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
View source
version on businesswire.com: https://www.businesswire.com/news/home/20201112006086/en/
Investor and Media: David Climie, Investor Relations
dclimie@sierrawireless.com Investor: Samuel Cochrane, Chief
Financial Officer investor@sierrawireless.com
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