SWIR
$14.32
Sierra Wireless IN
($.01)
(.07%)
Earnings Details
Quarter December 2020
Tuesday, February 23, 2021 4:30:00 PM
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Summary

Sierra Wireless Guides In-line

Sierra Wireless IN (SWIR) reported a Quarter December 2020 loss of $0.33 per share on revenue of $120.5 million. The consensus estimate was a loss of $0.40 per share on revenue of $116.3 million. Revenue fell 30.9% compared to the same quarter a year ago.

The company said it expects first quarter revenue to be in-line with the current consensus estimate of $109.9 million for the quarter ending March 31, 2021.

Sierra Wireless Inc provides cellular wireless solutions to machine-to-machine and connected device markets. Its products, services and solutions connect people, their mobile computers and machines to wireless voice and data networks around the world.

Results
Reported Earnings
($0.33)
Earnings Whisper
-
Consensus Estimate
($0.40)
Reported Revenue
$120.5 Mil
Revenue Estimate
$116.3 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Sierra Wireless Reports Fourth Quarter and Full Year 2020 Results

Recurring and Other Services revenue represented 27% of total revenue in Q4 2020

VANCOUVER, British Columbia--(BUSINESS WIRE)--Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) (the "Company", "Sierra Wireless", "we", "us", or "our") reported results for its fourth quarter and fiscal year ended December 31, 2020. 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.

“Our revenue continued to improve in the Fourth Quarter of 2020 with 6.3% sequential revenue growth to $120.5 million and overall gross margins improving to 36%. Our business transformation is proceeding well as shown by our third consecutive quarter of sequential revenue growth led by our Q4 Recurring and other services revenue of $32.6 million which increased 9.4% sequentially and 25.1% year on year. We are winning in the market with our Solutions offering and our Recurring and other services revenue is now at 27.1% of total revenue,” said Kent Thexton, President and CEO. “We completed the divestiture of our Automotive product line in November and ended the year with a strong balance sheet with $171.4 million in cash and no debt.”

Revenue, excluding the Automotive Business, decreased slightly at 3.7% to $120.5 million in the fourth quarter of 2020 as compared to $125.1 million in the fourth quarter of 2019.

Quarterly revenue for our two business segments were as follows:

(i)

Revenue from IoT Solutions decreased 3.6% to $87.6 million as compared to $90.9 million in the fourth quarter of 2019. The decrease was primarily due to lower hardware sales in Enterprise gateway products and Integrated IoT Solutions modules. Within the IoT Solutions segment, recurring and other services revenue was up 25.1% in the fourth quarter of 2020 compared to the same period in 2019 due to growth in connected devices and the addition of the M2M Group in Australia.

(ii)

Revenue from Embedded Broadband decreased 3.8% to $32.9 million as compared to $34.2 million in the fourth quarter of 2019. The decrease was primarily a reflection of lower mobile computing and networking sales due to previously communicated design losses of two higher-margin computing customers. The fourth quarter of 2020 is the last period impacted by these design losses.

Product revenue was $87.9 million in the fourth quarter of 2020, representing 72.9% of consolidated revenue and Recurring and other services revenue was $32.6 million, representing 27.1% of consolidated revenue.

In accordance with U.S. GAAP, the results of operations of the Automotive Business are reported as discontinued operations in our consolidation statements of operations and comprehensive loss for the years ended December 31, 2020 and 2019.

Non-GAAP financial measures referred to in this news release are labeled as "non-GAAP measure" or designated as such with an asterisk (*). Please see "Non-GAAP Financial Measures" for explanations of why the Company uses these non-GAAP measures and "Reconciliation of GAAP and Non-GAAP Results by Quarter" for reconciliation to the most comparable GAAP financial measures.

Fourth Quarter 2020 Financial Highlights

  • Gross margin was 36.0% in the fourth quarter of 2020 as compared to 35.8% in the fourth quarter of 2019. The modest increase was driven by changes in product and customer mix in our Embedded Broadband and IoT Solutions segment.
    • IoT Solutions gross margin was 38.5% in the fourth quarter of 2020 as compared to 37.0% in the fourth quarter of 2019 due to higher volume in connected devices.
    • Embedded Broadband margin was 29.3% in the fourth quarter of 2020 as compared to 32.5% in the fourth quarter of 2019 due to lower volume in higher-margin mobile computing and networking sales from design losses of two higher-margin mobile computing customers discussed above.
  • Operating expenses, excluding the Automotive Business, were $65.7 million in the fourth quarter of 2020 as compared to $61.9 million in the fourth quarter of 2019. In the fourth quarter of 2020, we recorded COVID-19 related government grants of $1.0 million.
  • Net loss from continuing operations was $11.2 million in the fourth quarter of 2020 as compared to $15.3 million in the fourth quarter of 2019 due higher tax recovery and foreign exchange gain, partially offset by higher restructuring and administration expenses.
  • Adjusted net loss from continuing operations* was $7.0 million, or loss of $0.19 per share, which was in-line with the same comparative period in 2019.
  • Adjusted EBITDA* was a loss of $2.9 million in the fourth quarter of 2020 as compared to a loss of $3.2 million in the fourth quarter of 2019.
  • During the fourth quarter of 2020, we repaid short-term borrowings and long-term debt for a total of $34.4 million.

Cash and cash equivalents and restricted cash at the end of the fourth quarter of 2020 were $171.4 million, an increase of $99.4 million compared to $72.0 million (including cash held for sale) at the end of the third quarter of 2020. The increase in cash was mainly due to net proceeds from the sale of our Automotive Business, partially offset by repayment of short-term borrowings and long-term debt, acquisition of M2M New Zealand, purchase of treasury shares for RSU distribution and capital expenditures.

Full Year 2020 Financial Highlights

  • Total revenue decreased 18.0% to $448.6 million as compared to 2019. The lower revenue in 2020 is primarily attributable to the impact of the Covid-19 pandemic, lower mobile computing module sales from design losses discussed above, and tight component supply primarily in the late third and fourth quarter of 2020.
  • Gross margin was 35.4% as compared to 36.1% in 2019. In 2020, gross margin was impacted by unfavorable shift in product and customer mix. IoT Solution gross margin percentage was consistent year-over-year and Embedded Broadband gross margin was 30.4% as compared to 33.8% in 2019 due to lower sales of higher-margin percentage mobile computing and networking modules.
  • Operating expenses were $246.8 million as compared to $261.7 million in 2019. In 2020, we recorded government grants under the Canada Emergency Wage Subsidy of $6.3 million and other COVID-19 related subsidies of $0.9 million, totaling $7.2 million. Total number of employees decreased by 19.2% from 1,300 to 1,050 in 2020. We are on track to meeting our operating expense reduction targets.
  • Net loss from continuing operations was $70.2 million which was mostly inline with 2019.
  • Adjusted net loss from continuing operations* was $51.0 million, or loss of $1.40 per share as compared to $6.0 million, or loss of $0.17 per share in 2019. The decrease was primarily attributable to the impact of COVID-19 pandemic and lower mobile computing module sales from design losses discussed above, and tight component supply primarily in the late third and fourth quarter of 2020.
  • Adjusted EBITDA* was a loss of $34.9 million as compared to income of $9.8 million in 2019.

Change in Reportable Segments

During the first quarter of 2021, we revised our reportable segments to better reflect the way the Company manages its business. We reorganized our reportable segments in order to better align our various businesses for future growth and streamline operations. We will classify our operations into the following two reportable segments: IoT Solutions and Enterprise Solutions. Our new IoT Solutions segment will be comprised of our portfolio of cellular modules from LPWA through to high-speed embedded 5G broadband modules with IoT connectivity, solutions and software. The Enterprise Solutions segment will be comprised of our gateways, asset tracking and monitoring business and our Enterprise connectivity, solutions and software. See "Supplemental Financial Information" on page 13 for more information.

Divestiture of Automotive Business

On July 23, 2020, we entered into a definitive agreement with Rolling Wireless (H.K.) Limited ("Rolling Wireless"), a consortium led by Fibocom Wireless Inc. of Shenzhen to divest our Shenzhen, China-based automotive embedded module product line ("Automotive Business"). On November 18, 2020, we completed this transaction for total gross proceeds of $165.0 million in cash, subject to working capital adjustments, including $10.0 million of proceeds held in escrow that we recorded in restricted cash and was released on January 8, 2021.

Financial Guidance

The impact of the COVID-19 pandemic on our global business continues to remain uncertain. While we continue to evaluate the effects of COVID-19 on our business, the overall severity and duration of adverse impacts related to COVID-19 on our business, financial condition, cash flows and/or results of operations for the first quarter 2021 and beyond cannot be reasonably estimated at this time. The ultimate size of the impact of the COVID-19 pandemic on our business will depend on future developments which cannot be currently predicted.

Regarding the First Quarter of 2021, we expect our revenue to be in-line with Street consensus of $109.9 million. There is strong demand for our products and services in the First Quarter and we have secured hardware orders and recurring revenue that is approximately 15% above Street Consensus for Q1’21. However, we are facing a very tight global supply chain environment that is constraining our ability to source components and fully deliver to this level of demand.

This non-GAAP guidance constitutes "forward-looking statements" within the meaning of applicable securities laws and reflects current business indicators and expectations. These statements are based on management's current beliefs and assumptions, which could prove to be significantly incorrect. Forward-looking statements, particularly those that relate to longer periods of time, are subject to substantial known and unknown risks and uncertainties that could cause actual events or results to differ significantly from those expressed or implied by our forward-looking statements, including those described in our regulatory filings. See "Cautionary Note Regarding Forward-Looking Statements" below.

Non-GAAP Financial Measures

Our consolidated financial statements are prepared in accordance with U.S. GAAP on a basis consistent for all periods presented. In addition to results reported in accordance with U.S. GAAP, we use non-GAAP financial measures as supplemental indicators of our operating performance. The term “non-GAAP financial measure” is used to refer to a numerical measure of a company’s historical or future financial performance, financial position or cash flows that: (i) excludes amounts, or is subject to adjustments that have the effect of excluding amounts, that are included in the most directly comparable measure calculated and presented in accordance with U.S. GAAP in a company’s statement of earnings, balance sheet or statement of cash flows; or (ii) includes amounts, or is subject to adjustments that have the effect of including amounts, that are excluded from the most directly comparable measure so calculated and presented.

Our non-GAAP financial measures included in this press release are adjusted net earnings (loss) from continuing operations*, adjusted basic and diluted net earnings (loss) per share from continuing operations*and adjusted EBITDA* (earnings before interest, taxes, depreciation and amortization).

Adjusted net earnings (loss) from continuing operations* excludes the impact of stock-based compensation expense and related social taxes, phantom RSU expense which represents expenses related to compensation units settled in cash based on the stock price at vesting, restructuring costs, acquisition-related and integration costs, government grants related to COVID-19 relief, impairment, certain other non-recurring costs or recoveries, acquisition-related amortization, the impact of foreign exchange gains or losses on translation of certain balance sheet accounts, foreign exchange gains or losses on forward contracts, and certain tax adjustments.

Adjusted EBITDA* is defined as net earnings (loss) from continuing operations plus stock-based compensation expense and related social taxes, phantom RSU expense which represents expenses related to compensation units settled in cash based on the stock price at vesting, restructuring costs, acquisition-related and integration costs, government grants related to COVID-19 relief, impairment, certain other non-recurring costs or recoveries, amortization, interest and other income (expense), foreign exchange gains or losses on translation of certain balance sheet accounts, unrealized foreign exchange gains or losses on forward contracts, and income tax expense (recovery). Adjusted EBITDA* is a metric used by investors and analysts for valuation purposes and is an important indicator of our operating performance and our ability to generate liquidity through operating cash flow that will fund future working capital needs and fund future capital expenditures.

We use the above-noted non-GAAP financial measures for planning purposes and to allow us to assess the performance of our business before including the impacts of the items noted above as they affect the comparability of our financial results. These non-GAAP measures are reviewed regularly by management and the Board of Directors as part of the ongoing internal assessment of our operating performance.

We disclose these non-GAAP financial measures as we believe they provide useful information to investors and analysts to assist them in their evaluation of our operating results and to assist in comparisons from one period to another. Readers are cautioned that non-GAAP financial measures do not have any standardized meaning prescribed by U.S. GAAP and therefore may not be comparable to similar measures presented by other companies.

Conference call and webcast details

Sierra Wireless is hosting a conference call to discuss its financial results for the year ended December 31, 2020 on Tuesday February 23, 2021, at 5:30 PM Eastern time (2:30 PM Pacific time).

To participate, dial the following number approximately ten minutes prior to the start of the call:

  • Toll-free (Canada and US): 1-877-201-0168
  • Alternate number: 1-647-788-4901
  • Conference ID: 6019337

Conference call and webcast details are available at the following link:
Sierra Wireless Q4 2020 Conference Call and Webcast

If the above link does not work, copy and paste the following URL into your browser:
https://onlinexperiences.com/Launch/QReg/ShowUUID=082F0C0B-5156-4D82-BA21-02C5588ABAE8

The webcast will remain available at the above link for one year following the call.

Cautionary Note Regarding Forward-Looking Statements

This press release contains certain statements and information that 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 (collectively, “forward-looking statements”) and may include statements and information relating to our financial guidance for our first quarter and fiscal year 2021; the impact of COVID-19 on customer demand, our supply chain, manufacturing capacity, our ability to meet customer demand and our financial results; expectations regarding post-COVID-19 recovery; our business outlook for the short and long term; statements regarding our strategy, plans, goals, objectives, expectations and future operating performance; the Company's liquidity and capital resources; the Company's financial and operating objectives and strategies to achieve them; general economic conditions; estimates of our expenses, future revenues, financial results and capital requirements; non-GAAP earnings per share and capital requirements; our expectations regarding the legal proceedings we are involved in; statements with respect to the Company's estimated working capital; expectations with respect to the adoption of Internet of Things ("IoT") solutions; expectations regarding trends and growth in the IoT market and wireless module market; expectations regarding product and price competition from other wireless device manufacturers and solution providers; our ability to implement effective control procedures; expectations regarding the launch of fifth generation cellular embedded modules and gateways and corporate update. In particular, this press release describes our revenue targets, which are forward-looking statements and are subject to the assumptions, risks and uncertainties described below. Forward-looking statements are provided to help you understand our views of our short and long term plans, expectations and prospects. We caution you that forward-looking statements may not be appropriate for other purposes.

Forward-looking statements:

  • Typically include words and phrases about the future such as "outlook", "will", "may", “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible”, or variations thereof.
  • 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, but not limited to, those listed below, which could prove to be significantly incorrect:
    • the scope and duration of the COVID-19 pandemic and its impact on our business;
    • our ability to return to normal operations after the COVID-19 pandemic has subsided;
    • expected component supply constraints and manufacturing capacity;
    • customer demand and our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times;
    • our ability to realize the anticipated benefits of the recent divestiture of the automotive product line (the "Sale Transaction");
    • our ability to effect and to realize the anticipated benefits of our business transformation initiatives, and the timing thereof;
    • our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance;
    • expected macro-economic business conditions;
    • expected cost of sales;
    • our ability to win new business;
    • our ability to integrate acquired businesses and realize expected benefits;
    • our ability to renew or obtain credit facilities when required;
    • expected deployment of next generation networks by wireless network operators;
    • our operations not being adversely disrupted by other developments, operating, cyber security, litigation, or regulatory risks; and
    • expected tax and foreign exchange rates.
  • Are based on our management's current expectations and we caution investors that forward-looking statements, particularly those that relate to longer periods of time, 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 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:
    • prolonged negative impact from COVID-19;
    • our access to capital, if required;
    • competition from new or established competitors or from those with greater resources;
    • natural catastrophes or public health epidemics that could impact customer demand, result in production disruption and impact our ability to meet customer demand or capacity to continue critical operations;
    • risks that the Sale Transaction may fail to realize the expected benefits;
    • the loss of, or significant demand fluctuations from, any of our significant customers;
    • our financial results being subject to fluctuation;
    • our business transformation initiatives may result in disruptions to our business and may not achieve the anticipated benefits;
    • our ability to respond to changing technology, industry standards and customer requirements;
    • failures of our products or services due to design flaws and errors, component quality issues, manufacturing defects, network service interruptions, cyber-security vulnerabilities or other quality issues;
    • deterioration in macro-economic conditions could adversely affect our operating results and financial conditions;
    • our ability to attract or retain key personnel and the impact of organizational changes on our business;
    • cyber-attacks or other breaches of our information technology security;
    • risks related to the transmission, use and disclosure of user data and personal information;
    • disruption of, and demands on, our ongoing business and diversion of management's time and attention in connection with acquisitions or divestitures;
    • risks that the acquisition of the M2M Group and M2M New Zealand or our investments and partnerships may fail to realize the expected benefits;
    • risks related to infringement on intellectual property rights of others;
    • our ability to obtain necessary rights to use software or components supplied by third parties;
    • our ability to enforce our intellectual property rights;
    • our reliance on single source suppliers for certain components used in our products;
    • our dependence on a limited number of third party manufacturers;
    • unanticipated costs associated with litigation or settlements;
    • our dependence on mobile network operators to promote and offer acceptable wireless data services;
    • risks related to contractual disputes with counterparties;
    • risks related to governmental regulation;
    • risks inherent in foreign jurisdictions; and
    • risks related to tariffs or other trade restrictions.

About Sierra Wireless

Sierra Wireless (NASDAQ: SWIR) (TSX: SW) is the leading IoT solutions provider that combines devices, network services and software to unlock value in the connected economy. Companies globally are adopting IoT to improve operational efficiency, create better customer experiences, improve their business models and create new revenue streams. Whether it is a solution to help a business securely connect edge devices to the cloud, or a software/API solution to help manage processes associated with billions of connected assets, or a platform to extract real-time data to make the best business decisions, Sierra Wireless will work with you to create the right industry-specific solution for your next IoT endeavor. Sierra Wireless has more than 1,050 employees globally and operates R&D centers in North America, Europe and Asia. For more information, visit www.sierrawireless.com.

“Sierra Wireless” is a registered trademark 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 EARNINGS (LOSS)

(In thousands of U.S. dollars, except where otherwise stated)

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

 

2020

 

2019

 

2020

 

2019

Revenue

 

 

 

 

 

 

 

loT Solutions

$

87,604

 

 

$

90,937

 

 

$

327,323

 

 

$

377,808

 

Embedded Broadband

32,874

 

 

34,170

 

 

121,265

 

 

169,468

 

 

120,478

 

 

125,107

 

 

448,588

 

 

547,276

 

Cost of Sales

 

 

 

 

 

 

 

loT Solutions

53,876

 

 

57,272

 

 

205,419

 

 

237,650

 

Embedded Broadband

23,236

 

 

23,075

 

 

84,418

 

 

112,140

 

 

77,112

 

 

80,347

 

 

289,837

 

 

349,790

 

Gross margin

43,366

 

 

44,760

 

 

158,751

 

 

197,486

 

 

 

 

 

 

 

 

 

Expenses

 

 

 

 

 

 

 

Sales and marketing

21,663

 

 

21,070

 

 

86,481

 

 

87,185

 

Research and development

20,878

 

 

20,787

 

 

82,029

 

 

78,761

 

Administration

13,402

 

 

11,273

 

 

48,513

 

 

47,127

 

Restructuring

4,800

 

 

2,251

 

 

8,740

 

 

26,262

 

Acquisition-related and integration

115

 

 

274

 

 

440

 

 

974

 

Impairment

 

 

877

 

 

 

 

877

 

Amortization

4,829

 

 

5,356

 

 

20,584

 

 

20,554

 

 

65,687

 

 

61,888

 

 

246,787

 

 

261,740

 

Loss from operations

(22,321)

 

 

(17,128)

 

 

(88,036)

 

 

(64,254)

 

Foreign exchange gain (loss)

3,734

 

 

1,661

 

 

8,003

 

 

(1,224)

 

Other expense

(564)

 

 

(111)

 

 

(2,027)

 

 

(307)

 

Loss before income taxes

(19,151)

 

 

(15,578)

 

 

(82,060)

 

 

(65,785)

 

Income tax expense (recovery)

(7,984)

 

 

(262)

 

 

(11,909)

 

 

8,878

 

Net loss from continuing operations

$

(11,167)

 

 

$

(15,316)

 

 

$

(70,151)

 

 

$

(74,663)

 

Net earnings from discontinued operations

12,123

 

 

4,398

 

 

20,810

 

 

4,125

 

Net earnings (loss)

$

956

 

 

$

(10,918)

 

 

$

(49,341)

 

 

$

(70,538)

 

Other comprehensive income (loss):

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of taxes of $nil

5,514

 

 

3,177

 

 

7,636

 

 

(4,070)

 

Comprehensive earnings (loss)

$

6,470

 

 

$

(7,741)

 

 

$

(41,705)

 

 

$

(74,608)

 

 

 

 

 

 

 

 

 

Net earnings (loss) per share (in dollars)

 

 

 

 

 

 

 

Continuing operations

$

(0.31)

 

 

$

(0.42)

 

 

$

(1.93)

 

 

$

(2.06)

 

Discontinued operations

0.33

 

 

0.12

 

 

0.57

 

 

0.11

 

 

$

0.03

 

 

$

(0.30)

 

 

$

(1.36)

 

 

$

(1.95)

 

Weighted average number of shares outstanding (in thousands)

 

 

 

 

 

 

 

Basic

36,534

 

 

36,222

 

 

36,393

 

 

36,166

 

Diluted

36,534

 

 

36,222

 

 

36,393

 

 

36,166

 

SIERRA WIRELESS, INC.

CONSOLIDATED BALANCE SHEETS

(In thousands of U.S. dollars, except where otherwise stated)

 

 

 

As at December 31,

 

 

2020

 

2019

Assets

 

 

 

 

Current assets

 

 

 

 

Cash and cash equivalents

 

$

160,560

 

 

 

$

71,164

 

 

Restricted cash

 

10,864

 

 

 

3,629

 

 

Accounts receivable

 

68,575

 

 

 

94,491

 

 

Inventories

 

32,815

 

 

 

36,334

 

 

Prepaids and other

 

11,933

 

 

 

10,858

 

 

Assets held for sale

 

 

 

 

67,586

 

 

 

 

284,747

 

 

 

284,062

 

 

Property and equipment, net

 

31,412

 

 

 

27,577

 

 

Operating lease right-of-use assets

 

20,068

 

 

 

25,466

 

 

Intangible assets, net

 

78,081

 

 

 

70,072

 

 

Goodwill

 

175,545

 

 

 

154,381

 

 

Deferred income taxes

 

1,135

 

 

 

1,779

 

 

Other assets

 

10,383

 

 

 

9,982

 

 

Long-term assets held for sale

 

 

 

 

66,021

 

 

 

 

$

601,371

 

 

 

$

639,340

 

 

Liabilities

 

 

 

 

Current liabilities

 

 

 

 

Accounts payable and accrued liabilities

 

$

162,138

 

 

 

$

149,596

 

 

Deferred revenue

 

9,862

 

 

 

9,190

 

 

Liabilities held for sale

 

 

 

 

25,380

 

 

 

 

172,000

 

 

 

184,166

 

 

Long-term obligations

 

45,646

 

 

 

43,407

 

 

Operating lease liabilities

 

17,054

 

 

 

25,154

 

 

Deferred income taxes

 

10,258

 

 

 

4,921

 

 

Long-term liabilities held for sale

 

 

 

 

367

 

 

 

 

244,958

 

 

 

258,015

 

 

Equity

 

 

 

 

Shareholders’ equity

 

 

 

 

Common stock: no par value; unlimited shares authorized; issued and outstanding:

 

 

 

 

36,619,439 shares (December 31, 2019 — 36,233,361 shares)

 

441,999

 

 

 

435,532

 

 

Preferred stock: no par value; unlimited shares authorized;
issued and outstanding: nil shares

 

 

 

 

 

 

Treasury stock: at cost; 46,505 shares (December 31, 2019 — 44,487 shares)

 

(542

)

 

 

(370

)

 

Additional paid-in capital

 

49,489

 

 

 

38,212

 

 

Retained deficit

 

(128,953

)

 

 

(78,833

)

 

Accumulated other comprehensive loss

 

(5,580

)

 

 

(13,216

)

 

 

 

356,413

 

 

 

381,325

 

 

 

 

$

601,371

 

 

 

$

639,340

 

 

SIERRA WIRELESS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

 

 

Three months ended
December 31,

 

Twelve months ended
December 31,

 

2020

 

2019

 

2020

 

2019

Cash flows provided by (used in):

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

Net earnings (loss)

$

956

 

 

 

$

(10,918

)

 

 

$

(49,341

)

 

 

$

(70,538

)

 

Items not requiring (providing) cash

 

 

 

 

 

 

 

Amortization

7,053

 

 

 

8,573

 

 

 

32,345

 

 

 

33,177

 

 

Stock-based compensation

7,815

 

 

 

1,801

 

 

 

19,940

 

 

 

12,930

 

 

Deferred income taxes

(1,294

)

 

 

(93

)

 

 

(1,150

)

 

 

8,711

 

 

Impairment

 

 

 

877

 

 

 

 

 

 

877

 

 

Gain on sale of Automotive business

(27,137

)

 

 

 

 

 

(27,137

)

 

 

 

 

Unrealized foreign exchange loss (gain)

(4,891

)

 

 

(958

)

 

 

(8,808

)

 

 

1,122

 

 

Other

196

 

 

 

570

 

 

 

43

 

 

 

1,218

 

 

Changes in non-cash working capital

 

 

 

 

 

 

 

Accounts receivable

2,468

 

 

 

156

 

 

 

1,232

 

 

 

37,965

 

 

Inventories

13,222

 

 

 

6,264

 

 

 

10,997

 

 

 

(3,712

)

 

Prepaids and other

5,032

 

 

 

(1,111

)

 

 

7,646

 

 

 

(8,611

)

 

Accounts payable and accrued liabilities

(2,851

)

 

 

(12,566

)

 

 

7,771

 

 

 

(12,069

)

 

Deferred revenue

99

 

 

 

1,113

 

 

 

(1,305

)

 

 

5,792

 

 

Cash flows provided by (used in) operating activities

668

 

 

 

(6,292

)

 

 

(7,767

)

 

 

6,862

 

 

Investing activities

 

 

 

 

 

 

 

Additions to property and equipment

(6,809

)

 

 

(4,691

)

 

 

(18,952

)

 

 

(16,494

)

 

Additions to intangible assets

(1,049

)

 

 

(801

)

 

 

(3,023

)

 

 

(3,779

)

 

Proceeds from sale of property and equipment

29

 

 

 

11

 

 

 

281

 

 

 

98

 

 

Proceeds from sale of Automotive Business, net

144,156

 

 

 

 

 

 

144,156

 

 

 

 

 

Proceeds from sale of investment

 

 

 

3,303

 

 

 

 

 

 

3,303

 

 

Proceeds from sale of iTank business

 

 

 

 

 

 

 

 

 

500

 

 

Acquisitions, net of cash acquired:

 

 

 

 

 

 

 

M2M Group

 

 

 

 

 

 

(18,391

)

 

 

 

 

M2M New Zealand

(3,468

)

 

 

 

 

 

(3,468

)

 

 

 

 

Cash flows provided by (used in) investing activities

132,859

 

 

 

(2,178

)

 

 

100,603

 

 

 

(16,372

)

 

Financing activities

 

 

 

 

 

 

 

Issuance of common shares, net of issuance cost

1,081

 

 

 

161

 

 

 

1,964

 

 

 

488

 

 

Purchase of treasury shares for RSU distribution

(2,038

)

 

 

(348

)

 

 

(2,802

)

 

 

(674

)

 

Taxes paid related to net settlement of equity awards

(339

)

 

 

(86

)

 

 

(1,530

)

 

 

(941

)

 

Proceeds from long-term debt

 

 

 

 

 

 

9,383

 

 

 

 

 

Repayment of long-term debt

(9,383

)

 

 

 

 

 

(9,383

)

 

 

 

 

Repayment of short-term borrowings

(25,000

)

 

 

 

 

 

 

 

 

 

 

Decrease in other long-term obligations

(171

)

 

 

(130

)

 

 

(405

)

 

 

(535

)

 

Cash flows used in financing activities

(35,850

)

 

 

(403

)

 

 

(2,773

)

 

 

(1,662

)

 

Effect of foreign exchange rate changes on cash and cash
equivalents

1,775

 

 

 

835

 

 

 

2,278

 

 

 

958

 

 

Cash, cash equivalents and restricted cash, increase
(decrease) in the year

99,452

 

 

 

(8,038

)

 

 

92,341

 

 

 

(10,214

)

 

Cash, cash equivalents and restricted cash, beginning of year

71,972

 

 

 

87,121

 

 

 

79,083

 

 

 

89,297

 

 

Cash, cash equivalents and restricted cash, end of year

$

171,424

 

 

 

$

79,083

 

 

 

$

171,424

 

 

 

$

79,083

 

 

SIERRA WIRELESS, INC.

RECONCILIATION OF GAAP AND NON-GAAP RESULTS BY QUARTER

 

(in thousands of U.S. dollars, except
where otherwise stated)

2020

 

2019

Q4

Q3

Q2

Q1

 

Q4

Q3

Q2

Q1

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) from continuing
operations - GAAP

$

(11,167

)

 

$

(14,483

)

 

$

(17,291

)

 

$

(27,210

)

 

 

$

(15,316

)

 

$

(19,761

)

 

$

(28,961

)

 

$

(10,625

)

 

Stock-based compensation and
related social taxes

6,461

 

 

5,085

 

 

3,256

 

 

3,200

 

 

 

1,773

 

 

3,763

 

 

3,979

 

 

3,300

 

 

Phantom RSU expense

691

 

 

261

 

 

141

 

 

74

 

 

 

35

 

 

55

 

 

76

 

 

44

 

 

Restructuring

4,800

 

 

3,089

 

 

245

 

 

606

 

 

 

2,251

 

 

4,588

 

 

18,083

 

 

1,340

 

 

Acquisition-related and integration

115

 

 

140

 

 

185

 

 

 

 

 

274

 

 

291

 

 

314

 

 

95

 

 

COVID-19 government relief

(954

)

 

(6,298

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment

 

 

 

 

 

 

 

 

 

877

 

 

 

 

 

 

 

 

Other non-recurring costs

330

 

 

299

 

 

152

 

 

87

 

 

 

795

 

 

279

 

 

662

 

 

1,167

 

 

Amortization

7,054

 

 

8,030

 

 

7,823

 

 

7,726

 

 

 

7,849

 

 

7,378

 

 

7,355

 

 

7,651

 

 

Interest and other (income) expense,
net

564

 

 

988

 

 

283

 

 

192

 

 

 

111

 

 

122

 

 

105

 

 

(31

)

 

Foreign exchange loss (gain), net of
realized gain/loss on hedge contracts

(2,804

)

 

(3,572

)

 

(3,955

)

 

2,836

 

 

 

(1,580

)

 

2,953

 

 

(1,034

)

 

698

 

 

Income tax expense (recovery)

(7,984

)

 

(633

)

 

427

 

 

(3,719

)

 

 

(262

)

 

3,864

 

 

5,160

 

 

116

 

 

Adjusted EBITDA*

$

(2,894

)

 

$

(7,094

)

 

$

(8,734

)

 

$

(16,208

)

 

 

$

(3,193

)

 

$

3,532

 

 

$

5,739

 

 

$

3,755

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) from continuing
operations - GAAP

$

(11,167

)

 

$

(14,483

)

 

$

(17,291

)

 

$

(27,210

)

 

 

$

(15,316

)

 

$

(19,761

)

 

$

(28,961

)

 

$

(10,625

)

 

Stock-based compensation and
related social taxes

6,461

 

 

5,085

 

 

3,256

 

 

3,200

 

 

 

1,773

 

 

3,763

 

 

3,979

 

 

3,300

 

 

Phantom RSU expense

691

 

 

261

 

 

141

 

 

74

 

 

 

35

 

 

55

 

 

76

 

 

44

 

 

Restructuring

4,800

 

 

3,089

 

 

245

 

 

606

 

 

 

2,251

 

 

4,588

 

 

18,083

 

 

1,340

 

 

Acquisition-related and integration

115

 

 

140

 

 

185

 

 

 

 

 

274

 

 

291

 

 

314

 

 

95

 

 

COVID-19 government relief

(954

)

 

(6,298

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Impairment

 

 

 

 

 

 

 

 

 

877

 

 

 

 

 

 

 

 

Other non-recurring costs

330

 

 

299

 

 

152

 

 

87

 

 

 

795

 

 

279

 

 

662

 

 

1,167

 

 

Acquisition-related amortization

3,306

 

 

3,555

 

 

3,886

 

 

3,889

 

 

 

3,593

 

 

3,610

 

 

3,624

 

 

3,687

 

 

Foreign exchange loss (gain), net of
realized gain/loss on hedge contracts

(2,804

)

 

(3,572

)

 

(3,955

)

 

2,836

 

 

 

(1,580

)

 

2,953

 

 

(1,034

)

 

698

 

 

Income tax expense (recovery)
adjustment

(7,784

)

 

200

 

 

358

 

 

(2,696

)

 

 

415

 

 

3,933

 

 

4,805

 

 

(129

)

 

Adjusted earnings (loss) from
continuing operations*

$

(7,006

)

 

$

(11,724

)

 

$

(13,023

)

 

$

(19,214

)

 

 

$

(6,883

)

 

$

(289

)

 

$

1,548

 

 

$

(423

)

 

 

 

 

 

 

 

 

 

 

 

Weighted average number of shares
(in thousands) - basic and diluted

36,534

 

 

36,417

 

 

36,341

 

 

36,277

 

 

 

36,222

 

 

36,179

 

 

36,156

 

 

36,106

 

 

 

 

 

 

 

 

 

 

 

 

Basic and diluted adjusted net
earnings (loss) per share from

continuing operations* (in dollars)

$

(0.19

)

 

$

(0.32

)

 

$

(0.36

)

 

$

(0.53

)

 

 

$

(0.19

)

 

$

(0.01

)

 

$

0.04

 

 

$

(0.01

)

 

 

 

 

 

 

 

 

 

 

 

(1) Prior periods have been adjusted to include phantom RSU expense.

SIERRA WIRELESS, INC.

SEGMENTED RESULTS

 

(In thousands of
U.S. dollars,
except where otherwise indicated)

2020

 

2019

Total

Q4

Q3

Q2

Q1

 

Total

Q4

Q3

Q2

Q1

 

 

 

 

 

 

 

 

 

 

 

 

IoT Solutions

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

327,323

 

$

87,604

 

$

79,093

 

$

81,836

 

$

78,790

 

 

$

377,808

 

$

90,937

 

$

93,439

 

$

99,145

 

$

94,287

 

Gross margin

$

121,904

 

$

33,728

 

$

29,627

 

$

30,538

 

$

28,011

 

 

$

140,158

 

$

33,665

 

$

35,203

 

$

36,811

 

$

34,479

 

Gross margin
%

37.2

%

38.5

%

37.5

%

37.3

%

35.6

%

 

37.1

%

37.0

%

37.7

%

37.1

%

36.6

%

Embedded Broadband

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

121,265

 

$

32,874

 

$

34,278

 

$

29,882

 

$

24,231

 

 

$

169,468

 

$

34,170

 

$

43,256

 

$

46,520

 

$

45,522

 

Gross margin

$

36,847

 

$

9,638

 

$

9,825

 

$

10,470

 

$

6,914

 

 

$

57,328

 

$

11,095

 

$

14,421

 

$

16,170

 

$

15,642

 

Gross margin
%

30.4

%

29.3

%

28.7

%

35.0

%

28.5

%

 

33.8

%

32.5

%

33.3

%

34.8

%

34.4

%

Total

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

448,588

 

$

120,478

 

$

113,371

 

$

111,718

 

$

103,021

 

 

$

547,276

 

$

125,107

 

$

136,695

 

$

145,665

 

$

139,809

 

Gross margin

$

158,751

 

$

43,366

 

$

39,452

 

$

41,008

 

$

34,925

 

 

$

197,486

 

$

44,760

 

$

49,624

 

$

52,981

 

$

50,121

 

Gross margin
%

35.4

%

36.0

%

34.8

%

36.7

%

33.9

%

 

36.1

%

35.8

%

36.3

%

36.4

%

35.8

%

Revenue by
Type:

 

 

 

 

 

 

 

 

 

 

 

Product

$

332,544

 

$

87,856

 

$

83,560

 

$

84,820

 

$

76,308

 

 

$

449,063

 

$

99,024

 

$

112,177

 

$

120,859

 

$

117,003

 

Recurring and
other services

$

116,044

 

$

32,622

 

$

29,811

 

$

26,898

 

$

26,713

 

 

$

98,213

 

$

26,083

 

$

24,518

 

$

24,806

 

$

22,806

 

SUPPLEMENTAL FINANCIAL INFORMATION

2020 SEGMENTED RESULTS RECAST UNDER NEW REPORTABLE SEGMENTS

 

(In thousands of
U.S. dollars, except where
otherwise indicated)

2020

Total

Q4

Q3

Q2

Q1

 

 

 

 

 

 

IoT Solutions (new)

 

 

 

 

 

Revenue

$

306,917

 

$

81,561

 

$

79,345

 

$

77,629

 

$

68,382

 

Gross margin

$

87,146

 

$

23,343

 

$

22,588

 

$

23,030

 

$

18,185

 

Gross margin %

28.4

%

28.6

%

28.5

%

29.7

%

26.6

%

Enterprise Solutions

 

 

 

 

 

Revenue

$

141,671

 

$

38,917

 

$

34,026

 

$

34,089

 

$

34,639

 

Gross margin

$

71,605

 

$

20,023

 

$

16,864

 

$

17,978

 

$

16,740

 

Gross margin %

50.5

%

51.5

%

49.6

%

52.7

%

48.3

%

Total

 

 

 

 

 

Revenue

$

448,588

 

$

120,478

 

$

113,371

 

$

111,718

 

$

103,021

 

Gross margin

$

158,751

 

$

43,366

 

$

39,452

 

$

41,008

 

$

34,925

 

Gross margin %

35.4

%

36.0

%

34.8

%

36.7

%

33.9

%

(1) See "Change in Reportable Segments" on page 3.

Investor and Media:
David Climie, Investor Relations
dclimie@sierrawireless.com

Investor:
Samuel Cochrane, Chief Financial Officer
investor@sierrawireless.com

Source: Sierra Wireless