Sierra Wireless Reports First Quarter 2014 Results

  Sierra Wireless Reports First Quarter 2014 Results          Record revenue of $121.2 million; 19.5% year-over-year growth  Business Wire  VANCOUVER, British Columbia -- May 1, 2014  Sierra Wireless, Inc. (NASDAQ:SWIR) (TSX:SW):  First Quarter 2014 highlights from continuing operations    *Record revenue of $121.2 million, an increase of 19.5% compared with Q1     2013   *Adjusted EBITDA of $4.1 million compared with $1.8 million in Q1 2013   *Non-GAAP earnings from operations of $0.7 million compared with a non-GAAP     loss from operations of $1.4 million in Q1 2013  Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results for its first quarter ending March 31, 2014. 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.  “We achieved record revenue in the first quarter and also completed the acquisition of In Motion Technology. I believe we are well positioned for continued revenue growth and improving profitability in the second quarter and beyond,” said Jason Cohenour, President and Chief Executive Officer. “We continue to focus on driving profitable organic growth in M2M devices and cloud services, while pursuing additional strategic acquisitions.”  Revenue for the first quarter of 2014 was $121.2 million, an increase of 19.5% compared to $101.4 million in the first quarter of 2013, and an increase of 2.2% compared to $118.6 million in the fourth quarter of 2013. Revenue from OEM Solutions was $106.2 million in the first quarter of 2014, up 19.0% compared to $89.2 million in the first quarter of 2013. Revenue from Enterprise Solutions was $15.0 million (including $1.3 million contribution from In Motion Technology) in the first quarter of 2014, up 23.3% compared to $12.2 million in the first quarter of 2013.  GAAP    *Gross margin was $38.6 million, or 31.9% of revenue, in the first quarter     of 2014, compared to $33.4 million, or 32.9% of revenue, in the first     quarter of 2013.   *Operating expenses were $45.3 million and loss from operations was $6.7     million in the first quarter of 2014, compared to operating expenses of     $40.3 million and a loss from operations of $6.9 million in the first     quarter of 2013.   *Net loss from continuing operations was $4.0 million, or $0.13 per diluted     share, in the first quarter of 2014, compared to a net loss from     continuing operations of $7.9 million, or $0.26 per diluted share, in the     first quarter of 2013.  NON-GAAP    *Gross margin was 32.0% in the first quarter of 2014, compared to 33.0% in     the first quarter of 2013.   *Operating expenses were $38.0 million and earnings from operations were     $0.7 million in the first quarter of 2014, compared to operating expenses     of $34.9 million and a loss from operations of $1.4 million in the first     quarter of 2013.   *Adjusted earnings before interest, taxes, depreciation and amortization     ("Adjusted EBITDA") were $4.1 million in the first quarter of 2014,     compared to $1.8 million in the first quarter of 2013.   *Net earnings from continuing operations were $0.5 million, or $0.02 per     diluted share, in the first quarter of 2014, compared to a net loss from     continuing operations of $0.7 million, or $0.02 per diluted share, in the     first quarter of 2013.  Non-GAAP results exclude the impact of stock-based compensation expense and related social taxes, acquisition costs, gain on sale of the AirCard business, restructuring costs, integration costs, disposition costs, acquisition amortization, impairment, 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 about actual operating results and assist in comparisons from one period to another.  Adjusted EBITDA as defined equates to earnings (loss) from operations plus stock-based compensation expense and related social taxes, acquisition costs, restructuring costs, integration costs, impairment, and amortization. The reconciliation between our GAAP and non-GAAP results is provided in the accompanying schedules.  Financial Guidance  The Company provides the following guidance for continuing operations for the second quarter of 2014.  In the second quarter of 2014 we expect revenue to increase sequentially and on a year-over-year basis, driven by organic growth as well as the addition of revenue for a full quarter from In Motion Technology. We expect gross margin percentage to improve slightly from the first quarter of 2014 and operating expenses to increase, primarily reflecting the addition of In Motion Technology expenses for a full quarter.                             Consolidated Q2 2014 Guidance                                     Non-GAAP                             Revenue                    $128.0 to $131.0 million Earnings from operations   $2.7 to $3.5 million Net earnings               $1.9 to $2.5 million Earnings per share         $0.06 to $0.08 per share  This non-GAAP guidance for the second quarter of 2014 reflects current business indicators and expectations. 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 above. All figures are approximations based on management's current beliefs and assumptions.  Conference call, webcast and instant replay details  Sierra Wireless President and CEO, Jason Cohenour, and CFO, David McLennan, will host a conference call and webcast with analysts and investors to review the results on Thursday, May 1, 2014, at 5:30 PM Eastern Time (2:30 PM PT). A live slide presentation will be available for viewing during the call from the link provided below.  To participate in this conference call, please dial the following number approximately ten minutes prior to the commencement of the call:    *Toll-free (Canada and US): 1-877-201-0168   *Alternate number: 1-647-788-4901   *Conference ID: 15895706  For those unable to participate in the live call, a replay will be available until June 1, 2014. Dial 1-855-859-2056 or 1-800-585-8367 and enter the Conference ID number above to access the replay.  To access the webcast, please follow the link below:  Sierra Wireless Q1 2014 Conference Call and Webcast  If the above link does not work, please copy and paste the following URL into your browser:  http://www.snwebcastcenter.com/webcast/sierrawireless/2014q1/  The webcast will remain available at the above link for one year following the call.  To access a full copy of our Q1 2014 earnings release, please follow the link below:  http://www.sierrawireless.com/AboutUs/investorinformation.aspx  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 2014 and our fiscal year 2014, 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 cost of goods sold;   *Expected component supply constraints;   *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 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. 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, continuing     uncertain economic conditions, price and product competition, different     product mix, the loss of any of our significant customers, or 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;   *Unanticipated costs associated with litigation or settlements associated     with intellectual property matters; and   *Higher than anticipated costs; disruption of, and demands on, our ongoing     business; and diversion of management's time and attention in connection     with acquisitions or divestitures.  About Sierra Wireless  Sierra Wireless (NASDAQ: SWIR) (TSX: SW) is the global leader in machine-to-machine (M2M) devices and cloud services, delivering intelligent wireless solutions that simplify the connected world. We offer the industry's most comprehensive portfolio of 2G, 3G and 4G embedded modules and gateways, seamlessly integrated with our secure M2M cloud services. Customers worldwide, including OEMs, enterprises, and mobile network operators, trust our innovative solutions to get their connected products and services to market faster. Sierra Wireless has more than 900 employees globally and has R&D centers in North America, Europe and Asia. For more information about Sierra Wireless, visit www.sierrawireless.com.  "AirPrime," "AirLink," and "AirVantage" are 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 AND COMPREHENSIVE LOSS         (In thousands of U.S. dollars, except where otherwise stated)                                  (unaudited)                                                  Three months ended March 31,                                                  2014           2013       Revenue                                           $  121,163       $ 101,401 Cost of goods sold                                82,566          68,023     Gross margin                                      38,597          33,378                                                                                   Expenses Sales and marketing                               12,366           10,356 Research and development                          20,017           18,363 Administration                                    9,333            8,123 Restructuring                                     —                117 Integration                                       20               27 Acquisition                                       950              — Amortization                                      2,583           3,276                                                       45,269          40,262     Loss from operations                              (6,672      )    (6,884    ) Foreign exchange gain (loss)                      392              (2,370    ) Other income (expense)                            26              (132      ) Loss before income taxes                          (6,254      )    (9,386    ) Income tax recovery                               2,249           1,448      Net loss from continuing operations               (4,005      )    (7,938    ) Net earnings from discontinued operations         —               1,863      Net loss                                          $  (4,005   )    $ (6,075  ) Other comprehensive income (loss): Foreign currency translation adjustments, net     20              (904      ) of taxes of $nil Comprehensive loss                                $  (3,985   )    $ (6,979  ) Basic and diluted net earnings (loss) per share attributable to the Company’s common shareholders (in dollars) Continuing operations                             $  (0.13    )    $ (0.26   ) Discontinued operations                           0.00            0.06                                                         $  (0.13    )    $ (0.20   ) Weighted average number of shares outstanding (in thousands) Basic                                             31,235           30,695 Diluted                                           31,235          30,695                                  SIERRA WIRELESS, INC.                          CONSOLIDATED BALANCE SHEETS                         (In thousands of U.S. dollars)                                  (unaudited)                                            March 31, 2014  December 31, 2013 Assets Current assets Cash and cash equivalents                   $  151,339       $   177,416 Short-term investments                      —                2,470 Accounts receivable, net of allowance for doubtful accounts of $2,326                 116,796          112,490 (December 31, 2013 - $2,279) Inventories                                 9,191            8,253 Deferred income taxes                       2,393            2,391 Prepaids and other                          23,965          28,741                                                     303,684          331,761 Property and equipment                      21,076           21,982 Intangible assets                           53,578           43,631 Goodwill                                    112,015          102,718 Deferred income taxes                       4,208            7,176 Other assets                                7,490           4,732                                                     $  502,051      $   512,000                                                                                Liabilities Current liabilities Accounts payable and accrued liabilities    $  111,015       $   124,846 Deferred revenue and credits                4,155           2,481                                                      115,170          127,327 Long-term obligations                       22,890           21,550 Deferred income taxes                       505             127                                                       138,565         149,004        Equity Shareholders’ equity Common stock: no par value; unlimited shares authorized; issued and outstanding 31,431,851 shares (December 31, 2013 -                                  333,945          329,628 31,097,844 shares)   Preferred stock: no par value; unlimited shares authorized; issued and outstanding: nil shares          —                —   Treasury stock: at cost 81,475 shares       (796        )    (5,137        ) (December 31, 2013 – 507,147 shares) Additional paid-in capital                  21,813           25,996 Retained earnings                           15,362           19,367 Accumulated other comprehensive loss        (6,838      )    (6,858        )                                            363,486         362,996                                                   $  502,051      $   512,000                                 SIERRA WIRELESS, INC.                     CONSOLIDATED STATEMENTS OF CASH FLOWS                         (In thousands of U.S. dollars)                                  (unaudited)                                                 Three months ended March 31,                                                 2014            2013        Cash flows provided by (used in): Operating activities Net loss                                        $  (4,005   )     $  (6,075  ) Items not requiring (providing) cash Amortization                                    6,483             7,511 Stock-based compensation                        2,251             1,928 Deferred income taxes                           2,966             (31        ) Gain on disposal of property and equipment      (14         )     — Impairment of assets related to discontinued    —                 1,004 operations Other                                           14                1,750 Taxes paid related to net settlement of equity  (501        )     (250       ) awards Changes in non-cash working capital Accounts receivable                             860               (6,643     ) Inventories                                     139               7,354 Prepaid expenses and other                      5,098             (9,044     ) Accounts payable and accrued liabilities        (17,238     )     (3,079     ) Deferred revenue and credits                    52               28          Cash flows used in operating activities         (3,895      )     (5,547     ) Investing activities Additions to property and equipment             (1,430      )     (2,199     ) Proceeds from sale of property and equipment    37                11 Increase in intangible assets                   (527        )     (659       ) Acquisition of In Motion Technology, net of     (22,578     )     — cash acquired Net change in short-term investments            2,470             — Increase in other assets                        (2,748      )     —           Cash flows used in investing activities         (24,776     )     (2,847     ) Financing activities Issuance of common shares                       2,725             2,104 Repurchase of common shares for cancellation    —                 (1,377     ) Decrease in other long-term obligations         (112        )     (627       ) Cash flows provided by financing activities     2,613            100         Effect of foreign exchange rate changes on cash (19         )     571         and cash equivalents Cash and cash equivalents, decrease in the      (26,077     )     (7,723     ) period Cash and cash equivalents, beginning of period  177,416          63,646      Cash and cash equivalents, end of period        $  151,339       $  55,923                                SIERRA WIRELESS,INC.                  RECONCILIATION OF GAAP AND NON-GAAP RESULTS  (in thousands of U.S. dollars, except where otherwise stated)                 2014        2013                  Q1           Total        Q4          Q3          Q2          Q1                                                                                                 Gross margin      $ 38,597       $ 145,641     $ 38,443     $ 37,346     $ 36,474     $ 33,378 - GAAP Stock-based compensation     160          406          119         117         95          75        and related social taxes Gross margin     $ 38,757     $ 146,047    $ 38,562    $ 37,463    $ 36,569    $ 33,453  - Non-GAAP                                                                                                 Loss from operations -      $ (6,672 )     $ (17,664 )   $ (3,547 )   $ (3,301 )   $ (3,932 )   $ (6,884 ) GAAP Stock-based compensation      3,304          7,990         2,177        2,145        2,013        1,655 and related social taxes Acquisition       950            508           369          139          —            — Restructuring     —              171           14           14           26           117 Integration       20             27            —            —            —            27 Impairment of an asset in       —              280           —            —            —            280 R&D Acquisition related          3,118        13,741       3,580       3,405       3,363       3,393     amortization Earnings (loss) from       $ 720          $ 5,053       $ 2,593      $ 2,402      $ 1,470      $ (1,412 ) operations - Non-GAAP Amortization (excluding acquisition      3,365        13,649       3,566       3,468       3,403       3,212     related amortization) Adjusted         $ 4,085      $ 18,702     $ 6,159     $ 5,870     $ 4,873     $ 1,800   EBITDA                                                                                                 Net earnings (loss) from continuing        $ (4,005 )     $ (15,550 )   $ (1,945 )   $ 1,075      $ (6,742 )   $ (7,938 ) operations - GAAP Stock-based compensation and related social taxes, restructuring and other,        7,389          22,620        6,112        5,760        5,393        5,355 integration, and acquisition related amortization, net of tax Unrealized foreign           (382     )     (3,912    )   (1,970   )   (2,457   )   (1,359   )   1,874 exchange loss (gain) Income tax        (2,519   )    3,784        925         (895     )   3,754       —         adjustments Net earnings (loss) from continuing        $ 483        $ 6,942      $ 3,122     $ 3,483     $ 1,046     $ (709   ) operations - Non-GAAP                                                                                                 Net earnings (loss) from discontinued      $ —            $ 70,588      $ 1,078      $ (505   )   $ 68,152     $ 1,863 operations – GAAP Stock-based compensation and               —              4,014         3            1,402        876          1,733 disposition costs Gain on sale of AirCard        —            (70,182   )   (1,056   )   (49      )   (69,077  )   —         business Net earnings (loss) from discontinued      $ —          $ 4,420      $ 25        $ 848       $ (49    )   $ 3,596   operations - Non-GAAP                                                                                                 Net earnings      $ (4,005 )     $ 55,038      $ (867   )   $ 570        $ 61,410     $ (6,075 ) (loss) - GAAP Net earnings (loss) -          483            11,362        3,147        4,331        997          2,887 Non-GAAP                                                                                                 Diluted earnings (loss) from continuing operations per share GAAP - (in        $ (0.13  )     $ (0.50   )   $ (0.06  )   $ 0.03       $ (0.22  )   $ (0.26  ) dollars) Non-GAAP -        $ 0.02         $ 0.23        $ 0.10       $ 0.11       $ 0.03       $ (0.02  ) (in dollars)                                                                                                 Net earnings (loss) per share - diluted GAAP - (in        $ (0.13  )     $ 1.79        $ (0.03  )   $ 0.02       $ 2.00       $ (0.20  ) dollars) Non-GAAP -       $ 0.02      $ 0.37       $ 0.10      $ 0.14      $ 0.03      $ 0.09    (in dollars)                              SIERRA WIRELESS,INC.                               SEGMENTED RESULTS  (In thousands of U.S. dollars, except where otherwise stated)              2014         2013               Q1             Total        Q4           Q3          Q2          Q1 OEM Solutions Revenue        $ 106,162       $ 382,016     $ 101,858     $ 95,850     $ 95,076     $ 89,232 Cost of        75,634         266,867      72,336       66,395      65,514      62,622 goods sold Gross          $ 30,528       $ 115,149    $ 29,522     $ 29,455    $ 29,562    $ 26,610 margin Gross          28.8%           30.1%         29.0%         30.7%        31.1%        29.8% margin %                                                                                       Enterprise Solutions Revenue        $ 15,001        $ 59,844      $ 16,750      $ 16,412     $ 14,513     $ 12,169 Cost of        6,932          29,352       7,829        8,521       7,601       5,401 goods sold Gross          $ 8,069        $ 30,492     $ 8,921      $ 7,891     $ 6,912     $ 6,768 margin Gross          53.8%           51.0%         53.3%         48.1%        47.6%        55.6% margin %  Contact:  Sierra Wireless, Inc. Media Contact: Sharlene Myers, +1 604-232-1445 Manager, Global Public Relations smyers@sierrawireless.com or Investor Contact: David Climie, +1 604-231-1137 Senior Director, Investor Relations dclimie@sierrawireless.com or David G. McLennan, +1 604-231-1181 Chief Financial Officer investor@sierrawireless.com  
Press spacebar to pause and continue. Press esc to stop.