Sierra Wireless Reports First Quarter 2014 Results

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Sierra Wireless Reports First Quarter 2014 Results

Record revenue of $121.2 million; 19.5% year-over-year growth.

First Quarter 2014 highlights from continuing operations :
++ Record revenue of $121.2 million, an increase of 19.5% compared with Q1 2013
++ Adjusted EBITDA of $4.1 million compared with $1.8 million in Q1 2013
++ Non-GAAP earnings from operations of $0.7 million compared with a non-GAAP loss from operations of $1.4 million in Q1 2013

Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results for its first quarter ending March 31, 2014. 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:

“We achieved record revenue in the first quarter and also completed the acquisition of In Motion Technology. I believe we are well positioned for continued revenue growth and improving profitability in the second quarter and beyond.”

“We continue to focus on driving profitable organic growth in M2M devices and cloud services, while pursuing additional strategic acquisitions.”

Revenue for the first quarter of 2014 was $121.2 million, an increase of 19.5% compared to $101.4 million in the first quarter of 2013, and an increase of 2.2% compared to $118.6 million in the fourth quarter of 2013.
Revenue from OEM Solutions was $106.2 million in the first quarter of 2014, up 19.0% compared to $89.2 million in the first quarter of 2013.
Revenue from Enterprise Solutions was $15.0 million (including $1.3 million contribution from In Motion Technology) in the first quarter of 2014, up 23.3% compared to $12.2 million in the first quarter of 2013.

GAAP

  • Gross margin was $38.6 million, or 31.9% of revenue, in the first quarter of 2014, compared to $33.4 million, or 32.9% of revenue, in the first quarter of 2013.
  • Operating expenses were $45.3 million and loss from operations was $6.7 million in the first quarter of 2014, compared to operating expenses of $40.3 million and a loss from operations of $6.9 million in the first quarter of 2013.
  • Net loss from continuing operations was $4.0 million, or $0.13 per diluted share, in the first quarter of 2014, compared to a net loss from continuing operations of $7.9 million, or $0.26 per diluted share, in the first quarter of 2013.

NON-GAAP

  • Gross margin was 32.0% in the first quarter of 2014, compared to 33.0% in the first quarter of 2013.
  • Operating expenses were $38.0 million and earnings from operations were $0.7 million in the first quarter of 2014, compared to operating expenses of $34.9 million and a loss from operations of $1.4 million in the first quarter of 2013.
  • Adjusted earnings before interest, taxes, depreciation and amortization (“Adjusted EBITDA”) were $4.1 million in the first quarter of 2014, compared to $1.8 million in the first quarter of 2013.
  • Net earnings from continuing operations were $0.5 million, or $0.02 per diluted share, in the first quarter of 2014, compared to a net loss from continuing operations of $0.7 million, or $0.02 per diluted share, in the first quarter of 2013.
Non-GAAP results exclude the impact of stock-based compensation expense and related social taxes, acquisition costs, gain on sale of the AirCard business, restructuring costs, integration costs, disposition costs, acquisition amortization, 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.

Adjusted EBITDA as defined equates to earnings (loss) from operations plus stock-based compensation expense and related social taxes, acquisition costs, restructuring costs, integration costs, impairment, and amortization. The reconciliation between our GAAP and non-GAAP results is provided in the accompanying schedules.

Financial Guidance

The Company provides the following guidance for continuing operations for the second quarter of 2014.

In the second quarter of 2014 we expect revenue to increase sequentially and on a year-over-year basis, driven by organic growth as well as the addition of revenue for a full quarter from In Motion Technology. We expect gross margin percentage to improve slightly from the first quarter of 2014 and operating expenses to increase, primarily reflecting the addition of In Motion Technology expenses for a full quarter.

Q2 2014 Guidance Consolidated

Non-GAAP

Revenue $128.0 to $131.0 million
Earnings from operations $2.7 to $3.5 million
Net earnings $1.9 to $2.5 million
Earnings per share $0.06 to $0.08 per share
This non-GAAP guidance for the second quarter of 2014 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.
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