[February 08, 2018] |
|
Sierra Wireless Reports Fourth Quarter and Full Year 2017 Results
Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results
for its fourth quarter and fiscal year ending December 31, 2017. 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.
"In the fourth quarter of 2017, we delivered year-over-year revenue
increases in each of our three segments, with particularly strong growth
in our high margin Enterprise and IoT Services lines of business," said
Jason Cohenour, President and CEO. "We also significantly strengthened
our IoT Services business with the addition of Numerex, and are now
better positioned than ever before to expand our IoT services and scale
our subscription based recurring revenue."
Q4 2017
Revenue for the fourth quarter of 2017 was $183.5 million, an increase
of 12.6% compared to $163.0 million in the fourth quarter of 2016.
Revenue from OEM Solutions was $139.8 million in the fourth quarter of
2017, up 3.4% compared to $135.2 million in the fourth quarter of 2016.
Revenue from Enterprise Solutions was $31.8 million in the fourth
quarter of 2017, up 52.0% compared to $21.0 million in the fourth
quarter of 2016. Revenue from IoT Services was $11.9 million in the
fourth quarter of 2017, up 73.5% compared to $6.8 million in the fourth
quarter of 2016. The fourth quarter of 2017 includes $3.1 million of
revenue from Numerex Corp. ("Numerex") which was acquired on December 7,
2017. Subsequent to the acquisition of Numerex, our former Cloud and
Connectivity Services segment was renamed IoT Services and now includes
Numerex.
GAAP RESULTS
-
Gross margin was $61.8 million, or 33.7% of revenue, in the fourth
quarter of 2017, compared to $68.8 million, or 42.2% of revenue, in
the fourth quarter of 2016. In the fourth quarter 2016, gross margin
was favorably impacted by a change in estimate of our Intellectual
Property ("IP") royalty accrual.
-
Operating expenses were $64.8 million and loss from operations was
$3.0 million in the fourth quarter of 2017, compared to operating
expenses of $49.6 million and earnings from operations of $19.2
million in the fourth quarter of 2016.
-
Net loss was $3.5 million, or $0.11 per diluted share, in the fourth
quarter of 2017, compared to net earnings of $15.7 million, or $0.49
diluted per share, in the fourth quarter of 2016.
NON-GAAP RESULTS(1)
-
Gross margin was 33.8% in the fourth quarter of 2017, compared to
34.3% in the fourth quarter of 2016.
-
Operating expenses were $52.5 million and earnings from operations
were $9.5 million in the fourth quarter of 2017, compared to operating
expenses of $44.1 million and earnings from operations of $11.7
million in the fourth quarter of 2016.
-
Net earnings were $9.2 million, or $0.28 per diluted share, in the
fourth quarter of 2017, compared to net earnings of $8.8 million, or
$0.27 per diluted share, in the fourth quarter of 2016.
-
Adjusted earnings before interest, taxes, depreciation and
amortization ("Adjusted EBITDA") were $13.9 million in the fourth
quarter of 2017, compared to $15.5 million in the fourth quarter of
2016.
(1) See "Non-GAAP Financial Measures" and "Reconciliation of GAAP
and Non-GAAP Results by Quarter" below.
Cash and cash equivalents at the end of the fourth quarter of 2017 were
$65.2 million, representing a decrease of $9.0 million compared to the
end of the third quarter of 2017. The decrease in cash was primarily due
to the acquisition of Numerex partially offset by positive cash flows
from operating activities.
FULL YEAR 2017
Revenue for 2017 was $692.1 million, an increase of 12.4% compared to
$615.6 million in 2016. Revenue from OEM Solutions was $555.9 million in
2017, up 7.6% compared to $516.5 million in 2016. Revenue from
Enterprise Solutions was $101.5 million in 2017, up 42.0% compared to
$71.5 million in 2016. Revenue from IoT Services, including $3.1 million
from Numerex was $34.7 million in 2017, up 25.5% compared to $27.6
million in 2016.
GAAP RESULTS
-
Gross margin was $234.9 million, or 33.9% of revenue, in 2017,
compared to $217.7 million, or 35.4% of revenue, in 2016. In 2016,
gross margin was favorably impacted by a change in estimate of our IP
royalty accrual and two legal settlements.
-
Operating expenses were $235.3 million and loss from operations was
$0.4 million in 2017, compared to operating expenses of $196.4 million
and earnings from operations of $21.3 million in 2016.
-
Net earnings were $4.1 million, or $0.13 per share, in 2017, compared
to net earnings of $15.4 million, or $0.48 per share, in 2016.
NON-GAAP RESULTS(2)
-
Gross margin was 34.0% in 2017, compared to 33.3% in 2016.
-
Operating expenses were $196.3 million and earnings from operations
were $39.2 million in 2017, compared to operating expenses of $175.0
million and earnings from operations of $30.1 million in 2016.
-
Net earnings were $34.1 million, or $1.04 per share, in 2017, compared
to net earnings of $22.0 million, or $0.68 per share, in 2016.
-
Adjusted EBITDA was $54.2 million in 2017, compared to $43.9 million
in 2016.
(2) See "Non-GAAP Financial Measures" and "Reconciliation of GAAP
and Non-GAAP Results by Quarter" below.
Acquisition
On December 7, 2017, in accordance with the terms of the Agreement and
Plan of Merger, dated as of August 2, 2017, we acquired all of the
outstanding shares of Numerex in a stock-for-stock merger transaction
(the "Transaction") whereby Numerex stockholders received a fixed
exchange ratio of 0.18 common shares of Sierra Wireless for each share
of Numerex common stock. On closing of the Transaction, Sierra Wireless
issued 3,580,832 common shares as merger consideration in exchange for
all of the outstanding shares of Numerex common stock and certain
outstanding Numerex equity awards and warrants. Concurrent with closing,
approximately $20.2 million of cash in the aggregate was paid to retire
outstanding Numerex debt for total consideration of $97.5 million.
Financial Guidance
For the first quarter of 2018, we expect revenue to be in the range of
$181 million to $189 million and non-GAAP earnings per share to be in
the range of $0.04 to $0.10. Our guidance for the first quarter of 2018
includes a full quarter of Numerex following the acquisition of the
company on December 7, 2017. We expect the first quarter of 2018 to be
impacted by some unusual and mainly non-recurring items, including
higher one-time costs related to a Numerex network upgrade and customer
migration and tight component supply constraining revenue and adding to
cost of goods.
Additionally, with the integration of Numerex, we have commenced various
efficiency and effectiveness initiatives. These initiatives are focused
on capturing synergies as we integrate Numerex and efficiency gains in
other areas of our business. The initiatives being undertaken are
expected to reduce cost of goods sold, as well as on-going operating
expenses. As a result of implementing these initiatives, we are
targeting a quarterly non-GAAP operating expense run rate of $56.5
million in the fourth quarter of 2018, down from approximately $59
million in non-GAAP operating expense that is included in our guidance
for the first quarter of 2018. We expect these initiatives will result
in a one-time non-GAAP restructuring charge of approximately $4.5
million.
This Non-GAAP guidance reflects current business indicators and
expectations. Inherent in this guidance are risk factors that are
described in greater detail in our regulatory filings. Our actual
results could differ materially from those presented above. All figures
are approximations based on management's current beliefs and assumptions.
Non-GAAP Financial Measures
We disclose non-GAAP financial measures as we believe they provide
useful information on actual operating performance and 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 nonrecurring costs or
recoveries.
Non-GAAP earnings (loss) from operations excludes the impact of
stock-based compensation expense and related social taxes, amortization
related to acquisitions, acquisition-related and integration expense,
restructuring expense, impairment and certain other nonrecurring costs
or recoveries.
In addition to the above, Non-GAAP net earnings (loss) and non-GAAP
earnings (loss) per share exclude the impact of foreign exchange gains
or losses on translation of certain balance sheet accounts, unrealized
foreign exchange gains or losses on forward contracts and certain tax
adjustments.
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.
Adjusted EBITDA is defined as net earnings (loss) plus stock-based
compensation expense and related social taxes, acquisition-related and
integration expense, restructuring expense, impairment, certain other
nonrecurring 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 and
income tax expense. Adjusted EBITDA is a metric used by investors and
analysts for valuation purposes and we believe that it 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 capital expenditures.
Conference call and webcast details
Sierra Wireless President and CEO, Jason Cohenour, and CFO, David
McLennan, will host a conference call and webcast with analysts and
investors to review the results on Thursday, February 8, 2018, at 5:30
PM Eastern Time (2:30 PM PT). A live slide presentation will be
available for viewing during the call from the link provided below.
To participate in this conference call, please dial the following number
approximately ten minutes prior to the start of the call:
-
Toll-free (Canada and US): 1-877-201-0168
-
Alternate number: 1-647-788-4901
-
Conference ID: 5895407
To access the webcast, please follow the link below:
Sierra
Wireless Q4 2017 Conference Call and Webcast
If the above link does not work, please copy and paste the following URL
into your browser:
http://event.on24.com/r.htm?e=1555069&s=1&k=387A1BA17101DAF00053186E3990FD79
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
("forward-looking statements") including statements and information
relating to our financial guidance for the first quarter of 2018 and our
fiscal year 2018, our business outlook for the short and longer term,
statements regarding our strategy, plans 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; expectations regarding the
acquisition of Numerex; estimates of our expenses, future revenues,
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 IoT solutions; expectations regarding product
and price competition from other wireless device manufacturers and
solution providers; and our ability to implement effective control
procedures. 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. We do not intend to update or revise our
forward-looking statements unless we are required to do so by securities
laws.
Forward-looking statements:
-
Typically include words and phrases about the future such as
"outlook", "will", "may", "estimates", "intends", "believes", "plans",
"anticipates" and "expects".
-
Are not promises or guarantees of future performance. They represent
our current views and may change significantly.
-
Are based on a number of material assumptions, including, but not
limited to, those listed below, which could prove to be significantly
incorrect:
-
our ability to develop, manufacture and sell new products and
services that meet the needs of our customers and gain commercial
acceptance;
-
our ability to continue to sell our products and services in the
expected quantities at the expected prices and expected times;
-
expected cost of goods sold;
-
expected component supply constraints;
-
our ability to win new business;
-
our ability to integrate the business, operations and workforce of
Numerex and to return the Numerex business to profitable growth
and realize the expected benefits of the acquisition;
-
our ability to integrate other acquired businesses and realize
expected benefits;
-
expected deployment of next generation networks by wireless
network operators;
-
our operations not being adversely disrupted by other
developments, operating or regulatory risks; and
-
expected tax rates and foreign exchange rates.
-
Are subject to substantial known and unknown material risks and
uncertainties. Many factors could cause our actual results,
achievements and developments in our business to differ significantly
from those expressed or implied by our forward-looking statements,
including without limitation, the following factors. These risk
factors and others are discussed in our Annual Information Form and
Management's Discussion and Analysis of Financial Condition and
Results of Operations, which may be found on SEDAR at www.sedar.com
and on EDGAR at www.sec.gov
and in our other regulatory filings with the Securities and Exchange
Commission in the United States and the Provincial Securities
Commissions in Canada:
-
competition from new or established competitors or from those with
greater resources;
-
risks related to the recent acquisition of Numerex;
-
disruption of, and demands on, our ongoing business and diversion
of management's time and attention in connection with other
acquisitions or divestitures;
-
the loss of or significant demand fluctuations from any of our
significant customers;
-
cyber-attacks or other breaches of our information technology
security;
-
our financial results being subject to fluctuation;
-
our ability to respond to changing technology, industry standards
and customer requirements;
-
our ability to attract or retain key personnel;
-
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;
-
difficult or uncertain global economic conditions;
-
our reliance on single source suppliers for certain components
used in our products;
-
failures of our products or services due to design flaws and
errors, component quality issues, manufacturing defects or other
quality issues;
-
our dependence on a limited number of third party manufacturers;
-
unanticipated costs associated with litigation or settlements;
-
our dependence on wireless network carriers to offer and promote
acceptable wireless service programs;
-
risks related to contractual disputes with counterparties;
-
risks related to governmental regulation;
-
risks related to the transmission, use and disclosure of user data
and personal information; and
-
risks inherent in foreign jurisdictions.
About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) is an IoT pioneer, empowering
businesses and industries to transform and thrive in the connected
economy. Customers Start with Sierra because we offer a device and cloud
solution, comprised of embedded and networking solutions seamlessly
integrated with our secure cloud and connectivity services. OEMs and
enterprises worldwide rely on our expertise in delivering fully
integrated solutions to reduce complexity, turn data into intelligence
and get their connected products and services to market faster. Sierra
Wireless has approximately 1,400 employees globally and operates R&D
centers in North America, Europe and Asia. For more information, visit www.sierrawireless.com.
"AirPrime," "AirLink," and "AirVantage" are trademarks of Sierra
Wireless. Other product or service names mentioned herein may be the
trademarks of their respective owners.
SIERRA WIRELESS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE EARNINGS
(LOSS)
(In thousands of U.S. dollars, except where otherwise stated)
|
|
Three months ended December 31,
|
|
|
Twelve months ended December 31,
|
|
|
2017
|
|
|
2016
|
|
|
2017
|
|
|
2016
|
Revenue
|
|
$
|
183,533
|
|
|
|
$
|
163,021
|
|
|
|
$
|
692,077
|
|
|
|
$
|
615,607
|
|
Cost of goods sold
|
|
121,719
|
|
|
|
94,225
|
|
|
|
457,130
|
|
|
|
397,864
|
|
Gross margin
|
|
61,814
|
|
|
|
68,796
|
|
|
|
234,947
|
|
|
|
217,743
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
20,456
|
|
|
|
17,048
|
|
|
|
75,594
|
|
|
|
64,242
|
|
Research and development
|
|
21,828
|
|
|
|
18,047
|
|
|
|
83,361
|
|
|
|
73,077
|
|
Administration
|
|
11,379
|
|
|
|
9,708
|
|
|
|
42,904
|
|
|
|
40,956
|
|
Restructuring
|
|
245
|
|
|
|
-
|
|
|
|
1,076
|
|
|
|
-
|
|
Acquisition-related and integration
|
|
4,792
|
|
|
|
376
|
|
|
|
8,195
|
|
|
|
843
|
|
Impairment
|
|
-
|
|
|
|
-
|
|
|
|
3,668
|
|
|
|
-
|
|
Amortization
|
|
6,073
|
|
|
|
4,372
|
|
|
|
20,508
|
|
|
|
17,277
|
|
|
|
64,773
|
|
|
|
49,551
|
|
|
|
235,306
|
|
|
|
196,395
|
|
Earnings (loss) from operations
|
|
(2,959
|
)
|
|
|
19,245
|
|
|
|
(359
|
)
|
|
|
21,348
|
|
Foreign exchange gain (loss)
|
|
1,267
|
|
|
|
(3,547
|
)
|
|
|
7,550
|
|
|
|
(1,736
|
)
|
Other income
|
|
38
|
|
|
|
2
|
|
|
|
67
|
|
|
|
83
|
|
Earnings (loss) before income taxes
|
|
(1,654
|
)
|
|
|
15,700
|
|
|
|
7,258
|
|
|
|
19,695
|
|
Income tax expense (recovery)
|
|
1,876
|
|
|
|
(18
|
)
|
|
|
3,123
|
|
|
|
4,310
|
|
Net earnings (loss)
|
|
$
|
(3,530
|
)
|
|
|
$
|
15,718
|
|
|
|
$
|
4,135
|
|
|
|
$
|
15,385
|
|
Other comprehensive earnings (loss):
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustments, net of taxes of $nil
|
|
88
|
|
|
|
(6,356
|
)
|
|
|
11,950
|
|
|
|
(6,448
|
)
|
Comprehensive earnings (loss)
|
|
$
|
(3,442
|
)
|
|
|
$
|
9,362
|
|
|
|
$
|
16,085
|
|
|
|
$
|
8,937
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) per share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$
|
(0.11
|
)
|
|
|
$
|
0.49
|
|
|
|
$
|
0.13
|
|
|
|
$
|
0.48
|
|
Diluted
|
|
(0.11
|
)
|
|
|
0.49
|
|
|
|
0.13
|
|
|
|
0.48
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average number of shares outstanding (in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
33,136
|
|
|
|
31,962
|
|
|
|
32,356
|
|
|
|
32,032
|
|
Diluted
|
|
33,136
|
|
|
|
32,367
|
|
|
|
32,893
|
|
|
|
32,335
|
|
SIERRA WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except where otherwise stated)
|
|
|
As at December 31,
|
|
|
|
2017
|
|
2016
|
Assets
|
|
|
|
|
|
Current assets
|
|
|
|
|
|
Cash and cash equivalents
|
|
|
$
|
65,003
|
|
|
$
|
102,772
|
|
Restricted cash
|
|
|
221
|
|
|
-
|
|
Accounts receivable
|
|
|
168,503
|
|
|
143,798
|
|
Inventories
|
|
|
53,026
|
|
|
40,913
|
|
Prepaids and other
|
|
|
8,006
|
|
|
6,530
|
|
|
|
|
294,759
|
|
|
294,013
|
|
Property and equipment
|
|
|
42,977
|
|
|
34,180
|
|
Intangible assets
|
|
|
108,599
|
|
|
74,863
|
|
Goodwill
|
|
|
218,516
|
|
|
154,114
|
|
Deferred income taxes
|
|
|
12,197
|
|
|
16,039
|
|
Other assets
|
|
|
12,058
|
|
|
5,250
|
|
|
|
|
$
|
689,106
|
|
|
$
|
578,459
|
|
Liabilities
|
|
|
|
|
|
Current liabilities
|
|
|
|
|
|
Accounts payable and accrued liabilities
|
|
|
$
|
172,395
|
|
|
$
|
167,500
|
|
Deferred revenue and credits
|
|
|
5,455
|
|
|
5,263
|
|
|
|
|
177,850
|
|
|
172,763
|
|
Long-term obligations
|
|
|
36,637
|
|
|
32,654
|
|
Deferred income taxes
|
|
|
7,702
|
|
|
11,458
|
|
|
|
|
222,189
|
|
|
216,875
|
|
Equity
|
|
|
|
|
|
Shareholders' equity
|
|
|
|
|
|
Common stock: no par value; unlimited shares authorized; issued and
outstanding:
|
|
|
|
|
|
35,861,510 shares (December 31, 2016 - 31,859,960 shares)
|
|
|
427,748
|
|
|
342,450
|
|
Preferred stock: no par value; unlimited shares authorized; issued
and outstanding: nil shares
|
|
|
-
|
|
|
-
|
|
Treasury stock: at cost; 222,639 shares (December 31, 2016 - 355,471
shares)
|
|
|
(3,216
|
)
|
|
(5,134
|
)
|
Additional paid-in capital
|
|
|
27,962
|
|
|
24,976
|
|
Retained earnings
|
|
|
16,899
|
|
|
13,718
|
|
Accumulated other comprehensive loss
|
|
|
(2,476
|
)
|
|
(14,426
|
)
|
|
|
|
466,917
|
|
|
361,584
|
|
|
|
|
$
|
689,106
|
|
|
$
|
578,459
|
|
SIERRA WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
|
|
Three months ended December 31,
|
|
Twelve months ended December 31,
|
|
|
2017
|
|
2016
|
|
2017
|
|
|
2016
|
Cash flows provided by (used in):
|
|
|
|
|
|
|
|
|
|
Operating activities
|
|
|
|
|
|
|
|
|
|
Net earnings (loss)
|
|
$
|
(3,530
|
)
|
|
$
|
15,718
|
|
|
$
|
4,135
|
|
|
|
$
|
15,385
|
|
Items not requiring (providing) cash
|
|
|
|
|
|
|
|
|
|
Amortization
|
|
8,764
|
|
|
7,043
|
|
|
30,503
|
|
|
|
25,894
|
|
Stock-based compensation
|
|
2,869
|
|
|
1,845
|
|
|
10,341
|
|
|
|
7,629
|
|
Deferred income taxes
|
|
2,088
|
|
|
(2,707
|
)
|
|
748
|
|
|
|
(2,707
|
)
|
Reduction in accrued royalty obligation
|
|
-
|
|
|
(13,045
|
)
|
|
-
|
|
|
|
(13,045
|
)
|
Impairment
|
|
-
|
|
|
-
|
|
|
3,668
|
|
|
|
-
|
|
Unrealized foreign exchange (gain) loss
|
|
(461
|
)
|
|
561
|
|
|
(8,507
|
)
|
|
|
(862
|
)
|
Other
|
|
170
|
|
|
(99
|
)
|
|
(55
|
)
|
|
|
(303
|
)
|
Changes in non-cash working capital
|
|
|
|
|
|
|
|
|
|
Accounts receivable
|
|
(11,333
|
)
|
|
(22,285
|
)
|
|
(10,584
|
)
|
|
|
(26,475
|
)
|
Inventories
|
|
7,387
|
|
|
(16,749
|
)
|
|
(6,806
|
)
|
|
|
(5,785
|
)
|
Prepaids and other
|
|
(122
|
)
|
|
3,515
|
|
|
(4,875
|
)
|
|
|
6,970
|
|
Accounts payable and accrued liabilities
|
|
6,627
|
|
|
25,139
|
|
|
(18,932
|
)
|
|
|
38,601
|
|
Deferred revenue and credits
|
|
1,079
|
|
|
245
|
|
|
(564
|
)
|
|
|
1,203
|
|
Cash flows provided by (used in) operating activities
|
|
13,538
|
|
|
(819
|
)
|
|
(928
|
)
|
|
|
46,505
|
|
Investing activities
|
|
|
|
|
|
|
|
|
|
Additions to property and equipment
|
|
(3,221
|
)
|
|
(4,147
|
)
|
|
(14,100
|
)
|
|
|
(16,957
|
)
|
Additions to intangible assets
|
|
(321
|
)
|
|
(163
|
)
|
|
(1,706
|
)
|
|
|
(900
|
)
|
Proceeds from sale of property and equipment
|
|
8
|
|
|
-
|
|
|
35
|
|
|
|
3
|
|
Acquisitions, net of cash acquired:
|
|
|
|
|
|
|
|
|
|
Numerex Corp.
|
|
(18,725
|
)
|
|
-
|
|
|
(18,725
|
)
|
|
|
-
|
|
GNSS business
|
|
-
|
|
|
-
|
|
|
(3,145
|
)
|
|
|
-
|
|
Blue Creation
|
|
-
|
|
|
(2,882
|
)
|
|
-
|
|
|
|
(2,882
|
)
|
GenX Mobile Inc.
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(5,900
|
)
|
Cash flows used in investing activities
|
|
(22,259
|
)
|
|
(7,192
|
)
|
|
(37,641
|
)
|
|
|
(26,636
|
)
|
Financing activities
|
|
|
|
|
|
|
|
|
|
Issuance of common shares, net of issue cost
|
|
423
|
|
|
479
|
|
|
5,708
|
|
|
|
2,048
|
|
Repurchase of common shares for cancellation
|
|
-
|
|
|
(3,997
|
)
|
|
(2,779
|
)
|
|
|
(10,203
|
)
|
Purchase of treasury shares for RSU distribution
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(4,214
|
)
|
Taxes paid related to net settlement of equity awards
|
|
(271
|
)
|
|
(119
|
)
|
|
(1,367
|
)
|
|
|
(909
|
)
|
Payment for contingent consideration
|
|
-
|
|
|
-
|
|
|
(1,397
|
)
|
|
|
(16
|
)
|
Decrease in other long-term obligations
|
|
(96
|
)
|
|
(105
|
)
|
|
(436
|
)
|
|
|
(395
|
)
|
Cash flows provided by (used in) financing activities
|
|
56
|
|
|
(3,742
|
)
|
|
(271
|
)
|
|
|
(13,689
|
)
|
Effect of foreign exchange rate changes on cash and cash equivalents
|
|
(317
|
)
|
|
2,471
|
|
|
1,292
|
|
|
|
2,656
|
|
Cash and cash equivalents and restricted cash, increase (decrease)
in the period
|
|
(8,982
|
)
|
|
(9,282
|
)
|
|
(37,548
|
)
|
|
|
8,836
|
|
Cash and cash equivalents and restricted cash, beginning of period
|
|
74,206
|
|
|
112,054
|
|
|
102,772
|
|
|
|
93,936
|
|
Cash and cash equivalents and restricted cash, end of period
|
|
$
|
65,224
|
|
|
$
|
102,772
|
|
|
$
|
65,224
|
|
|
|
$
|
102,772
|
|
SIERRA WIRELESS, INC.
RECONCILIATION OF GAAP AND NON-GAAP RESULTS BY QUARTER
|
|
2017
|
|
|
2016
|
(In thousands of U.S. dollars, except where otherwise
stated)
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Gross margin - GAAP
|
|
$
|
61,814
|
|
|
$
|
57,775
|
|
|
$
|
59,697
|
|
|
$
|
55,661
|
|
|
|
$
|
68,796
|
|
|
$
|
49,368
|
|
|
$
|
52,764
|
|
|
$
|
46,815
|
|
Stock-based compensation and related social taxes
|
|
122
|
|
|
123
|
|
|
108
|
|
|
108
|
|
|
|
99
|
|
|
108
|
|
|
107
|
|
|
106
|
|
Realized gains (losses) on hedge contracts
|
|
11
|
|
|
12
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other nonrecurring costs (recoveries)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
|
(13,045
|
)
|
|
-
|
|
|
-
|
|
|
-
|
|
Gross margin - Non-GAAP
|
|
$
|
61,947
|
|
|
$
|
57,910
|
|
|
$
|
59,805
|
|
|
$
|
55,769
|
|
|
|
$
|
55,850
|
|
|
$
|
49,476
|
|
|
$
|
52,871
|
|
|
$
|
46,921
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Earnings (loss) from operations - GAAP
|
|
$
|
(2,959
|
)
|
|
$
|
238
|
|
|
$
|
3,849
|
|
|
$
|
(1,487
|
)
|
|
|
$
|
19,245
|
|
|
$
|
(53
|
)
|
|
$
|
3,411
|
|
|
$
|
(1,255
|
)
|
Stock-based compensation and related social taxes
|
|
2,869
|
|
|
2,780
|
|
|
2,577
|
|
|
2,148
|
|
|
|
1,845
|
|
|
1,856
|
|
|
1,902
|
|
|
1,993
|
|
Acquisition-related and integration
|
|
4,792
|
|
|
2,077
|
|
|
875
|
|
|
451
|
|
|
|
376
|
|
|
34
|
|
|
59
|
|
|
374
|
|
Restructuring
|
|
245
|
|
|
199
|
|
|
259
|
|
|
373
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Impairment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
3,668
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Realized gains (losses) on hedge contracts
|
|
209
|
|
|
210
|
|
|
-
|
|
|
-
|
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other nonrecurring costs (recoveries)
|
|
-
|
|
|
-
|
|
|
42
|
|
|
276
|
|
|
|
(13,045
|
)
|
|
1,283
|
|
|
-
|
|
|
-
|
|
Acquisition-related amortization
|
|
4,306
|
|
|
3,845
|
|
|
3,694
|
|
|
3,641
|
|
|
|
3,308
|
|
|
3,206
|
|
|
3,058
|
|
|
2,530
|
|
Earnings (loss) from operations - Non-GAAP
|
|
$
|
9,462
|
|
|
$
|
9,349
|
|
|
$
|
11,296
|
|
|
$
|
9,070
|
|
|
|
$
|
11,729
|
|
|
$
|
6,326
|
|
|
$
|
8,430
|
|
|
$
|
3,642
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net earnings (loss) - GAAP
|
|
$
|
(3,530
|
)
|
|
$
|
1,227
|
|
|
$
|
6,649
|
|
|
$
|
(211
|
)
|
|
|
$
|
15,718
|
|
|
$
|
(1,769
|
)
|
|
$
|
718
|
|
|
$
|
718
|
|
Stock-based compensation and related social taxes,
restructuring, impairment, acquisition-related and
integration, realized gains (losses) on hedge contracts and other
nonrecurring costs (recoveries)
|
|
7,906
|
|
|
5,056
|
|
|
3,753
|
|
|
6,916
|
|
|
|
(10,824
|
)
|
|
3,173
|
|
|
1,961
|
|
|
2,367
|
|
Amortization
|
|
8,764
|
|
|
7,548
|
|
|
7,194
|
|
|
6,997
|
|
|
|
7,043
|
|
|
6,577
|
|
|
6,706
|
|
|
5,568
|
|
Interest and other, net
|
|
(38
|
)
|
|
(32
|
)
|
|
12
|
|
|
(9
|
)
|
|
|
(2
|
)
|
|
(23
|
)
|
|
(32
|
)
|
|
(26
|
)
|
Foreign exchange loss (gain)
|
|
(1,058
|
)
|
|
(1,457
|
)
|
|
(3,517
|
)
|
|
(1,099
|
)
|
|
|
3,547
|
|
|
(590
|
)
|
|
1,071
|
|
|
(2,292
|
)
|
Income tax expense (recovery)
|
|
1,876
|
|
|
710
|
|
|
705
|
|
|
(168
|
)
|
|
|
(18
|
)
|
|
2,329
|
|
|
1,654
|
|
|
345
|
|
Adjusted EBITDA
|
|
$
|
13,920
|
|
|
$
|
13,052
|
|
|
$
|
14,796
|
|
|
$
|
12,426
|
|
|
|
$
|
15,464
|
|
|
$
|
9,697
|
|
|
$
|
12,078
|
|
|
$
|
6,680
|
|
Amortization (exclude acquisition-related amortization)
|
|
(4,458
|
)
|
|
(3,703
|
)
|
|
(3,500
|
)
|
|
(3,356
|
)
|
|
|
(3,735
|
)
|
|
(3,371
|
)
|
|
(3,648
|
)
|
|
(3,038
|
)
|
Interest and other, net
|
|
38
|
|
|
32
|
|
|
(12
|
)
|
|
9
|
|
|
|
2
|
|
|
23
|
|
|
32
|
|
|
26
|
|
Income tax expense - Non-GAAP
|
|
(308
|
)
|
|
(1,791
|
)
|
|
(1,591
|
)
|
|
(1,418
|
)
|
|
|
(2,900
|
)
|
|
(2,208
|
)
|
|
(2,086
|
)
|
|
(1,047
|
)
|
Net earnings - Non-GAAP
|
|
$
|
9,192
|
|
|
$
|
7,590
|
|
|
$
|
9,693
|
|
|
$
|
7,661
|
|
|
|
$
|
8,831
|
|
|
$
|
4,141
|
|
|
$
|
6,376
|
|
|
$
|
2,621
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diluted earnings (loss) per share
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
GAAP - (in dollars)
|
|
$
|
(0.11
|
)
|
|
$
|
0.04
|
|
|
$
|
0.20
|
|
|
$
|
(0.01
|
)
|
|
|
$
|
0.49
|
|
|
$
|
(0.06
|
)
|
|
$
|
0.02
|
|
|
$
|
0.02
|
|
Non-GAAP - (in dollars)
|
|
$
|
0.28
|
|
|
$
|
0.23
|
|
|
$
|
0.30
|
|
|
$
|
0.24
|
|
|
|
$
|
0.27
|
|
|
$
|
0.13
|
|
|
$
|
0.20
|
|
|
$
|
0.08
|
|
SIERRA WIRELESS, INC.
SEGMENTED RESULTS
(In thousands of U.S. dollars, except where otherwise
stated)
|
|
|
2017
|
|
2016
|
|
|
|
Total
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
Total
|
|
Q4
|
|
Q3
|
|
Q2
|
|
Q1
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
OEM Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
|
555,887
|
|
|
|
$
|
|
139,795
|
|
|
|
$
|
|
138,531
|
|
|
|
$
|
|
144,561
|
|
|
|
$
|
|
133,000
|
|
|
|
$
|
|
516,517
|
|
|
|
$
|
|
135,211
|
|
|
|
$
|
|
127,765
|
|
|
|
$
|
|
132,667
|
|
|
|
$
|
|
120,874
|
|
|
|
Gross margin (2) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- GAAP
|
|
|
$
|
|
171,015
|
|
|
|
$
|
|
41,453
|
|
|
|
$
|
|
41,161
|
|
|
|
$
|
|
46,323
|
|
|
|
$
|
|
42,078
|
|
|
|
$
|
|
166,596
|
|
|
|
$
|
|
54,110
|
|
|
|
$
|
|
37,191
|
|
|
|
$
|
|
41,005
|
|
|
|
$
|
|
34,290
|
|
|
|
- Non-GAAP
|
|
|
$
|
|
171,402
|
|
|
|
$
|
|
41,554
|
|
|
|
$
|
|
41,268
|
|
|
|
$
|
|
46,413
|
|
|
|
$
|
|
42,167
|
|
|
|
$
|
|
154,988
|
|
|
|
$
|
|
42,232
|
|
|
|
$
|
|
37,280
|
|
|
|
$
|
|
41,096
|
|
|
|
$
|
|
34,380
|
|
|
|
Gross margin % (2) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- GAAP
|
|
|
30.8
|
|
%
|
|
29.7
|
|
%
|
|
29.7
|
|
%
|
|
32.0
|
|
%
|
|
31.6
|
|
%
|
|
32.3
|
|
%
|
|
40.0
|
|
%
|
|
29.1
|
|
%
|
|
30.9
|
|
%
|
|
28.4
|
|
%
|
|
- Non-GAAP
|
|
|
30.8
|
|
%
|
|
29.7
|
|
%
|
|
29.8
|
|
%
|
|
32.1
|
|
%
|
|
31.7
|
|
%
|
|
30.0
|
|
%
|
|
31.2
|
|
%
|
|
29.2
|
|
%
|
|
31.0
|
|
%
|
|
28.4
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Enterprise Solutions
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
|
101,535
|
|
|
|
$
|
|
31,879
|
|
|
|
$
|
|
26,277
|
|
|
|
$
|
|
21,661
|
|
|
|
$
|
|
21,718
|
|
|
|
$
|
|
71,486
|
|
|
|
$
|
|
20,976
|
|
|
|
$
|
|
18,938
|
|
|
|
$
|
|
16,577
|
|
|
|
$
|
|
14,995
|
|
|
|
Gross margin (1) (2) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- GAAP
|
|
|
$
|
|
48,521
|
|
|
|
$
|
|
15,129
|
|
|
|
$
|
|
12,631
|
|
|
|
$
|
|
10,276
|
|
|
|
$
|
|
10,485
|
|
|
|
$
|
|
39,949
|
|
|
|
$
|
|
12,002
|
|
|
|
$
|
|
9,273
|
|
|
|
$
|
|
8,922
|
|
|
|
$
|
|
9,752
|
|
|
|
- Non-GAAP
|
|
|
$
|
|
48,593
|
|
|
|
$
|
|
15,152
|
|
|
|
$
|
|
12,652
|
|
|
|
$
|
|
10,289
|
|
|
|
$
|
|
10,500
|
|
|
|
$
|
|
38,913
|
|
|
|
$
|
|
10,930
|
|
|
|
$
|
|
9,286
|
|
|
|
$
|
|
8,934
|
|
|
|
$
|
|
9,763
|
|
|
|
Gross margin % (1) (2) (3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- GAAP
|
|
|
47.8
|
|
%
|
|
47.5
|
|
%
|
|
48.1
|
|
%
|
|
47.4
|
|
%
|
|
48.3
|
|
%
|
|
55.9
|
|
%
|
|
57.2
|
|
%
|
|
49.0
|
|
%
|
|
53.8
|
|
%
|
|
65.0
|
|
%
|
|
- Non-GAAP
|
|
|
47.9
|
|
%
|
|
47.5
|
|
%
|
|
48.1
|
|
%
|
|
47.5
|
|
%
|
|
48.3
|
|
%
|
|
54.4
|
|
%
|
|
52.1
|
|
%
|
|
49.0
|
|
%
|
|
53.9
|
|
%
|
|
65.1
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
IoT Services
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
|
34,655
|
|
|
|
$
|
|
11,859
|
|
|
|
$
|
|
8,433
|
|
|
|
$
|
|
7,288
|
|
|
|
$
|
|
7,075
|
|
|
|
$
|
|
27,604
|
|
|
|
$
|
|
6,834
|
|
|
|
$
|
|
6,857
|
|
|
|
$
|
|
6,985
|
|
|
|
$
|
|
6,928
|
|
|
|
Gross margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- GAAP
|
|
|
$
|
|
15,411
|
|
|
|
$
|
|
5,232
|
|
|
|
$
|
|
3,983
|
|
|
|
$
|
|
3,098
|
|
|
|
$
|
|
3,098
|
|
|
|
$
|
|
11,198
|
|
|
|
$
|
|
2,684
|
|
|
|
$
|
|
2,904
|
|
|
|
$
|
|
2,837
|
|
|
|
$
|
|
2,773
|
|
|
|
- Non-GAAP
|
|
|
$
|
|
15,436
|
|
|
|
$
|
|
5,241
|
|
|
|
$
|
|
3,990
|
|
|
|
$
|
|
3,103
|
|
|
|
$
|
|
3,102
|
|
|
|
$
|
|
11,217
|
|
|
|
$
|
|
2,688
|
|
|
|
$
|
|
2,910
|
|
|
|
$
|
|
2,841
|
|
|
|
$
|
|
2,778
|
|
|
|
Gross margin %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- GAAP
|
|
|
44.5
|
|
%
|
|
44.1
|
|
%
|
|
47.2
|
|
%
|
|
42.5
|
|
%
|
|
43.8
|
|
%
|
|
40.6
|
|
%
|
|
39.3
|
|
%
|
|
42.4
|
|
%
|
|
40.6
|
|
%
|
|
40.0
|
|
%
|
|
- Non-GAAP
|
|
|
44.5
|
|
%
|
|
44.2
|
|
%
|
|
47.3
|
|
%
|
|
42.6
|
|
%
|
|
43.8
|
|
%
|
|
40.6
|
|
%
|
|
39.3
|
|
%
|
|
42.4
|
|
%
|
|
40.7
|
|
%
|
|
40.1
|
|
%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
|
|
$
|
|
692,077
|
|
|
|
$
|
|
183,533
|
|
|
|
$
|
|
173,241
|
|
|
|
$
|
|
173,510
|
|
|
|
$
|
|
161,793
|
|
|
|
$
|
|
615,607
|
|
|
|
$
|
|
163,021
|
|
|
|
$
|
|
153,560
|
|
|
|
$
|
|
156,229
|
|
|
|
$
|
|
142,797
|
|
|
|
Gross margin
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- GAAP
|
|
|
$
|
|
234,947
|
|
|
|
$
|
|
61,814
|
|
|
|
$
|
|
57,775
|
|
|
|
$
|
|
59,697
|
|
|
|
$
|
|
55,661
|
|
|
|
$
|
|
217,743
|
|
|
|
$
|
|
68,796
|
|
|
|
$
|
|
49,368
|
|
|
|
$
|
|
52,764
|
|
|
|
$
|
|
46,815
|
|
|
|
- Non-GAAP
|
|
|
$
|
|
235,431
|
|
|
|
$
|
|
61,947
|
|
|
|
$
|
|
57,910
|
|
|
|
$
|
|
59,805
|
|
|
|
$
|
|
55,769
|
|
|
|
$
|
|
205,118
|
|
|
|
$
|
|
55,850
|
|
|
|
$
|
|
49,476
|
|
|
|
$
|
|
52,871
|
|
|
|
$
|
|
46,921
|
|
|
|
Gross margin %
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
- GAAP
|
|
|
33.9
|
|
%
|
|
33.7
|
|
%
|
|
33.3
|
|
%
|
|
34.4
|
|
%
|
|
34.4
|
|
%
|
|
35.4
|
|
%
|
|
42.2
|
|
%
|
|
32.1
|
|
%
|
|
33.8
|
|
%
|
|
32.8
|
|
%
|
|
- Non-GAAP
|
|
|
34.0
|
|
%
|
|
33.8
|
|
%
|
|
33.4
|
|
%
|
|
34.5
|
|
%
|
|
34.5
|
|
%
|
|
33.3
|
|
%
|
|
34.3
|
|
%
|
|
32.2
|
|
%
|
|
33.8
|
|
%
|
|
32.9
|
|
%
|
|
(1) Q1 2016 Enterprise Solutions results include a $1.9 million
recovery from a legal settlement with a supplier related to a quality
issue with a component used in some of our gateway products. Excluding
this recovery, GAAP and Non-GAAP gross margin percentage would have been
52.4% and 52.5%, respectively. (2) Q2 2016 OEM Solutions results
include a $1.7 million recovery from certain legal costs pursuant to a
favorable arbitration decision on a contract dispute with an
intellectual property licensor. Excluding this recovery, GAAP and
Non-GAAP gross margin percentage would have been 29.6% and 29.7%,
respectively. Q2 2016 Enterprise Solutions results also include a $0.2
million recovery from this arbitration decision. Excluding this
recovery, GAAP and Non-GAAP gross margin percentage would have been
52.7% and 52.8%, respectively. (3) Q4 2016 OEM Solutions and
Enterprise Solutions GAAP gross margins include a favorable impact of
$12.9 million and $1.5 million, respectively, of a change in estimate on
accrued royalty obligations. This is comprised of two components, an
amount of $11.7 million and $1.3 million, respectively, related to a
one-time reduction effective October 1, 2016 (excluded from non-GAAP
gross margin), and a $1.2 million and $0.2 million, respectively,
favorable impact related to royalties accrued on the products sold in
Q4, 2016 (included in non-GAAP gross margin).
View source version on businesswire.com: http://www.businesswire.com/news/home/20180208006467/en/
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