SWIR
$15.05
Sierra Wireless IN
$.45
3.08%
Earnings Details
3rd Quarter September 2020
Thursday, November 12, 2020 4:22:00 PM
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Summary

Sierra Wireless IN (SWIR) Recent Earnings

Sierra Wireless IN (SWIR) reported a 3rd Quarter September 2020 loss of $0.33 per share on revenue of $113.4 million. The consensus estimate was a loss of $0.23 per share on revenue of $156.4 million. Revenue fell 34.9% compared to the same quarter a year ago.

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
($0.23)
Reported Revenue
$113.4 Mil
Revenue Estimate
$156.4 Mil
Growth
Earnings Growth
Revenue Growth
Power Rating
Grade
Earnings Release

Sierra Wireless Reports Third Quarter 2020 Results

VANCOUVER, British Columbia--(BUSINESS WIRE)--Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results for its third quarter ended September 30, 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.

“We are on-track to complete the sale of our Automotive product line and expect the deal to close in the coming weeks. Our Continuing Operations in the Third Quarter, excluding the Automotive product line being divested, improved sequentially with Recurring and Other Services revenue up 11% sequentially and 22% year-over-year,” said Kent Thexton, President and CEO. “Combining revenue from our Continuing Operations with the discontinued Automotive product line, total revenue in the Third Quarter was $180.3 million compared to $174.0 million the prior year. Going forward, we are improving the Company’s operating efficiency and we have announced and are implementing a series of cost reduction initiatives.”

Revenue, including our Automotive Business, for the third quarter of 2020 was $180.3 million compared to $174.0 million in the third quarter of 2019, an increase of 3.6% in a challenging environment. Revenue, excluding our Automotive Business, for the third quarter of 2020 was $113.4 million compared to $136.7 million in the third quarter of 2019, a decrease of 17.1%. Revenue, excluding Automotive was up 1.5% sequentially from Q2 2020. Our transformation to an IoT Solutions company is progressing well with record recurring revenue design wins year to date and increasing device design wins. Additionally, in our Enterprise Networking we are seeing strong growth in our opportunities pipeline.

Quarterly revenue for our two business segments was as follows:

(i)

Revenue from IoT Solutions was $79.1 million in the third quarter of 2020, a decrease of 15.4% compared to $93.4 million in the third quarter of 2019 due to lower hardware sales in Enterprise gateway products and IoT Solutions modules driven by the impact of COVID-19, the economic impact on energy, sales & payment and public safety, competitive pressure in hardware only segments, and a transition to lower device ASPs with the increasing sales of LPWA technologies. Within this segment we had solid year-over-year recurring and other service revenue growth of 21.6% driven by growth in connected devices.

 

(ii)

Revenue from Embedded Broadband, excluding our Automotive Business, was $34.3 million in the third quarter of 2020, a decrease of 20.8% compared to $43.3 million in the third quarter of 2019, reflecting lower mobile computing and networking sales due to previously communicated design losses of two higher-margin computing customers.

Recurring and other services revenue in the third quarter of 2020 was $29.8 million, representing 26.3% of consolidated revenue and Product revenue was $83.6 million, representing 73.7% 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 earnings (loss) for each of the three and nine months periods ended September 30, 2020 and 2019.

GAAP:

  • Gross margin, excluding our Automotive Business, was $39.5 million, or 34.8% of revenue, in the third quarter of 2020 compared to $49.6 million, or 36.3% of revenue, in the third quarter of 2019.
  • Operating expenses, excluding our Automotive Business, were $57.2 million in the third quarter of 2020 compared to $62.5 million in the third quarter of 2019. In the third quarter of 2020, we recorded government grants under the Canada Emergency Wage Subsidy (CEWS) of $5.6 million and other COVID-19 related subsidies of $0.7 million, totaling $6.3 million.
  • Loss from operations, which excludes our Automotive Business, was $17.8 million compared to $12.8 million in the third quarter of 2019.
  • Net loss from continuing operations, which excludes our Automotive Business, was $14.5 million, or loss of $0.40 per diluted share, compared to net loss of $19.8 million, or loss of $0.55 per diluted share, in the third quarter of 2019.
  • Net loss, which includes our Automotive Business, was $12.0 million, or loss of $0.33 per diluted share, compared to $20.2 million, or loss of $0.56 per diluted share, in the third quarter of 2019.
  • Short-term borrowings and long-term debt were $34.4 million as at September 30, 2020 compared to $15.0 million as at June 30, 2020.

NON-GAAP(1) Results Including Discontinued Operations (Automotive Business):

  • Total revenue was $180.3 million compared to $174.0 million in the third quarter of 2019.
  • Gross margin in the third quarter of 2020 was 27.3% compared to 31.7% in the third quarter of 2019.
  • Adjusted EBITDA was a loss of $0.4 million compared to earnings of $6.3 million in the third quarter of 2019.
  • Net loss was $7.1 million, or loss of $0.19 per diluted share, compared to net earnings of $1.0 million, or earnings of $0.03 per diluted share, in the third quarter of 2019.

NON-GAAP(1) Results Excluding Discontinued Operations (Automotive Business):

  • Gross margin was 34.7% compared to 36.3% in the third quarter of 2019.
  • Adjusted EBITDA was a loss of $7.4 million compared to earnings of $3.5 million in the third quarter of 2019.
  • Loss from operations was $11.8 million compared to $0.3 million in the third quarter of 2019.
  • Net loss from continuing operations was $12.0 million, or loss of $0.33 per share, compared to $0.3 million, or loss of $0.01 per share, in the third quarter of 2019.

(1) See "Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results by Quarter" below.

Cash, cash equivalents and restricted cash (including cash held for sale) at the end of the third quarter of 2020 was $72.0 million, representing an increase of $9.5 million from the end of the second quarter of 2020. The increase in cash was primarily driven by additional borrowings under our credit facility, offset by cash flow used in operating activities and capital expenditure. Our cash flow from operating activities were negatively impacted by the unwinding of our receivables factoring program related to the Automotive business prior to the completion of the divestiture.

Credit Facilities

During the third quarter, we entered into a Cdn$12.5M term loan agreement with Canadian Imperial Bank of Commerce ("CIBC") backed by the Canadian Government under the Business Credit Availability Program to provide for additional liquidity to the Company.

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 fourth quarter 2020 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.

Given these conditions, we continue not to provide guidance although we are seeing continued business improvements. In conjunction with the recently announced divestiture of the embedded automotive business, we have begun to initiate actions to reduce operating expenses by approximately $25 to $30 million on an annualized basis to rightsize the remaining business and improve ongoing earnings and cash flows.

We will continue to monitor the effects of COVID-19 on our business.

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

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.

Non-GAAP gross margin excludes the impact of stock-based compensation expense and related social taxes and certain other non-recurring costs or recoveries.

Non-GAAP earnings (loss) from operations includes allocation of realized gains or losses on forward contracts and excludes the impact of stock-based compensation expense and related social taxes, acquisition-related amortization, acquisition-related and integration costs, restructuring costs, impairment, government grants related to COVID-19 relief and certain other non-recurring costs or recoveries.

Non-GAAP income tax expense includes certain tax adjustments and taxes on acquisition-related amortization, acquisition-related and integration costs, restructuring costs, other non-recurring costs and foreign exchange.

Non-GAAP net earnings (loss) and non-GAAP net earnings (loss) per share exclude 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.

Non-GAAP net earnings (loss) from continuing operations is equal to non-GAAP earnings (loss) from operations as described above, excluding operating results of our Automotive Business and excluding 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.

Non-GAAP net earnings (loss) from discontinued operations is equal to non-GAAP earnings (loss) from operations as described above pertaining to our Automotive Business, excluding 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) plus stock-based compensation expense and related social taxes, acquisition-related and integration costs, restructuring cost, impairment, certain other non-recurring costs or recoveries, amortization, foreign exchange gains or losses on translation of certain balance sheet accounts, unrealized foreign exchange gains or losses on forward contracts, interest, government grants related to COVID-19 relief and income tax expense. 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.

Adjusted EBITDA (continuing and discontinued) is equal to the Adjusted EBITDA as defined above including operating results of our Automotive Business.

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 also use non-GAAP earnings from operations as one component in determining short-term incentive compensation for management employees.

Conference call and webcast details

Sierra Wireless President and CEO, Kent Thexton, and CFO, Samuel Cochrane, will host a conference call and webcast with analysts and investors to review the results on Thursday November 12, 2020, at 6:00 PM Eastern time (3:00 PM Pacific time). 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 start of the call:

  • Toll-free (Canada and US): 1-877-201-0168
  • Alternate number: 1-647-788-4901
  • Conference ID: 7390518

To access the webcast, please follow the link below:

Sierra Wireless Q3 2020 Conference Call and Webcast

If the above link does not work, please copy and paste the following URL into your browser:

https://onlinexperiences.com/Launch/QReg/ShowUUID=E5E7D527-646D-4053-9906-4A5774F72BE2.

The webcast will remain available at the above link for one year following the 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 (collectively, “forward-looking statements”) and may include statements and information relating to our 2020 corporate update; financial guidance for our fiscal year 2020; 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; expectations regarding the Company's cost savings initiatives; anticipated benefits of our recently announced divestiture of the automotive product line (the "Sale Transaction") and the Company's exit from automotive applications; the anticipated timing of the closing of the Sale Transaction; expectations regarding movement of employees pursuant to the Sale Transaction; 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; 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; and expectations regarding the launch of fifth generation cellular embedded modules and gateways. 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 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 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:
    • 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 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 not be completed in a timely manner or at all, which may adversely affect our business and the price of our common shares;
    • failure to satisfy the conditions to the consummation of the Sale Transaction, including any required approvals;
    • 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 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 1,300 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)

(unaudited)

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

2020

 

2019

 

2020

 

2019

Revenue

 

 

 

 

 

 

 

IoT Solutions

$

79,093

 

 

$

93,439

 

 

$

239,719

 

 

$

286,871

 

Embedded Broadband

34,278

 

 

43,256

 

 

88,391

 

 

135,298

 

 

113,371

 

 

136,695

 

 

328,110

 

 

422,169

 

Cost of sales

 

 

 

 

 

 

 

IoT Solutions

49,466

 

 

58,236

 

 

151,543

 

 

180,378

 

Embedded Broadband

24,453

 

 

28,835

 

 

61,182

 

 

89,065

 

 

73,919

 

 

87,071

 

 

212,725

 

 

269,443

 

Gross margin

39,452

 

 

49,624

 

 

115,385

 

 

152,726

 

Expenses

 

 

 

 

 

 

 

Sales and marketing

20,072

 

 

22,286

 

 

64,818

 

 

66,115

 

Research and development

17,699

 

 

18,796

 

 

61,151

 

 

57,974

 

Administration

11,199

 

 

11,496

 

 

35,111

 

 

35,854

 

Restructuring

3,089

 

 

4,588

 

 

3,940

 

 

24,011

 

Acquisition-related and integration

140

 

 

291

 

 

325

 

 

700

 

Amortization

5,040

 

 

5,013

 

 

15,755

 

 

15,198

 

 

57,239

 

 

62,470

 

 

181,100

 

 

199,852

 

Loss from operations

(17,787

)

 

(12,846

)

 

(65,715

)

 

(47,126

)

Foreign exchange gain (loss)

3,659

 

 

(2,929

)

 

4,269

 

 

(2,885

)

Other expense

(988

)

 

(122

)

 

(1,463

)

 

(196

)

Loss before income taxes

(15,116

)

 

(15,897

)

 

(62,909

)

 

(50,207

)

Income tax expense (recovery)

(633

)

 

3,864

 

 

(3,925

)

 

9,140

 

Net loss from continuing operations

$

(14,483

)

 

$

(19,761

)

 

$

(58,984

)

 

$

(59,347

)

Net earnings (loss) from discontinued operations

$

2,456

 

 

$

(460

)

 

$

8,687

 

 

$

(273

)

Net loss

$

(12,027

)

 

$

(20,221

)

 

$

(50,297

)

 

$

(59,620

)

Other comprehensive gain (loss):

 

 

 

 

 

 

 

Foreign currency translation adjustments, net of taxes of $nil

2,670

 

 

(3,727

)

 

2,122

 

 

(7,247

)

Comprehensive loss

$

(9,357

)

 

$

(23,948

)

 

$

(48,175

)

 

$

(66,867

)

 

 

 

 

 

 

 

 

Basic and diluted net earnings (loss) per share (in dollars)

 

 

 

 

 

 

 

Continuing operations

$

(0.40

)

 

$

(0.55

)

 

$

(1.62

)

 

$

(1.64

)

Discontinued operations

0.07

 

 

(0.01

)

 

0.24

 

 

(0.01

)

 

$

(0.33

)

 

$

(0.56

)

 

$

(1.38

)

 

$

(1.65

)

Weighted average number of shares outstanding (in thousands)

 

 

 

 

 

 

 

Basic

36,417

 

 

36,179

 

 

36,345

 

 

36,147

 

Diluted

36,417

 

 

36,179

 

 

36,345

 

 

36,147

 

SIERRA WIRELESS, INC.

CONSOLIDATED BALANCE SHEETS

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

(unaudited)

 

 

September 30, 2020

 

December 31, 2019

Assets

 

 

 

Current assets

 

 

 

Cash and cash equivalents

$

63,483

 

 

$

71,164

 

Restricted cash

3,029

 

 

3,629

 

Accounts receivable, net of allowance of $3,772 (December 31, 2019 - $3,892)

69,972

 

 

94,491

 

Inventories

35,172

 

 

36,334

 

Prepaids and other

12,193

 

 

10,858

 

Assets held for sale

161,204

 

 

67,586

 

 

345,053

 

 

284,062

 

Property and equipment, net

28,505

 

 

27,577

 

Operating lease right-of-use assets

21,185

 

 

25,466

 

Intangible assets, net

76,717

 

 

70,072

 

Goodwill

167,769

 

 

154,381

 

Deferred income taxes

1,883

 

 

1,779

 

Other assets

9,821

 

 

9,982

 

Long-term assets held for sale

 

 

66,021

 

 

$

650,933

 

 

$

639,340

 

Liabilities

 

 

 

Current liabilities

 

 

 

Short-term borrowings

$

25,000

 

 

$

 

Current portion of long-term debt

235

 

 

 

Accounts payable and accrued liabilities

154,215

 

 

149,596

 

Deferred revenue

9,331

 

 

9,190

 

Liabilities held for sale

34,392

 

 

25,380

 

 

223,173

 

 

184,166

 

Long-term obligations

44,845

 

 

43,407

 

Operating lease liabilities

20,059

 

 

25,154

 

Long-term debt

9,148

 

 

 

Deferred income taxes

10,283

 

 

4,921

 

Long-term liabilities held for sale

 

 

367

 

 

307,508

 

 

258,015

 

Equity

 

 

 

Shareholders’ equity

 

 

 

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

36,491,352 shares (December 31, 2019 - 36,233,361 shares)

440,003

 

 

435,532

 

Preferred stock: no par value; unlimited shares authorized;

issued and outstanding: nil shares

 

 

 

Treasury stock: at cost; 43,979 shares (December 31, 2019 – 44,487 shares)

(508

)

 

(370

)

Additional paid-in capital

44,933

 

 

38,212

 

Retained deficit

(129,909

)

 

(78,833

)

Accumulated other comprehensive loss

(11,094

)

 

(13,216

)

 

343,425

 

 

381,325

 

 

$

650,933

 

 

$

639,340

 

SIERRA WIRELESS, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands of U.S. dollars)

(unaudited)

 

 

Three months ended
September 30,

 

Nine months ended
September 30,

 

2020

 

2019

 

2020

 

2019

Cash flows provided by (used in):

 

 

 

 

 

 

 

Operating activities

 

 

 

 

 

 

 

Net loss

$

(12,027

)

 

$

(20,221

)

 

$

(50,297

)

 

$

(59,620

)

Items not requiring (providing) cash

 

 

 

 

 

 

 

Amortization

8,269

 

 

8,115

 

 

25,292

 

 

24,604

 

Stock-based compensation

5,667

 

 

3,869

 

 

12,125

 

 

11,129

 

Deferred income taxes

153

 

 

3,766

 

 

144

 

 

8,804

 

Unrealized foreign exchange (gain) loss

(4,278

)

 

4,056

 

 

(3,917

)

 

2,080

 

Other

54

 

 

62

 

 

(153

)

 

648

 

Changes in non-cash working capital

 

 

 

 

 

 

 

Accounts receivable

(27,524

)

 

19,811

 

 

(1,236

)

 

37,809

 

Inventories

9,330

 

 

(4,357

)

 

(2,225

)

 

(9,976

)

Prepaids and other

8,273

 

 

(1,982

)

 

2,614

 

 

(7,500

)

Accounts payable and accrued liabilities

4,589

 

 

(7,102

)

 

10,622

 

 

497

 

Deferred revenue

(188

)

 

1,961

 

 

(1,404

)

 

4,679

 

Cash flows provided by (used in) operating activities

(7,682

)

 

7,978

 

 

(8,435

)

 

13,154

 

Investing activities

 

 

 

 

 

 

 

Additions to property and equipment

(2,416

)

 

(3,672

)

 

(12,143

)

 

(11,803

)

Additions to intangible assets

(503

)

 

(1,585

)

 

(1,974

)

 

(2,978

)

Proceeds from sale of property and equipment

28

 

 

3

 

 

252

 

 

87

 

Proceeds from sale of iTank business

 

 

 

 

 

 

500

 

Acquisition of M2M Group, net of cash acquired

 

 

 

 

(18,391

)

 

 

Cash flows used in investing activities

(2,891

)

 

(5,254

)

 

(32,256

)

 

(14,194

)

Financing activities

 

 

 

 

 

 

 

Issuance of common shares

883

 

 

160

 

 

883

 

 

327

 

Purchase of treasury shares for RSU distribution

(544

)

 

(59

)

 

(764

)

 

(326

)

Taxes paid related to net settlement of equity awards

(565

)

 

(110

)

 

(1,191

)

 

(855

)

Decrease in other long-term obligations

(47

)

 

(191

)

 

(234

)

 

(405

)

Proceeds from short-term borrowings

10,000

 

 

 

 

25,000

 

 

 

Proceeds from long-term debt

9,383

 

 

 

 

9,383

 

 

 

Cash flows provided by (used in) financing activities

19,110

 

 

(200

)

 

33,077

 

 

(1,259

)

Effect of foreign exchange rate changes on cash and cash equivalents

978

 

 

(393

)

 

503

 

 

123

 

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

9,515

 

 

2,131

 

 

(7,111

)

 

(2,176

)

Cash, cash equivalents and restricted cash, beginning of period

62,457

 

 

84,990

 

 

79,083

 

 

89,297

 

Cash, cash equivalents and restricted cash, end of period

$

71,972

 

 

$

87,121

 

 

$

71,972

 

 

$

87,121

 

Cash, cash equivalents and restricted cash are comprised of:

 

 

 

 

 

 

 

Cash, cash equivalents and restricted cash

66,512

 

 

82,874

 

 

66,512

 

 

82,874

 

Cash and cash equivalents classified as held for sale

5,460

 

 

4,247

 

 

5,460

 

 

4,247

 

Cash, cash equivalents and restricted cash, end of period

$

71,972

 

 

$

87,121

 

 

$

71,972

 

 

$

87,121

 

SIERRA WIRELESS, INC.

RECONCILIATION OF GAAP AND NON-GAAP RESULTS BY QUARTER

 

(in thousands of U.S. dollars, except where

2020

 

 

2019

 

otherwise stated)

Q3

Q2

Q1

 

 

Total

Q4

Q3

Q2

Q1

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross margin - GAAP

$

39,452

 

$

41,008

 

$

34,925

 

 

 

$

197,486

 

$

44,760

 

$

49,624

 

$

52,981

 

$

50,121

 

 

Stock-based compensation and related social taxes

91

 

65

 

49

 

 

 

167

 

20

 

44

 

44

 

59

 

 

Realized losses on hedge contracts

1

 

(74

)

(1

)

 

 

(4

)

1

 

 

(2

)

(3

)

 

Other non-recurring costs

(168

)

 

 

 

 

 

 

 

 

 

 

Gross margin - Non-GAAP

$

39,376

 

$

40,999

 

$

34,973

 

 

 

$

197,649

 

$

44,781

 

$

49,668

 

$

53,023

 

$

50,177

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) from operations - GAAP

$

(17,787

)

$

(20,125

)

$

(27,803

)

 

 

$

(64,254

)

$

(17,128

)

$

(12,846

)

$

(24,547

)

$

(9,733

)

 

Stock-based compensation and related social taxes

5,085

 

3,256

 

3,200

 

 

 

12,815

 

1,773

 

3,763

 

3,979

 

3,300

 

 

Acquisition-related and integration

140

 

185

 

 

 

 

974

 

274

 

291

 

314

 

95

 

 

Restructuring

3,089

 

245

 

606

 

 

 

26,262

 

2,251

 

4,588

 

18,083

 

1,340

 

 

COVID-19 government relief

(6,298

)

 

 

 

 

 

 

 

 

 

 

Other nonrecurring costs

299

 

152

 

87

 

 

 

2,903

 

795

 

279

 

662

 

1,167

 

 

Impairment

 

 

 

 

 

877

 

877

 

 

 

 

 

Realized gains (losses) on hedge contracts

87

 

(411

)

(98

)

 

 

(187

)

81

 

24

 

(183

)

(109

)

 

Acquisition-related amortization

3,555

 

3,886

 

3,889

 

 

 

14,514

 

3,593

 

3,610

 

3,624

 

3,687

 

 

Earnings (loss) from operations - Non-GAAP

$

(11,830

)

$

(12,812

)

$

(20,119

)

 

 

$

(6,096

)

$

(7,484

)

$

(291

)

$

1,932

 

$

(253

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) from continuing operations - GAAP

$

(14,483

)

$

(17,291

)

$

(27,210

)

 

 

$

(74,663

)

$

(15,316

)

$

(19,761

)

$

(28,961

)

$

(10,625

)

 

Stock-based compensation and related social

taxes, restructuring, impairment, acquisition-

related, integration, COVID-19 government

relief and other non-recurring costs

(recoveries)

2,315

 

3,838

 

3,893

 

 

 

43,831

 

5,970

 

8,921

 

23,038

 

5,902

 

 

Amortization

8,030

 

7,823

 

7,726

 

 

 

30,233

 

7,849

 

7,378

 

7,355

 

7,651

 

 

Interest and other, net

988

 

283

 

192

 

 

 

307

 

111

 

122

 

105

 

(31

)

 

Foreign exchange loss (gain)

(3,572

)

(3,955

)

2,836

 

 

 

1,037

 

(1,580

)

2,953

 

(1,034

)

698

 

 

Income tax expense (recovery)

(633

)

427

 

(3,719

)

 

 

8,878

 

(262

)

3,864

 

5,160

 

116

 

 

Adjusted EBITDA

$

(7,355

)

$

(8,875

)

$

(16,282

)

 

 

$

9,623

 

$

(3,228

)

$

3,477

 

$

5,663

 

$

3,711

 

 

Amortization (exclude acquisition-related amortization)

(4,475

)

(3,937

)

(3,837

)

 

 

(15,719

)

(4,256

)

(3,768

)

(3,731

)

(3,964

)

 

Interest and other, net

(988

)

(283

)

(192

)

 

 

(307

)

(111

)

(122

)

(105

)

31

 

 

Income tax expense - Non-GAAP

833

 

(69

)

1,023

 

 

 

146

 

677

 

69

 

(355

)

(245

)

 

Net earnings (loss) from continuing operations - Non-GAAP

$

(11,985

)

$

(13,164

)

$

(19,288

)

 

 

$

(6,257

)

$

(6,918

)

$

(344

)

$

1,472

 

$

(467

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) from discontinued operations - GAAP

$

2,456

 

$

1,684

 

$

4,547

 

 

 

$

4,125

 

$

4,398

 

$

(460

)

$

785

 

$

(598

)

 

Stock-based compensation and related social

taxes, restructuring, impairment, acquisition-

related, integration, COVID-19 government

relief and other non-recurring costs

(recoveries)

3,344

 

555

 

33

 

 

 

2,277

 

87

 

1,799

 

220

 

171

 

 

Foreign exchange loss (gain)

46

 

10

 

35

 

 

 

72

 

(5

)

35

 

(3

)

45

 

 

Income tax expense (recovery)

(927

)

(165

)

(21

)

 

 

(522

)

(501

)

(9

)

(7

)

(5

)

 

Net earnings (loss) from discontinued operations - NON-GAAP

$

4,919

$

2,084

 

$

4,594

 

 

 

$

5,952

 

$

3,979

 

$

1,365

 

$

995

 

$

(387

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

2020

 

 

2019

 

 

Q3

Q2

Q1

 

 

Total

Q4

Q3

Q2

Q1

 

Net earnings (loss) - GAAP

$

(12,027

)

$

(15,607

)

$

(22,663

)

 

 

$

(70,538

)

$

(10,918

)

$

(20,221

)

$

(28,176

)

$

(11,223

)

 

Net earnings (loss) - NON-GAAP

$

(7,066

)

$

(11,080

)

$

(14,694

)

 

 

$

(305

)

$

(2,939

)

$

1,021

 

$

2,467

 

$

(854

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Diluted net earnings (loss) per share

 

 

 

 

 

 

 

 

 

 

 

GAAP - (in dollars per share)

$

(0.33

)

$

(0.43

)

$

(0.62

)

 

 

$

(1.95

)

$

(0.30

)

$

(0.56

)

$

(0.78

)

$

(0.31

)

 

Non-GAAP - (in dollars per share)

$

(0.19

)

$

(0.30

)

$

(0.41

)

 

 

$

(0.01

)

$

(0.08

)

$

0.03

 

$

0.07

 

$

(0.02

)

 

 

 

 

 

 

 

 

 

 

 

 

 

Net earnings (loss) - GAAP

$

(12,027

)

$

(15,607

)

$

(22,663

)

 

 

$

(70,538

)

$

(10,918

)

$

(20,221

)

$

(28,176

)

$

(11,223

)

 

Stock-based compensation and related social

taxes, restructuring, impairment, acquisition-

related, integration and other non-recurring

costs (recoveries)

11,957

 

4,393

 

3,926

 

 

 

46,108

 

6,057

 

10,720

 

23,258

 

6,073

 

 

COVID-19 government relief

(6,298

)

 

 

 

 

 

 

 

 

 

 

Amortization

8,269

 

8,538

 

8,485

 

 

 

33,177

 

8,573

 

8,115

 

8,118

 

8,371

 

 

Interest expense and other, net

987

 

280

 

191

 

 

 

301

 

109

 

121

 

102

 

(31

)

 

Foreign exchange loss (gain)

(3,526

)

(3,945

)

2,871

 

 

 

1,109

 

(1,585

)

2,988

 

(1,037

)

743

 

 

Income tax expense (recovery)

268

 

1,031

 

(1,978

)

 

 

10,920

 

90

 

4,577

 

5,657

 

596

 

 

Adjusted EBITDA (continuing and discontinued)

$

(370

)

$

(5,310

)

$

(9,168

)

 

 

$

21,077

 

$

2,326

 

$

6,300

 

$

7,922

 

$

4,529

 

 

 

 

 

 

 

 

 

 

 

 

 

 

SIERRA WIRELESS, INC.

SEGMENTED RESULTS

Prior period results have been reclassified to conform to current period presentation

 
(In thousands of U.S. dollars,

2020

 

 

2019

except where otherwise

 

 

 

 

 

 

 

 

 

 

indicated)

Q3

Q2

Q1

 

 

Total

Q4

Q3

Q2

Q1

 

 

 

 

 

 

 

 

 

 

 

IoT Solutions

 

 

 

 

 

 

 

 

 

 

Revenue

$

79,093

 

$

81,836

 

$

78,790

 

 

 

$

377,808

 

$

90,937

 

$

93,439

 

$

99,145

 

$

94,287

 

Gross margin

 

 

 

 

 

 

 

 

 

 

- GAAP

$

29,627

 

$

30,538

 

$

28,011

 

 

 

$

140,158

 

$

33,665

 

$

35,203

 

$

36,811

 

$

34,479

 

- Non-GAAP

$

29,594

 

$

30,533

 

$

28,035

 

 

 

$

140,222

 

$

33,676

 

$

35,203

 

$

36,833

 

$

34,510

 

Gross margin %

 

 

 

 

 

 

 

 

 

 

- GAAP

37.5%

37.3%

35.6%

 

 

37.1%

37.0%

37.7%

37.1%

36.6%

- Non-GAAP

37.4%

37.3%

35.6%

 

 

37.1%

37.0%

37.7%

37.2%

36.6%

 

 

 

 

 

 

 

 

 

 

 

Embedded Broadband

 

 

 

 

 

 

 

 

 

 

Revenue

$

34,278

 

$

29,882

 

$

24,231

 

 

 

$

169,468

 

$

34,170

 

$

43,256

 

$

46,520

 

$

45,522

 

Gross margin

 

 

 

 

 

 

 

 

 

 

- GAAP

$

9,825

 

$

10,470

 

$

6,914

 

 

 

$

57,328

 

$

11,095

 

$

14,421

 

$

16,170

 

$

15,642

 

- Non-GAAP

$

9,782

 

$

10,466

 

$

6,938

 

 

 

$

57,427

 

$

11,105

 

$

14,465

 

$

16,190

 

$

15,667

 

Gross margin %

 

 

 

 

 

 

 

 

 

 

- GAAP

28.7%

35.0%

28.5%

 

 

33.8%

32.5%

33.3%

34.8%

34.4%

- Non-GAAP

28.5%

35.0%

28.6%

 

 

33.9%

32.5%

33.4%

34.8%

34.4%

Total

 

 

 

 

 

 

 

 

 

 

Revenue

$

113,371

 

$

111,718

 

$

103,021

 

 

 

$

547,276

 

$

125,107

 

$

136,695

 

$

145,665

 

$

139,809

 

Gross margin

 

 

 

 

 

 

 

 

 

 

- GAAP

$

39,452

 

$

41,008

 

$

34,925

 

 

 

$

197,486

 

$

44,760

 

$

49,624

 

$

52,981

 

$

50,121

 

- Non-GAAP

$

39,376

 

$

40,999

 

$

34,973

 

 

 

$

197,649

 

$

44,781

 

$

49,668

 

$

53,023

 

$

50,177

 

Gross margin %

 

 

 

 

 

 

 

 

 

 

- GAAP

34.8%

36.7%

33.9%

 

 

36.1%

35.8%

36.3%

36.4%

35.8%

- Non-GAAP

34.7%

36.7%

33.9%

 

 

36.1%

35.8%

36.3%

36.4%

35.9%

Revenue by Type:

 

 

 

 

 

 

 

 

 

 

Product

$

83,560

 

$

84,820

 

$

76,308

 

 

 

$

449,063

 

$

99,024

 

$

112,177

 

$

120,859

 

$

117,003

 

Recurring and other services

$

29,811

 

$

26,898

 

$

26,713

 

 

 

$

98,213

 

$

26,083

 

$

24,518

 

$

24,806

 

$

22,806

 

 

 

 

 

 

 

 

 

 

 

 

 

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

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

Source: Sierra Wireless, Inc.