Sierra Wireless Reports Third Quarter 2013 Results

Sierra Wireless (NASDAQ: SWIR) (TSX: SW):

Q3 highlights from continuing operations
  • Record revenue of $112.3 million, up 12.1% year-over-year
  • Adjusted EBITDA of $5.9 million, up 81.3% year-over-year
  • Non-GAAP earnings from operations of $2.4 million, compared to $0.3 million in Q3 2012
  • Non-GAAP diluted net earnings per share of $0.11, compared to diluted net earnings per share of $0.04 in Q3 2012

Sierra Wireless, Inc. today reported results for its third quarter ending September 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.

“We delivered another quarter of record M2M revenue, driven by steady growth in OEM Solutions and a strong quarter in Enterprise Solutions,” said Jason Cohenour, President and Chief Executive Officer. “In addition, our third quarter results are highlighted by continued strong increases in our key profitability metrics, demonstrating the leverage in our operating model as we execute on our profitable growth plans.”

Revenue for the third quarter of 2013 was $112.3 million, an increase of 12.1% compared to $100.2 million in the third quarter of 2012, and an increase of 2.4% compared to $109.6 million in the second quarter of 2013. Revenue from OEM Solutions was $95.9 million in the third quarter of 2013, up 8.6% compared to $88.3 million in the third quarter of 2012. Revenue from Enterprise Solutions was $16.4 million in the third quarter of 2013, up 37.8% from $11.9 million in the third quarter of 2012.

GAAP
  • Gross margin was $37.3 million, or 33.3% of revenue, in the third quarter of 2013, compared to $31.1 million, or 31.0% of revenue, in the third quarter of 2012.
  • Operating expenses were $40.6 million and loss from operations was $3.3 million in the third quarter of 2013, compared to operating expenses of $37.8 million and a loss from operations of $6.7 million in the third quarter of 2012.
  • Net earnings from continuing operations were $1.1 million, or $0.03 per diluted share, in the third quarter of 2013, compared to a net loss of $3.6 million, or $0.12 per share, in the third quarter of 2012. Reorganization initiatives as we transition our business are favorably impacting our effective tax rate. Net earnings from continuing operations for the current quarter included a year-to-date tax recovery. A portion of the recovery, amounting to $0.5 million, or $0.02 per diluted share, relates to the first half of the year.
  • Net earnings for continuing and discontinued operations (1) combined were $0.6 million, or $0.02 per diluted share, in the third quarter of 2013, compared to net earnings of $3.7 million, or $0.12 per diluted share, in the third quarter of 2012.

NON-GAAP
  • Gross margin was 33.4% in the third quarter of 2013, compared to 31.1% in the third quarter of 2012.
  • Operating expenses were $35.1 million and earnings from operations were $2.4 million in the third quarter of 2013, compared to operating expenses of $30.8 million and earnings from operations of $0.3 million in the third quarter of 2012.
  • Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") were $5.9 million in the third quarter of 2013, compared to $3.2 million in the third quarter of 2012.
  • Net earnings from continuing operations were $3.5 million, or $0.11 per diluted share, in the third quarter of 2013, compared to net earnings of $1.3 million, or $0.04 per diluted share, in the third quarter of 2012. Reorganization initiatives as we transition our business are favorably impacting our effective tax rate. Net earnings from continuing operations for the current quarter included a year-to-date tax recovery. A portion of the recovery, amounting to $0.5 million, or $0.02 per diluted share, relates to the first half of the year.

Non-GAAP results exclude the impact of stock-based compensation expense, acquisition costs, gain on sale of the AirCard business, restructuring costs, integration costs, disposition costs, acquisition amortization, impairment, foreign exchange gains or losses on foreign currency contracts and 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.

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