,511) 6,120 7,881 127 |
|
| Cash flows provided (used) by operating activities | 17,184 | 1,258 | 18,660 | (6,650) | |
| Investing activities Purchase of Wavecom S.A. shares Additions to property, plant and equipment Proceeds from sale of property, plant and equipment Increase in intangible assets Net change in short-term investments |
(1,505) (6,600) 2 (1,216) 7,089 |
(1,553) (3,803) 6 (1,022) (2,326) |
(1,505) (8,562) 15 (1,957) 8,935 |
(1,553) (5,718) 6 (1,999) 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 Repayment of long-term obligations |
259 11 |
7 (1,675) |
465 (627) |
28 (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 Cash and cash equivalents, beginning of period |
15,488 86,197 |
(9,248) 111,257 |
16,242 85,443 |
(5,482) 107,491 |
|
| Cash and cash equivalents, end of period | $ 101,685 | $ 102,009 | $ 101,685 | $ 102,009 | |
| Supplemental disclosures: Net Income taxes paid (received) Net interest paid (received) Non-cash purchase of property, plant and equipment (funded by obligation under capital lease) |
$ (2,212) 54 0 |
$ 478 (9) 151 |
$ (1,911) (53) 0 |
$ 501 238 151 |
|
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 | ||||||||
SOURCE Sierra Wireless, Inc.
WANT YOUR COMPANY'S NEWS FEATURED ON PRNEWSWIRE.COM?
Newsrooms &
Influencers
Digital Media
Outlets
Journalists
Opted In
Share this article