Sierra Wireless Reports Second Quarter 2013 Results

Record quarterly revenue of $109.6 million, up 14.9% year-over-year | Adjusted EBITDA of $4.9 million, compared to $2.4 million in Q2 2012 | Non-GAAP earnings from operations of $1.5 million, compared to a loss of $0.4 million in Q2 2012 | Non-GAAP diluted earnings per share of $0.03, compared to a loss per share of $0.11 in Q2 2012

Sierra Wireless, Inc. today reported results for its second quarter ending June 30, 2013. 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 our first quarter as an M2M pure-play, we delivered record quarterly revenue with nearly 15% year-over-year growth.”

“Our record revenue, combined with solid gross margin and good cost control, led to a significant improvement in Non-GAAP earnings, demonstrating the leverage in our operating model as we grow the business.”

On April 2, 2013, the company completed the sale of substantially all of the assets and operations related to its AirCard business. In accordance with U.S. GAAP, the results of operations and the gain on sale of the AirCard business have been recorded as discontinued operations in the consolidated statements of operations for the three and six months ended June 30, 2013.

Revenue for the second quarter of 2013 was $109.6 million, an increase of 14.9% compared to $95.4 million in the second quarter of 2012, and an increase of 8.1% compared to $101.4 million in the first quarter of 2013.
Revenue from OEM Solutions was $95.1 million in the second quarter of 2013, up 14.1% compared to $83.3 million in the second quarter of 2012.
Revenue from Enterprise Solutions was $14.5 million in the second quarter of 2013, up 20.0% from $12.1 million in the second quarter of 2012.

On a GAAP basis, gross margin was $36.5 million, or 33.3% of revenue, in the second quarter of 2013, compared to $30.1 million, or 31.5% of revenue, in the second quarter of 2012. Operating expenses were $40.4 million and loss from operations was $3.9 million in the second quarter of 2013, compared to operating expenses of $36.6 million and a loss from operations of $6.6 million in the second quarter of 2012.
Net loss from continuing operations was $6.7 million, or $0.22 per diluted share, in the second quarter of 2013, compared to net loss of $8.9 million, or $0.29 per diluted share, in the second quarter of 2012.
Net earnings for continuing and discontinued operations was $61.4 million, or $2.00 per diluted share, compared to net earnings of $3.6 million, or $0.12 per diluted share, in the second quarter of 2012. The year-over-year increase in net earnings mainly reflects the gain on the sale of the AirCard business.

On a non-GAAP basis, gross margin was 33.4% in the second quarter of 2013, compared to 31.6% in the second quarter of 2012.
Operating expenses were $35.1 million and earnings from operations were $1.5 million in the second quarter of 2013, compared to operating expenses of $30.5 million and loss from operations of $0.4 million in the second quarter of 2012.
Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) was $4.9 million in the second quarter of 2013, compared to $2.4 million in the second quarter of 2012.
Net earnings from continuing operations were $1.0 million, or $0.03 per diluted share, in the second quarter of 2013, compared to a net loss of $3.4 million, or $0.11 per diluted share, in the second quarter of 2012.

Financial Guidance

The Company provides the following guidance for continuing operations for the third quarter of 2013:

In the third quarter of 2013, revenue is expected to increase sequentially and on a year-over-year basis. Gross margin and operating expenses are expected to remain similar to second quarter levels.