Sierra Wireless earns $27.19-million (U.S.) in 2012

2013-02-06 16:48 ET - News Release

 

Mr. David McLennan reports

SIERRA WIRELESS REPORTS FOURTH QUARTER AND FULL YEAR 2012 RESULTS

Sierra Wireless Inc. has released its fourth quarter and full-year 2012 results. All results are reported in United States dollars and are prepared in accordance with U.S. generally accepted accounting principles (GAAP), except as otherwise indicated below.

On Jan. 28, 2013, the company announced a definitive agreement for the sale of substantially all of the assets and operations related to its AirCard business to Netgear Inc. In accordance with GAAP, assets and liabilities associated with the sale have been recorded as held for sale and the results of operations of the AirCard business as discontinued operations. The consolidated statements of operations and related selected financial information have been retrospectively modified to distinguish between continuing operations and discontinued operations.

"Our fourth quarter results highlight our continued solid revenue growth and improving earnings," said Jason Cohenour, president and chief executive officer. "As the global leader in machine-to-machine and connected device solutions, we believe that we are exceptionally well positioned to drive profitable growth both organically and through strategic acquisitions."

Fourth quarter 2012

Revenue from continuing operations in the fourth quarter of 2012 was $109.4-million, compared with $82.4-million in the fourth quarter of 2011 and $100.2-million in the third quarter of 2012. The 32.8-per-cent year-over-year revenue increase was driven by better-than-expected growth in machine-to-machine sales, including a $15.5-million contribution from the recently acquired machine-to-machine business of Sagemcom, along with solid growth in sales to PC original equipment manufacturers (OEMs).

On a GAAP basis, gross margin from continuing operations was $36.2-million, or 33.1 per cent of revenue, in the fourth quarter of 2012, compared with $25.2-million, or 30.6 perc ent of revenue, in the fourth quarter of 2011. Operating expenses from continuing operations were $37.7-million and loss from continuing operations was $1.5-million in the fourth quarter of 2012, compared with operating expenses of $45.2-million and a loss from operations of $20-million in the fourth quarter of 2011. Fourth quarter of 2011 operating expenses included an intangible asset impairment charge of $11.2-million, primarily related to a software development program that was acquired through the purchase of Wavecom SA in 2009 and that the company abandoned during the fourth quarter of 2011. Net earnings from continuing operations were $15.5-million, or 50 cents per diluted share, in the fourth quarter of 2012, compared with net loss of $20.4-million, or 65 cents per diluted share, in the fourth quarter of 2011. Net earnings from continuing operations in 2012 included an income tax recovery that was the result of the recognition of certain tax assets that will be realizable as a result of the sale of the AirCard business. Net earnings, including discontinued operations, were $19.6-million, or 64 cents per diluted share, in the fourth quarter of 2012, compared with net loss, including discontinued operations, of $13.8-million, or 44 cents per diluted share, in the fourth quarter of 2011.

On a non-GAAP basis, gross margin from continuing operations was 33.2 per cent of revenue in the fourth quarter of 2012, compared with 30.7 per cent of revenue in the fourth quarter of 2011. Operating expenses from continuing operations were $32.6-million and operating earnings from continuing operations were $3.7-million in the fourth quarter of 2012, compared with operating expenses of $29.7-million and an operating loss of $4.4-million in the fourth quarter of 2011. Net earnings from continuing operations were $4.5-million, or 15 cents per diluted share, in the fourth quarter of 2012, compared with net loss of $4.4-million, or 14 cents per diluted share, in the fourth quarter of 2011.

The cash, cash equivalents and short-term investments balance at the end of the fourth quarter of 2012 was $63.6-million, up from $59.5-million at the end of the third quarter of 2012.

Full year 2012

Revenue from continuing operations for the year ended Dec. 31, 2012, was $397.3-million, compared with $333.2-million for the year ended Dec. 31, 2011. The 19.3-per-cent year-over-year revenue increase was driven by significant growth in machine-to-machine sales, including a $20.1-million contribution from the recently acquired machine-to-machine business of Sagemcom, along with strong growth in sales to PC OEMs.

On a GAAP basis, gross margin from continuing operations was $125.3-million, or 31.5 per cent of revenue, in 2012, compared with $101.7-million, or 30.5 per cent of revenue, in 2011. Operating expenses from continuing operations were $147.5-million and loss from operations was $22.2-million in 2012, compared with operating expenses of $156-million and a loss from operations of $54.2-million in 2011. The operating loss in 2011 included an intangible asset impairment charge of $11.2-million, primarily related to a software development program that was acquired through the purchase of Wavecom SA in 2009 and the company abandoned during the fourth quarter of 2011. Net loss from continuing operations was $4.2-million, or 14 cents per diluted share, in 2012, compared with $50.7-million, or $1.62 per diluted share, in 2011. Net earnings, including discontinued operations, were $27.2-million, or 88 cents per diluted share, in 2012, compared with net loss, including discontinued operations, of $29.3-million, or 94 cents per diluted share, in 2011.

On a non-GAAP basis, gross margin from continuing operations was 31.6 per cent of revenue in 2012, compared with 30.7 percent of revenue in 2011. Operating expenses from continuing operations were $124.7-million and operating earnings from continuing operations were $900,000 in 2012, compared with operating expenses of $124.5-million and an operating loss of $22.4-million in 2011. Net loss from continuing operations was $400,000, or one cent per diluted share, in 2012, compared with net loss of $18.7-million, or 60 cents per diluted share, in 2011.

Financial guidance

The company provides the following guidance for the first quarter of 2013 for its continuing operations.

In the first quarter of 2013, the company expects revenue from its continuing operations to be down sequentially following the exceptionally strong fourth quarter of 2012. It expects gross margin to be similar or slightly lower than fourth quarter 2012 levels and operating expenses to increase as a result of higher new product certification costs combined with the negative impact of a strengthening euro.

Looking forward to the second quarter of 2013, the company expects a return to solid sequential and year-over-year revenue growth and modest profitability.

 

                              FIRST QUARTER 2013 GUIDANCE                                                                         Continuing operationsRevenue                                                            $98-million to $102-million     Earnings (loss) from operations                               ($2.5-million) to ($1.5-million)     Net earnings (loss) from continuing operations                ($2.5-million) to ($1.5-million) Earnings (loss) per share from continuing operations   (Eight cents) to (five cents) per share  

 

This non-GAAP guidance for the first quarter of 2013 reflects current business indicators and expectations. Inherent in this guidance are risk factors that are described in greater detail in the company's regulatory filings. The company's actual results could differ materially from those presented above. All figures are approximations based on management's current beliefs and assumptions.

Conference call, webcast and instant replay details

Sierra Wireless president and chief executive officer, Jason Cohenour, and chief financial officer, David McLennan, will host a conference call and webcast with analysts and investors to review the results on Wednesday, Feb. 6, 2013, at 5:30 p.m. Eastern Time (2:30 p.m. PT). A live slide presentation will be available for viewing during the call.

To participate in this conference call, please dial the following numbers approximately 10 minutes prior to the commencement of the call.

 

Toll-free (Canada and U.S.): 1-877-201-0168

Alternate number: 1-647-788-4901

Conference ID: No. 87240990

 

For those unable to participate in the live call, a replay will be available until Feb. 27, 2013. Dial 1-855-859-2056 or 1-800-585-8367 and enter the conference ID number above to access the replay.

 

                                    STATEMENT OF OPERATIONS                                 (in thousands of U.S. dollars)                                                      Three months ended Dec. 31,    Year ended Dec. 31,                                                           2012              2011      2012         2011Revenue                                               $ 109,405          $ 82,391 $ 397,321    $ 333,175Cost of goods sold                                       73,172            57,206   272,047      231,435 Gross marginExpenses                                                 36,233            25,185   125,274      101,740 Sales and marketing                                      10,176             8,886    37,067       37,188Reseach and development                                  16,294            14,801    61,785       60,903 Administration                                            7,743             7,694    32,777       33,716  Acquisition costs                                           387                 -     3,182            -  Restructuring                                                42              (19)     2,251          837  Integration                                                   -                 -         -        1,426  Impairment of intangible asset                               -             11,214         -         11,2  Amortization                                              3,107             2,620    10,418       10,709                                                          37,749            45,196   147,480      155,993  Loss from operations                                    (1,516)          (20,011)  (22,206)     (54,253) Foreign exchange gain (loss)                              1,608             (507)     3,326        (460)  Other income (expense)                                       35                20     (196)           35  Earnings (loss) before income taxes                         127          (20,498)  (19,076)     (54,678) Income tax recovery                                    (15,396)              (68)  (14,874)      (3,968)  Net earnings (loss) from continuing operations           15,523          (20,430)   (4,202)     (50,710) Net earnings from discontinued operations                 4,083             6,668    31,401       21,338 Net earnings (loss)                                      19,606          (13,762)    27,199     (29,372)Net (loss) attributable to non-controlling interest          -                  -         -         (57) Net earnings (loss) attributable to company              19,606          (13,762)    27,199     (29,315) 

 

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