Sierra Wireless Reports Fourth Quarter and Fiscal Year 2007 Results
TSX: SW
Nasdaq: SWIR
VANCOUVER, Jan. 31 /CNW/ - Sierra Wireless, Inc. (NASDAQ: SWIR, TSX: SW)
is reporting fourth quarter and fiscal year 2007 results.
Our results are reported in US dollars and are prepared in accordance
with United States generally accepted accounting principles.
"In the fourth quarter of 2007, we experienced continued strong momentum
in our business and achieved record quarterly revenue and earnings, in spite
of a challenging component supply environment" said Jason Cohenour, President
and Chief Executive Officer. "Our fourth quarter revenue was up 22% from the
third quarter and up 98% on a year over year basis. Our strong sequential
growth was driven primarily by the launch and early shipments of our new HSUPA
AirCard products to customers around the world. Our momentum with these new
products helped lead the way to record revenue in each of our three main
business regions: The Americas, Asia and Europe.
Overall, 2007 was a year of continued strong revenue growth and improving
profitability for the company. In 2007, we grew revenue by 99% to a record
$439.9 million and grew our earnings from operations by almost seven fold
compared to 2006. While driving significantly improved operating results, we
also diversified our business with the acquisition of AirLink and bolstered
our strategic transaction capacity with a new equity issue.
As we look forward to 2008, we are encouraged by the continued strong
growth in our market segments, our proven ability to execute in a competitive
environment and the strategic opportunities that lay ahead. Our expectations
for 2008 are for continued revenue growth, improving profitability and further
business diversification."
Q4 2007 Financial Results
Our revenue for the fourth quarter of 2007 amounted to a record $135.6
million, gross margin was $37.8 million, or 27.9% of revenue, operating
expenses were $24.5 million and net earnings were $11.5 million, or diluted
earnings per share of $0.37. We generated $17.7 million of cash from
operations during the fourth quarter and our balance sheet remains strong,
with $196.4 million of cash and short and long-term investments.
Results for the fourth quarter of 2007, relative to guidance provided on
October 25, 2007 are as follows:
Fourth quarter revenue for 2007 of $135.6 million was better than our
guidance of $125.0 million. Our earnings from operations were
$13.3 million, better than our guidance of $12.8 million. Our net
earnings of $11.5 million, or diluted earnings per share of $0.37,
were also better than our guidance of net earnings of $11.1 million,
or diluted earnings per share of $0.35.
Results for the fourth quarter of 2007, compared to the fourth quarter of
2006 are as follows:
Fourth quarter revenue increased by 98% to $135.6 million in 2007
from $68.3 million for the same period in 2006. Gross margin for the
fourth quarter of 2007 was 27.9% of revenue, compared to 26.0% for
the same period in 2006. Operating expenses were $24.5 million in the
fourth quarter of 2007, compared to $16.4 million in the same period
of 2006. Net earnings for the fourth quarter of 2007 were $11.5
million, or diluted earnings per share of $0.37, compared to net
earnings of $2.4 million, or diluted earnings per share of $0.09, in
the same period of 2006.
Products acquired from the AirLink acquisition contributed revenue of
$9.5 million at a gross margin of 50.1% in the fourth quarter of
2007.
Included in our results are stock-based compensation expense and
amortization resulting from the acquisitions of AirPrime, Inc. in
2003 and AirLink in May 2007. Adjusting for these amounts, our
non-GAAP results are as follows:
(in millions of U.S. dollars) Q4 2007 Q4 2006
-------- --------
Earnings from operations - GAAP $ 13.3 $ 1.4
Stock-based compensation 1.6 0.9
Acquisition related amortization 0.8 0.3
-------- --------
Earnings from operations - Non-GAAP $ 15.7 $ 2.6
Net income - GAAP $ 11.5 $ 2.4
Net income - Non-GAAP 13.3 3.4
Diluted earnings per share - GAAP $ 0.37 $ 0.09
Diluted earnings per share - Non-GAAP 0.42 0.13
Results for the fourth quarter of 2007, compared to the third quarter of
2007 are as follows:
Revenue for the fourth quarter of 2007 increased by 22% to
$135.6 million, compared to $111.5 million in the third quarter of
2007. Gross margin was 27.9% of revenue in the fourth quarter of
2007, compared to 29.7% in the third quarter of 2007. Operating
expenses were $24.5 million in the fourth quarter of 2007, compared
to $21.4 million in the third quarter of 2007. Net earnings for the
fourth quarter of 2007 were $11.5 million, or diluted earnings per
share of $0.37, compared to net earnings of $9.0 million, or diluted
earnings per share of $0.33, in the third quarter of 2007.
Results for the fiscal year 2007, compared to the fiscal year 2006 are as
follows:
Revenue for the year ended December 31, 2007 increased by 99% to
$439.9 million, compared to $221.3 million in 2006. Gross margin was
28.0% of revenue in 2007, compared to 31.3% in 2006. Operating
expenses were $84.6 million, or 19.2% of revenue, in 2007, compared
to $63.6 million, or 28.7% of revenue, in 2006. Net earnings in 2007
were $32.5 million, or diluted earnings per share of $1.16, compared
to net earnings of $9.8 million, or diluted earnings per share of
$0.38 in 2006.
Fourth Quarter Highlights Included:
- AT&T Inc. launched two of our new HSUPA (High Speed Uplink Packet
Access) AirCard products - the AirCard 881 LaptopConnect card and
the USBConnect 881.
- @Road, a Trimble Company and provider of end-to-end solutions
for Mobile Resource Management (MRM), selected our MC8775 embedded
module for integration into @Road's HSDPA solutions for MRM.
- We introduced our Apex(TM) 880 USB modem for HSUPA networks. The
Apex 880 is smaller than previous models and features a new,
innovative design and features. We expect the Apex 880 USB modem
to be available for shipping in the first quarter of 2008.
- We announced the commercial availability of our AirCard 597E
ExpressCard for EVDO Rev A from TELUS.
- Together with Bouygues Telecom, we launched our AirCard 880E
ExpressCard on Bouygues' newly announced high-speed 3G+ network in
France.
- We introduced the AirLink(TM) Raven XT, the newest addition to our
line of Mobile and M2M devices. Commercial shipments for North
American CDMA and GSM networks are expected to begin in the first
quarter of 2008.
- We closed our previously announced bought deal common share
offering of 3,800,000 common shares at a price of US$22.40 per
share. Gross proceeds of this offering were US$85.1 million. We
will use the net proceeds from the offering for general corporate
purposes, working capital and potential future acquisitions.
Financial Guidance
The following guidance for the first quarter of 2008 reflects our current
business indicators and expectations.
Our revenue expectations for the first quarter of 2008 reflect strong
demand and good revenue visibility, constrained by expected continuing supply
shortages on key components.
For the first quarter of 2008, we expect our gross margin percentage to
be stable compared to the fourth quarter of 2007. As a result of our
anticipated new product launch activity in the first half of 2008, as well as
increased sales and marketing expense, we expect our 2008 first quarter
operating expenses to increase relative to the fourth quarter of 2007.
Inherent in this guidance are risk factors that are described in detail
in our regulatory filings. Our actual results could differ materially from
those presented below. All figures are approximations based on management's
current beliefs and assumptions.
Non-GAAP Adjustments
----------------------------
Stock Acquisition
Q1 2008 Guidance GAAP Comp Amortization(1) Non-GAAP
----------------- ----- ------ ---------------- ---------
Revenue $136 million $136 million
Earnings from
operations $11.3 million $1.6 million $0.9 million $13.8 million
Net earnings $9.4 million $1.1 million $0.6 million $11.1 million
Diluted earnings
per share $ 0.30/share $0.35/share
(1) Represents purchase price amortization associated with the
acquisition of AirLink Communications, Inc. in May 2007 and the
acquisition of AirPrime, Inc. in 2003.
Conference Call, Webcast and Instant Replay
We will host a conference call to review our results on Thursday, January
31, 2008 at 2:30 pm PST, 5:30 PM EST. You can participate in the conference
call either via telephone or webcast. To participate in this conference call,
please connect approximately ten minutes prior to the commencement of the
call.
Telephone participation:
Please dial the following number:
1-800-733-7571 Passcode: Not required
or
1-416-644-3414 Passcode: Not required
Webcast (to listen):
The Company will also broadcast its conference call over the
Internet. To access the web broadcast, click on this URL or enter
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=2101000
This webcast event will be optimized for Microsoft Windows Media
Player version 9. To download go to:
http://www.microsoft.com/windows/windowsmedia/download.
Should you be unable to participate, Instant Replay (audio and webcast)
will be available following the conference call.
- Audio only dial (available for 7 business days): 1-877-289-8525
or 1-416-640-1917 Passcode: 21254290 followed by the number sign.
Webcast (available for 90 days)
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1973620
No Passcode is required.
We look forward to having you participate in our call.
Forward-Looking Statements
Certain statements in this press release that are not based on historical
facts constitute forward-looking statements or forward-looking information
within the meaning of applicable securities laws ("forward-looking
statements"). These forward-looking statements are not promises or guarantees
of future performance but are only predictions that relate to future events,
conditions or circumstances or our future results, performance, achievements
or developments and are subject to substantial known and unknown risks,
assumptions, uncertainties and other factors that could cause our actual
results, performance, achievements or developments in our business or in our
industry to differ materially from those expressed, anticipated or implied by
such forward-looking statements. Forward-looking statements include all
financial guidance for the first quarter of 2008, disclosure regarding
possible events, conditions, circumstances or results of operations that are
based on assumptions about future economic conditions, courses of action and
other future events. We caution you not to place undue reliance upon any such
forward-looking statements, which speak only as of the date they are made.
These forward-looking statements appear in a number of different places in
this press release and can be identified by words such as "may", "estimates",
"projects", "expects", "intends", "believes", "plans", "anticipates", or their
negatives or other comparable words. Forward-looking statements include
statements regarding the outlook for our future operations, plans and timing
for the introduction or enhancement of our services and products, statements
concerning strategies or developments, statements about future market
conditions, supply conditions, end customer demand conditions, channel
inventory and sell through, revenue, gross margin, operating expenses,
profits, forecasts of future costs and expenditures, the outcome of legal
proceedings, and other expectations, intentions and plans that are not
historical fact. The risk factors and uncertainties that may affect our actual
results, performance, achievements or developments are many and include,
amongst others, our ability to develop, manufacture, supply and market new
products that we do not produce today that meet the needs of customers and
gain commercial acceptance, our reliance on the deployment of next generation
networks by major wireless operators, the continuous commitment of our
customers, and increased competition. These risk factors and others are
discussed in our Annual Information Form, which may be found on SEDAR at
www.sedar.com and in our other regulatory filings with the Securities and
Exchange Commission in the United States and the Provincial Securities
Commissions in Canada. Many of these factors and uncertainties are beyond the
control of the Company. Consequently, all forward-looking statements in this
press release are qualified by this cautionary statement and there can be no
assurance that actual results, performance, achievements or developments
anticipated by the Company will be realized. Forward-looking statements are
based on management's current plans, estimates, projections, beliefs and
opinions and the Company does not undertake any obligation to update
forward-looking statements should the assumptions related to these plans,
estimates, projections, beliefs and opinions change.
About Sierra Wireless
Sierra Wireless modems and software connect people all over the world
with mobile broadband networks that keep them in touch, informed and
productive from wherever they need to be. The Company offers a diverse product
portfolio addressing enterprise, consumer, original equipment manufacturer,
machine-to-machine, and specialized vertical industry markets and provides
professional services to customers requiring expertise in wireless design,
integration and carrier certification. Sierra Wireless is headquartered in
Richmond, British Columbia, Canada with additional offices in Carlsbad and
Hayward, California; London; and Hong Kong. For more information about Sierra
Wireless, visit www.sierrawireless.com.
"AirCard" is a registered trademark and "AirCard Enabled" is a 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 Deficit
(Expressed in thousands of United States dollars,
except per share amounts)
(Prepared in accordance with United States generally accepted
accounting principles (GAAP))
(Unaudited)
Three months ended Year ended
------------------ ----------
December 31, December 31,
------------ ------------
2007 2006 2007 2006
------ ------ ------ ------
Revenue............... $ 135,581 $ 68,303 $ 439,903 $ 221,285
Cost of goods sold.... 97,821 50,524 316,761 152,108
----------- ----------- ----------- -----------
Gross margin.......... 37,760 17,779 123,142 69,177
----------- ----------- ----------- -----------
Expenses
Sales and
marketing.......... 7,237 3,418 22,220 13,714
Research and
development........ 11,865 8,824 43,048 34,087
Administration...... 4,281 3,404 15,378 12,879
Amortization........ 1,092 705 3,920 2,909
----------- ----------- ----------- -----------
24,475 16,351 84,566 63,589
----------- ----------- ----------- -----------
Earnings from
operations........... 13,285 1,428 38,576 5,588
Other income.......... 2,045 1,627 4,795 5,254
----------- ----------- ----------- -----------
Earnings before
income taxes......... 15,330 3,055 43,371 10,842
Income tax expense.... 3,833 684 10,912 1,046
----------- ----------- ----------- -----------
Net earnings.......... 11,497 2,371 32,459 9,796
Deficit, beginning of
period............... (52,099) (75,432) (73,061) (82,857)
----------- ----------- ----------- -----------
Deficit, end of
period............... $ (40,602) $ (73,061) $ (40,602) $ (73,061)
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Earnings per share
for the period:
Basic............... $ 0.37 $ 0.09 $ 1.17 $ 0.38
Diluted............. $ 0.37 $ 0.09 $ 1.16 $ 0.38
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
Weighted average
number of shares
(in thousands)
Basic............... 31,217 25,681 27,696 25,609
Diluted............. 31,389 25,856 27,956 25,857
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
SIERRA WIRELESS, INC.
Consolidated Balance Sheets
(Expressed in thousands of United States dollars)
(Prepared in accordance with United States GAAP)
December 31, 2007 2006
---------- ----------
Assets
Current assets:
Cash and cash equivalents...................... $ 83,624 $ 46,438
Short-term investments......................... 92,980 40,554
Accounts receivable, net of allowance for
doubtful accounts of $1,939 (2006 - $1,867)... 83,015 57,441
Inventories.................................... 24,989 18,889
Deferred income taxes.......................... 3,556 118
Prepaid expenses............................... 9,229 6,032
---------- ----------
297,393 169,472
Long-term investments............................ 19,757 -
Fixed assets..................................... 15,274 13,400
Intangible assets................................ 17,418 9,892
Goodwill......................................... 32,541 18,409
Deferred income taxes............................ 1,156 -
Other............................................ 1,482 435
---------- ----------
$ 385,021 $ 211,608
---------- ----------
---------- ----------
Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable............................... $ 31,163 $ 16,608
Accrued liabilities............................ 53,691 39,543
Deferred revenue and credits................... 534 633
Current portion of long-term liabilities....... 277 847
---------- ----------
85,665 57,631
Long-term liabilities............................ 581 1,145
Deferred income taxes............................ 3,451 -
Shareholders' equity:
Share capital.................................. 328,323 221,861
Additional paid-in capital..................... 6,374 3,240
Warrants....................................... 1,538 1,538
Deficit........................................ (40,602) (73,061)
Accumulated other comprehensive loss........... (309) (746)
---------- ----------
295,324 152,832
---------- ----------
$ 385,021 $ 211,608
---------- ----------
---------- ----------
SIERRA WIRELESS, INC.
Consolidated Statements of Cash Flows
(Expressed in thousands of United States dollars)
(Prepared in accordance with United States GAAP)
(Unaudited)
Three months ended Year ended
------------------ ----------
December 31, December 31,
------------ ------------
2007 2006 2007 2006
------ ------ ------ ------
Cash flows from
operating activities:
Net earnings for
the period......... $ 11,497 $ 2,371 $ 32,459 $ 9,796
Adjustments to
reconcile net
earnings to net
cash provided by
(used in) operating
activities
Amortization...... 3,346 2,658 13,791 9,665
Stock-based
compensation..... 1,568 952 5,182 3,796
Tax benefit
related to
stock option
deduction........ 657 (114) 1,292 -
Utilization of
pre-acquisition
tax losses....... - 818 802 818
Deferred income
taxes............ (236) (118) 178 (118)
Loss (gain) on
disposal......... 7 (49) (13) (35)
Changes in operating
assets and liabilities
Accounts
receivable......... (11,748) (18,980) (21,067) (38,196)
Inventories......... 3,413 9,119 (2,493) (15,573)
Prepaid expenses
and other assets... (7,853) (4,684) (4,212) (2,007)
Accounts payable.... 4,710 (5,180) 11,347 12,637
Accrued
liabilities........ 12,524 7,249 11,816 10,899
Deferred revenue
and credits........ (220) 41 (244) 211
----------- ----------- ----------- -----------
Net cash provided
by (used in)
operating
activities........... 17,665 (5,917) 48,838 (8,107)
Cash flows from
investing activities:
Business
acquisition........ 64 - (12,093) -
Proceeds on
disposal........... 31 64 52 92
Purchase of fixed
assets............. (3,494) (1,520) (10,286) (9,102)
Increase in
intangible assets.. (546) (343) (1,307) (1,646)
Purchase of
long-term
investments........ (23,743) - (28,053) -
Purchase of
short-term
investments........ (70,546) (17,898) (171,182) (71,943)
Proceeds on
maturity
of short-term
investments........ 26,030 22,749 126,826 72,318
----------- ----------- ----------- -----------
Net cash provided by
(used in) investing
activities........... (72,204) 3,052 (96,043) (10,281)
Cash flows from
financing activities:
Issue of common
shares, net of
share issue costs.. 82,232 179 85,525 1,351
Decrease in
long-term
liabilities........ (653) (319) (1,134) (1,136)
----------- ----------- ----------- -----------
Net cash provided by
(used in) financing
activities........... 81,579 (140) 84,391 215
----------- ----------- ----------- -----------
Net increase
(decrease) in
cash and cash
equivalents.......... 27,040 (3,005) 37,186 (18,173)
Cash and cash
equivalents,
beginning
of period............ 56,584 49,443 46,438 64,611
----------- ----------- ----------- -----------
Cash and cash
equivalents, end
of period ...........
$ 83,624 $ 46,438 $ 83,624 $ 46,438
----------- ----------- ----------- -----------
----------- ----------- ----------- -----------
%SEDAR: 00011917E
For further information: Sierra Wireless, Inc., David G. McLennan, Chief
Financial Officer, (604) 231-1185, Website: www.sierrawireless.com, Email:
dmclennan@sierrawireless.com
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