Sierra Wireless Reports Fourth Quarter and Full Year 2011 Results

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Sierra Wireless Reports Fourth Quarter and Full Year 2011 Results

Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported fourth quarter and fiscal year 2011 results.



Fourth Quarter 2011

  • Revenue in the fourth quarter 2011 of $147.2 million
  • Non-GAAP earnings from operations of $3.4 million, exceeding guidance range
  • Non-GAAP net earnings of $2.5 million, or $0.08 per diluted share

Full Year 2011

  • Revenue for the year ended fiscal 2011 of $578.2 million
  • Non-GAAP net earnings of $3.6 million, or $0.12 per diluted share
  • Core M2M revenue up 9% year-over-year
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.

Jason Cohenour, President and Chief Executive Officer said:

“In the second half of 2011, we delivered improved operating results compared to the first half, continued to strengthen our global leadership position in the Machine-to-Machine market, and established ourselves as a 4G leader in Mobile Computing.

As we look forward, we believe that the strength of our market position, combined with an efficient cost structure and better gross margin, will drive continued improvement in operating results.”

Fourth Quarter 2011 Financial Results

Revenue for the fourth quarter of 2011 was $147.2 million, a decrease of 12% compared to $167.2 million in the fourth quarter of 2010, and comparable to $146.8 million in the third quarter of 2011.
The year-over-year revenue decrease was primarily due to the absence of revenue from Barnes & Noble and Clearwire, which combined had accounted for approximately $14.8 million in revenue in the fourth quarter of 2010.
Machine-to-Machine (“M2M”) revenue was $71.3 million, down 15% compared to the historically high levels of fourth quarter 2010, which included $8.4 million of revenue from Barnes & Noble.
Mobile Computing revenue was $75.9 million, down 9% compared to $83.2 million in the fourth quarter of 2010, which included $6.4 million of revenue from Clearwire.

On a GAAP basis, gross margin was $41.6 million, or 28.2%, in the fourth quarter of 2011, compared to $48.9 million, or 29.2%, in the fourth quarter of 2010.
Operating expenses were $54.0 million and loss from operations was $12.5 million in the fourth quarter of 2011, compared to operating expenses of $49.0 million and a loss from operations of $0.2 million in the fourth quarter of 2010.
The operating loss in the fourth quarter of 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, S.A. in 2009 and which we abandoned during the quarter. The program had no impact on our operations in prior periods nor do we expect it to have an impact on our future operations.
Net loss was $13.8 million, or $0.44 per diluted share, in the fourth quarter of 2011, compared to net earnings of $0.8 million, or $0.03 per diluted share, in the fourth quarter of 2010.

On a non-GAAP basis, gross margin was 28.3% in the fourth quarter of 2011, compared to 29.3% in the fourth quarter of 2010.
Operating expenses were $38.3 million and earnings from operations were $3.4 million in the fourth quarter of 2011, compared to operating expenses of $43.2 million and earnings from operations of $5.8 million in the fourth quarter of 2010.
Net earnings were $2.5 million, or $0.08 per diluted share, in the fourth quarter of 2011 compared to net earnings of $4.9 million, or $0.16 per diluted share, in the fourth quarter of 2010.

Full Year 2011 Financial Results

Revenue for the year ended December 31, 2011 was $578.2 million, a decrease of 11% compared to $650.3 million for the year ended December 31, 2010.
M2M revenue was $293.2 million in 2011, down 11.8% compared to $332.4 million in 2010. Excluding sales to Barnes & Noble, the company’s core M2M business increased 9% in 2011 on a year-over-year basis.
Mobile Computing revenue was $285.0 million in 2011, down 10.4% compared to $317.9 million in 2010. Excluding sales to Clearwire, the company’s Mobile Computing business was down 1% in 2011 compared to 2010.

On a GAAP basis, gross margin was $163.5 million, or 28.3%, in 2011 compared to $190.4 million, or 29.3%, in 2010. Operating expenses were $193.4 million and the loss from operations was $29.9 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, S.A. in 2009 and which we abandoned during the quarter. The program had no impact on our operations in prior periods nor do we expect it to have an impact on our future operations. This compares to operating expenses of $200.7 million and a loss from operations of $10.4 million in 2010.
Net loss was $29.3 million, or $0.94 per diluted share, in 2011, compared to a net loss of $14.5 million, or $0.47 per diluted share, in 2010.

On a non-GAAP basis, gross margin was 28.3% in 2011, compared to 29.3% in 2010.
Operating expenses were $160.9 million and earnings from operations were $2.9 million in 2011, compared to operating expenses of $168.5 million and earnings from operations of $22.4 million in 2010.
Net earnings were $3.6 million, or $0.12 per diluted share, in 2011 compared to net earnings of $20.0 million, or $0.64 per diluted share, in 2010.

Non-GAAP results exclude the impact of stock-based compensation expense, acquisition amortization, restructuring costs, integration costs, impairment, foreign exchange gains or losses on translation of balance sheet accounts, and certain tax adjustments. We disclose non-GAAP amounts as we believe that these measures provide our shareholders with better information about actual operating results and assist in comparisons from one period to another. The reconciliation between our GAAP and non-GAAP results of operations is provided in the accompanying schedules.

Financial Guidance
The following guidance for the first quarter of 2012 reflects current business indicators and expectations. In the first quarter of 2012, we expect revenue to be relatively flat compared to the fourth quarter of 2011, which is consistent with typical seasonal patterns. We expect gross margin to increase, returning to approximately the same level experienced in the third quarter of 2011 and we expect operating expenses to increase slightly on a sequential basis from the fourth quarter of 2011.

Q1 2012 Guidance Consolidated

Non-GAAP

Revenue $143.0 to $148.0 million
Earnings from operations $2.5 to $4.0 million
Net earnings $2.0 to $3.0 million
Earnings per share $0.06 to $0.10 per share
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