Recurring and Other Services revenue
represented 27% of total revenue in Q4 2020
Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) (the "Company",
"Sierra Wireless", "we", "us", or "our") reported results for its
fourth quarter and fiscal year ended December 31, 2020. 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.
“Our revenue continued to improve in the Fourth Quarter of 2020
with 6.3% sequential revenue growth to $120.5 million and overall
gross margins improving to 36%. Our business transformation is
proceeding well as shown by our third consecutive quarter of
sequential revenue growth led by our Q4 Recurring and other
services revenue of $32.6 million which increased 9.4% sequentially
and 25.1% year on year. We are winning in the market with our
Solutions offering and our Recurring and other services revenue is
now at 27.1% of total revenue,” said Kent Thexton, President and
CEO. “We completed the divestiture of our Automotive product line
in November and ended the year with a strong balance sheet with
$171.4 million in cash and no debt.”
Revenue, excluding the Automotive Business, decreased slightly
at 3.7% to $120.5 million in the fourth quarter of 2020 as compared
to $125.1 million in the fourth quarter of 2019.
Quarterly revenue for our two business segments were as
follows:
(i)
Revenue from IoT Solutions decreased 3.6%
to $87.6 million as compared to $90.9 million in the fourth quarter
of 2019. The decrease was primarily due to lower hardware sales in
Enterprise gateway products and Integrated IoT Solutions modules.
Within the IoT Solutions segment, recurring and other services
revenue was up 25.1% in the fourth quarter of 2020 compared to the
same period in 2019 due to growth in connected devices and the
addition of the M2M Group in Australia.
(ii)
Revenue from Embedded Broadband decreased
3.8% to $32.9 million as compared to $34.2 million in the fourth
quarter of 2019. The decrease was primarily a reflection of lower
mobile computing and networking sales due to previously
communicated design losses of two higher-margin computing
customers. The fourth quarter of 2020 is the last period impacted
by these design losses.
Product revenue was $87.9 million in the fourth quarter of 2020,
representing 72.9% of consolidated revenue and Recurring and other
services revenue was $32.6 million, representing 27.1% of
consolidated revenue.
In accordance with U.S. GAAP, the results of operations of the
Automotive Business are reported as discontinued operations in our
consolidation statements of operations and comprehensive loss for
the years ended December 31, 2020 and 2019.
Non-GAAP financial measures referred to in this news release are
labeled as "non-GAAP measure" or designated as such with an
asterisk (*). Please see "Non-GAAP Financial Measures" for
explanations of why the Company uses these non-GAAP measures and
"Reconciliation of GAAP and Non-GAAP Results by Quarter" for
reconciliation to the most comparable GAAP financial measures.
Fourth Quarter 2020 Financial Highlights
- Gross margin was 36.0% in the fourth quarter of 2020 as
compared to 35.8% in the fourth quarter of 2019. The modest
increase was driven by changes in product and customer mix in our
Embedded Broadband and IoT Solutions segment.
- IoT Solutions gross margin was 38.5% in the fourth quarter of
2020 as compared to 37.0% in the fourth quarter of 2019 due to
higher volume in connected devices.
- Embedded Broadband margin was 29.3% in the fourth quarter of
2020 as compared to 32.5% in the fourth quarter of 2019 due to
lower volume in higher-margin mobile computing and networking sales
from design losses of two higher-margin mobile computing customers
discussed above.
- Operating expenses, excluding the Automotive Business, were
$65.7 million in the fourth quarter of 2020 as compared to $61.9
million in the fourth quarter of 2019. In the fourth quarter of
2020, we recorded COVID-19 related government grants of $1.0
million.
- Net loss from continuing operations was $11.2 million in the
fourth quarter of 2020 as compared to $15.3 million in the fourth
quarter of 2019 due higher tax recovery and foreign exchange gain,
partially offset by higher restructuring and administration
expenses.
- Adjusted net loss from continuing operations* was $7.0 million,
or loss of $0.19 per share, which was in-line with the same
comparative period in 2019.
- Adjusted EBITDA* was a loss of $2.9 million in the fourth
quarter of 2020 as compared to a loss of $3.2 million in the fourth
quarter of 2019.
- During the fourth quarter of 2020, we repaid short-term
borrowings and long-term debt for a total of $34.4 million.
Cash and cash equivalents and restricted cash at the end of the
fourth quarter of 2020 were $171.4 million, an increase of $99.4
million compared to $72.0 million (including cash held for sale) at
the end of the third quarter of 2020. The increase in cash was
mainly due to net proceeds from the sale of our Automotive
Business, partially offset by repayment of short-term borrowings
and long-term debt, acquisition of M2M New Zealand, purchase of
treasury shares for RSU distribution and capital expenditures.
Full Year 2020 Financial Highlights
- Total revenue decreased 18.0% to $448.6 million as compared to
2019. The lower revenue in 2020 is primarily attributable to the
impact of the Covid-19 pandemic, lower mobile computing module
sales from design losses discussed above, and tight component
supply primarily in the late third and fourth quarter of 2020.
- Gross margin was 35.4% as compared to 36.1% in 2019. In 2020,
gross margin was impacted by unfavorable shift in product and
customer mix. IoT Solution gross margin percentage was consistent
year-over-year and Embedded Broadband gross margin was 30.4% as
compared to 33.8% in 2019 due to lower sales of higher-margin
percentage mobile computing and networking modules.
- Operating expenses were $246.8 million as compared to $261.7
million in 2019. In 2020, we recorded government grants under the
Canada Emergency Wage Subsidy of $6.3 million and other COVID-19
related subsidies of $0.9 million, totaling $7.2 million. Total
number of employees decreased by 19.2% from 1,300 to 1,050 in 2020.
We are on track to meeting our operating expense reduction
targets.
- Net loss from continuing operations was $70.2 million which was
mostly inline with 2019.
- Adjusted net loss from continuing operations* was $51.0
million, or loss of $1.40 per share as compared to $6.0 million, or
loss of $0.17 per share in 2019. The decrease was primarily
attributable to the impact of COVID-19 pandemic and lower mobile
computing module sales from design losses discussed above, and
tight component supply primarily in the late third and fourth
quarter of 2020.
- Adjusted EBITDA* was a loss of $34.9 million as compared to
income of $9.8 million in 2019.
Change in Reportable Segments
During the first quarter of 2021, we revised our reportable
segments to better reflect the way the Company manages its
business. We reorganized our reportable segments in order to better
align our various businesses for future growth and streamline
operations. We will classify our operations into the following two
reportable segments: IoT Solutions and Enterprise Solutions. Our
new IoT Solutions segment will be comprised of our portfolio of
cellular modules from LPWA through to high-speed embedded 5G
broadband modules with IoT connectivity, solutions and software.
The Enterprise Solutions segment will be comprised of our gateways,
asset tracking and monitoring business and our Enterprise
connectivity, solutions and software. See "Supplemental Financial
Information" on page 13 for more information.
Divestiture of Automotive Business
On July 23, 2020, we entered into a definitive agreement with
Rolling Wireless (H.K.) Limited ("Rolling Wireless"), a consortium
led by Fibocom Wireless Inc. of Shenzhen to divest our Shenzhen,
China-based automotive embedded module product line ("Automotive
Business"). On November 18, 2020, we completed this transaction for
total gross proceeds of $165.0 million in cash, subject to working
capital adjustments, including $10.0 million of proceeds held in
escrow that we recorded in restricted cash and was released on
January 8, 2021.
Financial Guidance
The impact of the COVID-19 pandemic on our global business
continues to remain uncertain. While we continue to evaluate the
effects of COVID-19 on our business, the overall severity and
duration of adverse impacts related to COVID-19 on our business,
financial condition, cash flows and/or results of operations for
the first quarter 2021 and beyond cannot be reasonably estimated at
this time. The ultimate size of the impact of the COVID-19 pandemic
on our business will depend on future developments which cannot be
currently predicted.
Regarding the First Quarter of 2021, we expect our revenue to be
in-line with Street consensus of $109.9 million. There is strong
demand for our products and services in the First Quarter and we
have secured hardware orders and recurring revenue that is
approximately 15% above Street Consensus for Q1’21. However, we are
facing a very tight global supply chain environment that is
constraining our ability to source components and fully deliver to
this level of demand.
This non-GAAP guidance constitutes "forward-looking statements"
within the meaning of applicable securities laws and reflects
current business indicators and expectations. These statements are
based on management's current beliefs and assumptions, which could
prove to be significantly incorrect. Forward-looking statements,
particularly those that relate to longer periods of time, are
subject to substantial known and unknown risks and uncertainties
that could cause actual events or results to differ significantly
from those expressed or implied by our forward-looking statements,
including those described in our regulatory filings. See
"Cautionary Note Regarding Forward-Looking Statements" below.
Non-GAAP Financial Measures
Our consolidated financial statements are prepared in accordance
with U.S. GAAP on a basis consistent for all periods presented. In
addition to results reported in accordance with U.S. GAAP, we use
non-GAAP financial measures as supplemental indicators of our
operating performance. The term “non-GAAP financial measure” is
used to refer to a numerical measure of a company’s historical or
future financial performance, financial position or cash flows
that: (i) excludes amounts, or is subject to adjustments that have
the effect of excluding amounts, that are included in the most
directly comparable measure calculated and presented in accordance
with U.S. GAAP in a company’s statement of earnings, balance sheet
or statement of cash flows; or (ii) includes amounts, or is subject
to adjustments that have the effect of including amounts, that are
excluded from the most directly comparable measure so calculated
and presented.
Our non-GAAP financial measures included in this press release
are adjusted net earnings (loss) from continuing operations*,
adjusted basic and diluted net earnings (loss) per share from
continuing operations*and adjusted EBITDA* (earnings before
interest, taxes, depreciation and amortization).
Adjusted net earnings (loss) from continuing operations*
excludes the impact of stock-based compensation expense and related
social taxes, phantom RSU expense which represents expenses related
to compensation units settled in cash based on the stock price at
vesting, restructuring costs, acquisition-related and integration
costs, government grants related to COVID-19 relief, impairment,
certain other non-recurring costs or recoveries,
acquisition-related amortization, the impact of foreign exchange
gains or losses on translation of certain balance sheet accounts,
foreign exchange gains or losses on forward contracts, and certain
tax adjustments.
Adjusted EBITDA* is defined as net earnings (loss) from
continuing operations plus stock-based compensation expense and
related social taxes, phantom RSU expense which represents expenses
related to compensation units settled in cash based on the stock
price at vesting, restructuring costs, acquisition-related and
integration costs, government grants related to COVID-19 relief,
impairment, certain other non-recurring costs or recoveries,
amortization, interest and other income (expense), foreign exchange
gains or losses on translation of certain balance sheet accounts,
unrealized foreign exchange gains or losses on forward contracts,
and income tax expense (recovery). Adjusted EBITDA* is a metric
used by investors and analysts for valuation purposes and 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 fund future capital
expenditures.
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 disclose these non-GAAP financial measures as we believe they
provide useful information to investors and analysts to assist them
in their evaluation of our operating results and to 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.
Conference call and webcast details
Sierra Wireless is hosting a conference call to discuss its
financial results for the year ended December 31, 2020 on Tuesday
February 23, 2021, at 5:30 PM Eastern time (2:30 PM Pacific
time).
To participate, 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: 6019337
Conference call and webcast details are available at the
following link: Sierra Wireless Q4 2020 Conference Call and
Webcast
If the above link does not work, copy and paste the following
URL into your browser:
https://onlinexperiences.com/Launch/QReg/ShowUUID=082F0C0B-5156-4D82-BA21-02C5588ABAE8
The webcast will remain available at the above link for one year
following the call.
Cautionary Note Regarding Forward-Looking Statements
This press release contains certain statements and information
that 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 (collectively, “forward-looking
statements”) and may include statements and information relating to
our financial guidance for our first quarter and fiscal year 2021;
the impact of COVID-19 on customer demand, our supply chain,
manufacturing capacity, our ability to meet customer demand and our
financial results; expectations regarding post-COVID-19 recovery;
our business outlook for the short and long term; statements
regarding our strategy, plans, goals, objectives, expectations 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; estimates
of our expenses, future revenues, financial results and capital
requirements; 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 Internet of
Things ("IoT") solutions; expectations regarding trends and growth
in the IoT market and wireless module market; expectations
regarding product and price competition from other wireless device
manufacturers and solution providers; our ability to implement
effective control procedures; expectations regarding the launch of
fifth generation cellular embedded modules and gateways and
corporate update. In particular, this press release describes our
revenue targets, which are forward-looking statements and are
subject to the assumptions, risks and uncertainties described
below. 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.
Forward-looking statements:
- Typically include words and phrases about the future such as
"outlook", "will", "may", “expects”, “is expected”, “anticipates”,
“believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”,
“strategy”, “goals”, “objectives”, “potential”, “possible”, or
variations thereof.
- 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:
- the scope and duration of the COVID-19 pandemic and its impact
on our business;
- our ability to return to normal operations after the COVID-19
pandemic has subsided;
- expected component supply constraints and manufacturing
capacity;
- customer demand and our ability to continue to sell our
products and services in the expected quantities at the expected
prices and expected times;
- our ability to realize the anticipated benefits of the recent
divestiture of the automotive product line (the "Sale
Transaction");
- our ability to effect and to realize the anticipated benefits
of our business transformation initiatives, and the timing
thereof;
- our ability to develop, manufacture and sell new products and
services that meet the needs of our customers and gain commercial
acceptance;
- expected macro-economic business conditions;
- expected cost of sales;
- our ability to win new business;
- our ability to integrate acquired businesses and realize
expected benefits;
- our ability to renew or obtain credit facilities when
required;
- expected deployment of next generation networks by wireless
network operators;
- our operations not being adversely disrupted by other
developments, operating, cyber security, litigation, or regulatory
risks; and
- expected tax and foreign exchange rates.
- Are based on our management's current expectations and we
caution investors that forward-looking statements, particularly
those that relate to longer periods of time, 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 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:
- prolonged negative impact from COVID-19;
- our access to capital, if required;
- competition from new or established competitors or from those
with greater resources;
- natural catastrophes or public health epidemics that could
impact customer demand, result in production disruption and impact
our ability to meet customer demand or capacity to continue
critical operations;
- risks that the Sale Transaction may fail to realize the
expected benefits;
- the loss of, or significant demand fluctuations from, any of
our significant customers;
- our financial results being subject to fluctuation;
- our business transformation initiatives may result in
disruptions to our business and may not achieve the anticipated
benefits;
- our ability to respond to changing technology, industry
standards and customer requirements;
- failures of our products or services due to design flaws and
errors, component quality issues, manufacturing defects, network
service interruptions, cyber-security vulnerabilities or other
quality issues;
- deterioration in macro-economic conditions could adversely
affect our operating results and financial conditions;
- our ability to attract or retain key personnel and the impact
of organizational changes on our business;
- cyber-attacks or other breaches of our information technology
security;
- risks related to the transmission, use and disclosure of user
data and personal information;
- disruption of, and demands on, our ongoing business and
diversion of management's time and attention in connection with
acquisitions or divestitures;
- risks that the acquisition of the M2M Group and M2M New Zealand
or our investments and partnerships may fail to realize the
expected benefits;
- 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;
- our reliance on single source suppliers for certain components
used in our products;
- our dependence on a limited number of third party
manufacturers;
- unanticipated costs associated with litigation or
settlements;
- our dependence on mobile network operators to promote and offer
acceptable wireless data services;
- risks related to contractual disputes with counterparties;
- risks related to governmental regulation;
- risks inherent in foreign jurisdictions; and
- risks related to tariffs or other trade restrictions.
About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) is the leading IoT
solutions provider that combines devices, network services and
software to unlock value in the connected economy. Companies
globally are adopting IoT to improve operational efficiency, create
better customer experiences, improve their business models and
create new revenue streams. Whether it is a solution to help a
business securely connect edge devices to the cloud, or a
software/API solution to help manage processes associated with
billions of connected assets, or a platform to extract real-time
data to make the best business decisions, Sierra Wireless will work
with you to create the right industry-specific solution for your
next IoT endeavor. Sierra Wireless has more than 1,050 employees
globally and operates R&D centers in North America, Europe and
Asia. For more information, visit www.sierrawireless.com.
“Sierra Wireless” is a registered trademark 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,
2020
2019
2020
2019
Revenue
loT Solutions
$
87,604
$
90,937
$
327,323
$
377,808
Embedded Broadband
32,874
34,170
121,265
169,468
120,478
125,107
448,588
547,276
Cost of Sales
loT Solutions
53,876
57,272
205,419
237,650
Embedded Broadband
23,236
23,075
84,418
112,140
77,112
80,347
289,837
349,790
Gross margin
43,366
44,760
158,751
197,486
Expenses
Sales and marketing
21,663
21,070
86,481
87,185
Research and development
20,878
20,787
82,029
78,761
Administration
13,402
11,273
48,513
47,127
Restructuring
4,800
2,251
8,740
26,262
Acquisition-related and integration
115
274
440
974
Impairment
—
877
—
877
Amortization
4,829
5,356
20,584
20,554
65,687
61,888
246,787
261,740
Loss from operations
(22,321)
(17,128)
(88,036)
(64,254)
Foreign exchange gain (loss)
3,734
1,661
8,003
(1,224)
Other expense
(564)
(111)
(2,027)
(307)
Loss before income taxes
(19,151)
(15,578)
(82,060)
(65,785)
Income tax expense (recovery)
(7,984)
(262)
(11,909)
8,878
Net loss from continuing
operations
$
(11,167)
$
(15,316)
$
(70,151)
$
(74,663)
Net earnings from discontinued
operations
12,123
4,398
20,810
4,125
Net earnings (loss)
$
956
$
(10,918)
$
(49,341)
$
(70,538)
Other comprehensive income (loss):
Foreign currency translation adjustments,
net of taxes of $nil
5,514
3,177
7,636
(4,070)
Comprehensive earnings (loss)
$
6,470
$
(7,741)
$
(41,705)
$
(74,608)
Net earnings (loss) per share (in
dollars)
Continuing operations
$
(0.31)
$
(0.42)
$
(1.93)
$
(2.06)
Discontinued operations
0.33
0.12
0.57
0.11
$
0.03
$
(0.30)
$
(1.36)
$
(1.95)
Weighted average number of shares
outstanding (in thousands)
Basic
36,534
36,222
36,393
36,166
Diluted
36,534
36,222
36,393
36,166
SIERRA WIRELESS, INC.
CONSOLIDATED BALANCE
SHEETS
(In thousands of U.S. dollars,
except where otherwise stated)
As at December 31,
2020
2019
Assets
Current assets
Cash and cash equivalents
$
160,560
$
71,164
Restricted cash
10,864
3,629
Accounts receivable
68,575
94,491
Inventories
32,815
36,334
Prepaids and other
11,933
10,858
Assets held for sale
—
67,586
284,747
284,062
Property and equipment, net
31,412
27,577
Operating lease right-of-use assets
20,068
25,466
Intangible assets, net
78,081
70,072
Goodwill
175,545
154,381
Deferred income taxes
1,135
1,779
Other assets
10,383
9,982
Long-term assets held for sale
—
66,021
$
601,371
$
639,340
Liabilities
Current liabilities
Accounts payable and accrued
liabilities
$
162,138
$
149,596
Deferred revenue
9,862
9,190
Liabilities held for sale
—
25,380
172,000
184,166
Long-term obligations
45,646
43,407
Operating lease liabilities
17,054
25,154
Deferred income taxes
10,258
4,921
Long-term liabilities held for sale
—
367
244,958
258,015
Equity
Shareholders’ equity
Common stock: no par value; unlimited
shares authorized; issued and outstanding:
36,619,439 shares (December 31, 2019 —
36,233,361 shares)
441,999
435,532
Preferred stock: no par value; unlimited
shares authorized; issued and outstanding: nil shares
—
—
Treasury stock: at cost; 46,505 shares
(December 31, 2019 — 44,487 shares)
(542
)
(370
)
Additional paid-in capital
49,489
38,212
Retained deficit
(128,953
)
(78,833
)
Accumulated other comprehensive loss
(5,580
)
(13,216
)
356,413
381,325
$
601,371
$
639,340
SIERRA WIRELESS, INC.
CONSOLIDATED STATEMENTS OF
CASH FLOWS
(In thousands of U.S.
dollars)
Three months ended December
31,
Twelve months ended December
31,
2020
2019
2020
2019
Cash flows provided by (used
in):
Operating activities
Net earnings (loss)
$
956
$
(10,918
)
$
(49,341
)
$
(70,538
)
Items not requiring (providing) cash
Amortization
7,053
8,573
32,345
33,177
Stock-based compensation
7,815
1,801
19,940
12,930
Deferred income taxes
(1,294
)
(93
)
(1,150
)
8,711
Impairment
—
877
—
877
Gain on sale of Automotive business
(27,137
)
—
(27,137
)
—
Unrealized foreign exchange loss
(gain)
(4,891
)
(958
)
(8,808
)
1,122
Other
196
570
43
1,218
Changes in non-cash working capital
Accounts receivable
2,468
156
1,232
37,965
Inventories
13,222
6,264
10,997
(3,712
)
Prepaids and other
5,032
(1,111
)
7,646
(8,611
)
Accounts payable and accrued
liabilities
(2,851
)
(12,566
)
7,771
(12,069
)
Deferred revenue
99
1,113
(1,305
)
5,792
Cash flows provided by (used in) operating
activities
668
(6,292
)
(7,767
)
6,862
Investing activities
Additions to property and equipment
(6,809
)
(4,691
)
(18,952
)
(16,494
)
Additions to intangible assets
(1,049
)
(801
)
(3,023
)
(3,779
)
Proceeds from sale of property and
equipment
29
11
281
98
Proceeds from sale of Automotive Business,
net
144,156
—
144,156
—
Proceeds from sale of investment
—
3,303
—
3,303
Proceeds from sale of iTank business
—
—
—
500
Acquisitions, net of cash acquired:
M2M Group
—
—
(18,391
)
—
M2M New Zealand
(3,468
)
—
(3,468
)
—
Cash flows provided by (used in) investing
activities
132,859
(2,178
)
100,603
(16,372
)
Financing activities
Issuance of common shares, net of issuance
cost
1,081
161
1,964
488
Purchase of treasury shares for RSU
distribution
(2,038
)
(348
)
(2,802
)
(674
)
Taxes paid related to net settlement of
equity awards
(339
)
(86
)
(1,530
)
(941
)
Proceeds from long-term debt
—
—
9,383
—
Repayment of long-term debt
(9,383
)
—
(9,383
)
—
Repayment of short-term borrowings
(25,000
)
—
—
—
Decrease in other long-term
obligations
(171
)
(130
)
(405
)
(535
)
Cash flows used in financing
activities
(35,850
)
(403
)
(2,773
)
(1,662
)
Effect of foreign exchange rate changes on
cash and cash equivalents
1,775
835
2,278
958
Cash, cash equivalents and restricted
cash, increase (decrease) in the year
99,452
(8,038
)
92,341
(10,214
)
Cash, cash equivalents and restricted
cash, beginning of year
71,972
87,121
79,083
89,297
Cash, cash equivalents and restricted
cash, end of year
$
171,424
$
79,083
$
171,424
$
79,083
SIERRA WIRELESS, INC.
RECONCILIATION OF GAAP AND
NON-GAAP RESULTS BY QUARTER
(in thousands of U.S. dollars, except
where otherwise stated)
2020
2019
Q4
Q3
Q2
Q1
Q4
Q3
Q2
Q1
Net earnings (loss) from continuing
operations - GAAP
$
(11,167
)
$
(14,483
)
$
(17,291
)
$
(27,210
)
$
(15,316
)
$
(19,761
)
$
(28,961
)
$
(10,625
)
Stock-based compensation and related
social taxes
6,461
5,085
3,256
3,200
1,773
3,763
3,979
3,300
Phantom RSU expense
691
261
141
74
35
55
76
44
Restructuring
4,800
3,089
245
606
2,251
4,588
18,083
1,340
Acquisition-related and integration
115
140
185
—
274
291
314
95
COVID-19 government relief
(954
)
(6,298
)
—
—
—
—
—
—
Impairment
—
—
—
—
877
—
—
—
Other non-recurring costs
330
299
152
87
795
279
662
1,167
Amortization
7,054
8,030
7,823
7,726
7,849
7,378
7,355
7,651
Interest and other (income) expense,
net
564
988
283
192
111
122
105
(31
)
Foreign exchange loss (gain), net of
realized gain/loss on hedge contracts
(2,804
)
(3,572
)
(3,955
)
2,836
(1,580
)
2,953
(1,034
)
698
Income tax expense (recovery)
(7,984
)
(633
)
427
(3,719
)
(262
)
3,864
5,160
116
Adjusted EBITDA*
$
(2,894
)
$
(7,094
)
$
(8,734
)
$
(16,208
)
$
(3,193
)
$
3,532
$
5,739
$
3,755
Net earnings (loss) from continuing
operations - GAAP
$
(11,167
)
$
(14,483
)
$
(17,291
)
$
(27,210
)
$
(15,316
)
$
(19,761
)
$
(28,961
)
$
(10,625
)
Stock-based compensation and related
social taxes
6,461
5,085
3,256
3,200
1,773
3,763
3,979
3,300
Phantom RSU expense
691
261
141
74
35
55
76
44
Restructuring
4,800
3,089
245
606
2,251
4,588
18,083
1,340
Acquisition-related and integration
115
140
185
—
274
291
314
95
COVID-19 government relief
(954
)
(6,298
)
—
—
—
—
—
—
Impairment
—
—
—
—
877
—
—
—
Other non-recurring costs
330
299
152
87
795
279
662
1,167
Acquisition-related amortization
3,306
3,555
3,886
3,889
3,593
3,610
3,624
3,687
Foreign exchange loss (gain), net of
realized gain/loss on hedge contracts
(2,804
)
(3,572
)
(3,955
)
2,836
(1,580
)
2,953
(1,034
)
698
Income tax expense (recovery)
adjustment
(7,784
)
200
358
(2,696
)
415
3,933
4,805
(129
)
Adjusted earnings (loss) from
continuing operations*
$
(7,006
)
$
(11,724
)
$
(13,023
)
$
(19,214
)
$
(6,883
)
$
(289
)
$
1,548
$
(423
)
Weighted average number of shares (in
thousands) - basic and diluted
36,534
36,417
36,341
36,277
36,222
36,179
36,156
36,106
Basic and diluted adjusted net earnings
(loss) per share from continuing operations* (in
dollars)
$
(0.19
)
$
(0.32
)
$
(0.36
)
$
(0.53
)
$
(0.19
)
$
(0.01
)
$
0.04
$
(0.01
)
(1) Prior periods have been adjusted to include phantom RSU
expense.
SIERRA WIRELESS, INC.
SEGMENTED RESULTS
(In thousands of U.S. dollars, except
where otherwise indicated)
2020
2019
Total
Q4
Q3
Q2
Q1
Total
Q4
Q3
Q2
Q1
IoT Solutions
Revenue
$
327,323
$
87,604
$
79,093
$
81,836
$
78,790
$
377,808
$
90,937
$
93,439
$
99,145
$
94,287
Gross margin
$
121,904
$
33,728
$
29,627
$
30,538
$
28,011
$
140,158
$
33,665
$
35,203
$
36,811
$
34,479
Gross margin %
37.2
%
38.5
%
37.5
%
37.3
%
35.6
%
37.1
%
37.0
%
37.7
%
37.1
%
36.6
%
Embedded Broadband
Revenue
$
121,265
$
32,874
$
34,278
$
29,882
$
24,231
$
169,468
$
34,170
$
43,256
$
46,520
$
45,522
Gross margin
$
36,847
$
9,638
$
9,825
$
10,470
$
6,914
$
57,328
$
11,095
$
14,421
$
16,170
$
15,642
Gross margin %
30.4
%
29.3
%
28.7
%
35.0
%
28.5
%
33.8
%
32.5
%
33.3
%
34.8
%
34.4
%
Total
Revenue
$
448,588
$
120,478
$
113,371
$
111,718
$
103,021
$
547,276
$
125,107
$
136,695
$
145,665
$
139,809
Gross margin
$
158,751
$
43,366
$
39,452
$
41,008
$
34,925
$
197,486
$
44,760
$
49,624
$
52,981
$
50,121
Gross margin %
35.4
%
36.0
%
34.8
%
36.7
%
33.9
%
36.1
%
35.8
%
36.3
%
36.4
%
35.8
%
Revenue by Type:
Product
$
332,544
$
87,856
$
83,560
$
84,820
$
76,308
$
449,063
$
99,024
$
112,177
$
120,859
$
117,003
Recurring and other services
$
116,044
$
32,622
$
29,811
$
26,898
$
26,713
$
98,213
$
26,083
$
24,518
$
24,806
$
22,806
SUPPLEMENTAL FINANCIAL
INFORMATION
2020 SEGMENTED RESULTS RECAST
UNDER NEW REPORTABLE SEGMENTS
(In thousands of U.S. dollars, except
where otherwise indicated)
2020
Total
Q4
Q3
Q2
Q1
IoT Solutions (new)
Revenue
$
306,917
$
81,561
$
79,345
$
77,629
$
68,382
Gross margin
$
87,146
$
23,343
$
22,588
$
23,030
$
18,185
Gross margin %
28.4
%
28.6
%
28.5
%
29.7
%
26.6
%
Enterprise Solutions
Revenue
$
141,671
$
38,917
$
34,026
$
34,089
$
34,639
Gross margin
$
71,605
$
20,023
$
16,864
$
17,978
$
16,740
Gross margin %
50.5
%
51.5
%
49.6
%
52.7
%
48.3
%
Total
Revenue
$
448,588
$
120,478
$
113,371
$
111,718
$
103,021
Gross margin
$
158,751
$
43,366
$
39,452
$
41,008
$
34,925
Gross margin %
35.4
%
36.0
%
34.8
%
36.7
%
33.9
%
(1) See "Change in Reportable Segments" on page 3.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20210223006135/en/
Investor and Media: David Climie, Investor Relations
dclimie@sierrawireless.com
Investor: Samuel Cochrane, Chief Financial Officer
investor@sierrawireless.com
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