Sierra Wireless Reports First Quarter 2007 Results



    TSX: SW
    Nasdaq:   SWIR

    VANCOUVER, April 26 /CNW/ - Sierra Wireless, Inc. (NASDAQ:    SWIR,
TSX: SW) is reporting first quarter 2007 results.
    Our results are reported in US dollars and are prepared in accordance
with United States generally accepted accounting principles.
    "The first quarter of 2007 was a period of record revenue, improved
profitability, new product launches and strategic milestones," said Jason
Cohenour, President and Chief Executive Officer. "During the first quarter, we
experienced strong sales growth, achieving record quarterly revenue of
$85.4 million in what is often a seasonally soft period. Our revenue growth
was driven primarily by increased sales of our HSDPA and EV-DO AirCard
products to existing wireless operator channels. Our strong revenue result,
combined with a slight improvement in gross margin, helped drive significantly
improved operating profit of $5.5 million - our best quarterly operating
profit result in more than two years."
    "As expected, the first quarter was also a busy period for new product
launches. By the end of the quarter, we commenced initial commercial shipments
of three new and important products: our 3G MPs for both HSDPA and EV-DO and
our new USB modem for HSDPA. We also announced an agreement with Sprint to
launch our new EV-DO USB modem for use on the Sprint Mobile Broadband Network.
We expect all four of these new products to be important contributors to our
financial results in the coming quarters. While executing on our business, we
also achieved an important strategic milestone, announcing the completion of a
definitive agreement to acquire AirLink Communications, Inc. We believe the
acquisition of AirLink will significantly expand our high gross margin product
lines and establish Sierra Wireless as a leader in the rugged mobile and M2M
connectivity segments. Looking forward, we expect that our current product
portfolio and expanded roster of channels, combined with more new product
releases and the addition of AirLink, will drive continued revenue growth and
improving profitability."

    Q1 2007 Financial Results

    Our revenue for the first quarter of 2007 amounted to a record
$85.4 million, gross margin was $23.3 million, or 27.3% of revenue, operating
expenses were $17.8 million and net earnings were $5.3 million, or diluted
earnings per share of $0.20. Our balance sheet remains strong, with
$93.9 million of cash and short-term investments.

    
    Results for the first quarter of 2007, relative to Company guidance
provided on January 31, 2007 are as follows:

    First quarter revenue for 2007 of $85.4 million was better than our
    guidance of $82.0 million. Our earnings from operations were
    $5.5 million, better than our guidance of $2.5 million. Our net earnings
    of $5.3 million, or diluted earnings per share of $0.20, was also better
    than our guidance of net earnings of $3.0 million, or diluted earnings
    per share of $0.12.

    Results for the first quarter of 2007, compared to the first quarter of
2006 are as follows:

    First quarter revenue increased by 89% to $85.4 million in 2007, from
    $45.2 million for the same period in 2006. Gross margin for the first
    quarter of 2007 was 27.3% of revenue, compared to 36.8% for the same
    period in 2006. Operating expenses were $17.8 million in the first
    quarter of 2007, compared to $14.8 million in the same period of 2006.
    Net earnings were $5.3 million, or diluted earnings per share of $0.20 in
    the first quarter of 2007, compared to net earnings of $2.6 million, or
    diluted earnings per share of $0.10, in the same period of 2006.

    Included in the results for the first quarters of 2007 and 2006 are
    stock-based compensation and amortization resulting from the acquisition
    of AirPrime, Inc. in 2003. Excluding these amounts, our results are as
    follows:


    (in millions of U.S. dollars)                       Q1 2007      Q1 2006
                                                      ----------   ----------

    Earnings from operations - GAAP                      $  5.5       $  1.9
      Stock-based compensation                              0.9          0.9
      Amortization related to AirPrime acquisition          0.3          0.3
                                                      ----------   ----------
    Earnings from operations - Non GAAP                     6.7          3.1

    Net income - GAAP                                    $  5.3       $  2.6
    Net income - Non GAAP                                   6.2          3.6

    Diluted earnings per share - GAAP                    $ 0.20       $ 0.10
    Diluted earnings per share - Non GAAP                  0.24         0.14


    Results for the first quarter of 2007, compared to the fourth quarter of
2006 were as follows:

    Revenue for the first quarter of 2007 increased by 25% to $85.4 million,
    compared to $68.3 million in the fourth quarter of 2006. Gross margin was
    27.3% of revenue in the first quarter of 2007, compared to 26.0% in the
    fourth quarter of 2006. Operating expenses were $17.8 million in the
    first quarter of 2007, compared to $16.4 million in the fourth quarter of
    2006. Net earnings for the first quarter of 2007 were $5.3 million, or
    diluted earnings per share of $0.20, compared to net earnings of
    $2.4 million, or diluted earnings per share of $0.09, in the fourth
    quarter of 2006.

    First Quarter Highlights Included:

    -   We announced a definitive agreement to acquire AirLink Communications
        Inc, a privately held supplier of high value fixed and mobile
        wireless data solutions for industrial and public safety applications
        located in Hayward, California. Under the terms of the agreement, we
        will pay $10.0 million of cash consideration, subject to customary
        closing adjustments, and will issue approximately 1.3 million common
        shares of Sierra Wireless to the shareholders of AirLink. We expect
        the acquisition to close by the end of June 2007.

    -   We announced an agreement with Sprint to supply our new AirCard 595U
        USB modem for use on the Sprint Mobile Broadband EV-DO Rev A Network.
        The Sprint Mobile Broadband USB Modem (AirCard 595U) is now available
        in Sprint sales channels, including retail stores.

    -   We announced commercial availability of the AirCard 875 with
        Telefonica Moviles Espana. Telefonica was the first European network
        operator to launch our AirCard 875 PC card.

    -   We announced that debitel added our AirCard 875 to its SURF@go
        product line up for connectivity to 3G and HSDPA networks in Germany.

    -   We announced that the AirCard 875 is available in Australia through
        Telstra for use on Telstra's Next GTM HSDPA network.

    -   We announced that the Sierra Wireless AirCard 595 wireless wide-area
        network card will be the first card available in Canada capable of
        operating on TELUS' High Speed EV-DO Rev A network.

    -   FlipStart Labs selected our embedded modules to provide mobile
        broadband connectivity to the FlipStart super compact PC, which
        features a unique small clamshell design and full Windows support.

    -   Fujitsu Siemens Computers selected our MC8780 embedded module for
        integration into its LIFEBOOK P7230 professional notebook. The
        LIFEBOOK P7230 is the first in the Fujitsu Siemens product line to
        migrate to our HSUPA module and is expected to begin commercial
        shipments in Europe this summer.

    -   Dialogue Technology Corp. selected our MC8775V voice-enabled embedded
        module to provide integrated high-speed wireless HSDPA connectivity
        for its FlyBook line of ultra-portable notebook computers.

    -   We announced that Cisco Systems has integrated our 3G embedded
        modules into the new Cisco 3G Wireless Wide Area Network (WAN) High-
        Speed WAN Interface Card (HWIC) solution for Cisco Integrated
        Services Routers. The new 3G Wireless HWIC solution is expected to
        deliver WAN fail-over and rapid deployment capability to new and
        existing Cisco Integrated Services Routers.

    -   Together with Isochron, we announced that Isochron selected our
        embedded modules to provide high-speed wireless connectivity for its
        innovative VendCast vending management solution.

    -   We expanded our relationship with Flextronics, our manufacturing
        partner, to add a configuration and distribution center for our
        products in Zalaegerszeg, Hungary, due to increased customer activity
        in the EMEA region. The Zalaegerszeg Center is now operational and
        supporting configuration, customization, packout, warehousing and
        reverse logistics for our EMEA customers.

    -   We introduced new AirCards and embedded modules for HSUPA networks
        that will improve the speed at which mobile users can work,
        supporting theoretical uplink speeds of 2 Mbps and downlink speeds of
        7.2 Mbps. We expect to commence commercial shipments of our HSUPA PC
        cards, ExpressCards and embedded modules mid 2007.
    

    Financial Guidance

    The following guidance for the second quarter of 2007 reflects our
current business indicators and expectations. Our guidance for the second
quarter includes a higher than usual revenue contribution from new product and
channel launches. As a result of this activity, we expect our second quarter
operating expenses to increase relative to the first quarter. There are
uncertainties associated with the launch and early ramp of new products that
could affect our ability to achieve guidance. 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
                                       --------------------
    Q2 2007
     Guidance
     (Excluding
     AirLink                           Stock     Acquisition        Non
     Acquisition)       GAAP           Comp     Amortization(1)     GAAP
    -------------       ----           -----    ---------------     ----
    Revenue         $92.0 million                               $92.0 million
    Earnings from
     operations     $ 6.0 million  $ 1.0 million  $0.3 million  $ 7.3 million
    Net earnings    $ 5.5 million  $ 0.8 million  $0.2 million  $ 6.5 million
    Diluted earnings
     per share      $  0.21/share                               $  0.25/share

    (1)  Represents purchase price amortization associated with the 2003
         acquisition of AirPrime, Inc.
    

    We believe that we are on track to close the AirLink acquisition by the
end of Q2 2007. There may be an opportunity to complete the acquisition as
early as the end of May. If so, including AirLink for one month in the second
quarter would positively impact revenue by approximately $2.0 million. The
estimated AirLink impact incorporates the elimination of intercompany sales.

    Conference Call, Webcast and Instant Replay

    We will host a conference call to review our results on Thursday,
April 26, 2007 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:

        1-800-732-9303        Passcode: Not required
        or
        1-416-644-3416        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 enter
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1743940

    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: 21220374 followed by the number sign.

    Webcast (available for 90 days)
http://www.newswire.ca/en/webcast/viewEvent.cgi?eventID=1743940
    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 second quarter of 2007, 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 (NASDAQ:   SWIR - TSX: SW) develops and markets wide area
wireless solutions for mobile computing. The Sierra Wireless product portfolio
includes the award-winning AirCard(R) line of wireless modems, embedded
modules for original equipment manufacturers (OEMs), and the MP line of
rugged, vehicle-mounted wireless modems. Sierra Wireless also offers
professional services to OEM customers during product development, leveraging
the company's expertise in wireless design and integration to provide built-in
wireless connectivity for notebook computers and other portable computing
devices. Sierra Wireless is headquartered in Richmond, British Columbia,
Canada, with additional offices in Carlsbad, California, London, and Hong
Kong. For more information about Sierra Wireless, please 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))

    Three Months Ended March 31,                           2007         2006
    ----------------------------                      ----------   ----------

    Revenue.......................................... $  85,428    $  45,224
    Cost of goods sold...............................    62,111       28,567
                                                      ----------   ----------
    Gross margin.....................................    23,317       16,657
                                                      ----------   ----------

    Expenses
      Sales and marketing............................     4,097        3,750
      Research and development.......................     9,885        7,528
      Administration.................................     3,141        2,747
      Amortization...................................       668          759
                                                      ----------   ----------
                                                         17,791       14,784
                                                      ----------   ----------
    Earnings from operations.........................     5,526        1,873

    Other income.....................................     1,249        1,175
                                                      ----------   ----------
    Earnings before income taxes.....................     6,775        3,048
    Income tax expense...............................     1,518          461
                                                      ----------   ----------
    Net earnings.....................................     5,257        2,587
    Deficit, beginning of period.....................   (73,061)     (82,857)
                                                      ----------   ----------
    Deficit, end of period........................... $ (67,804)   $ (80,270)
                                                      ----------   ----------
                                                      ----------   ----------

    Earnings per share for the period:
      Basic.......................................... $    0.20    $    0.10
      Diluted........................................ $    0.20    $    0.10
                                                      ----------   ----------

    Weighted average number of shares
     (in thousands)
      Basic..........................................    25,720       25,492
      Diluted........................................    25,955       25,736
                                                      ----------   ----------
                                                      ----------   ----------



                            SIERRA WIRELESS, INC.

                         Consolidated Balance Sheets
              (Expressed in thousands of United States dollars)
               (Prepared in accordance with United States GAAP)

                                                          March     December
                                                       31, 2007     31, 2006
                                                      ----------   ----------
    Assets
    Current assets:
      Cash and cash equivalents...................... $  35,364    $  46,438
      Short-term investments.........................    58,495       40,554
      Accounts receivable, net of allowance for
       doubtful accounts.............................    49,297       57,441
      Inventories....................................    27,945       18,889
      Deferred income taxes..........................       118          118
      Prepaid expenses...............................     5,193        6,032
                                                      ----------   ----------
                                                        176,412      169,472

    Fixed assets.....................................    14,140       13,400
    Intangible assets................................     9,346        9,892
    Goodwill.........................................    18,209       18,409
    Other assets.....................................       381          435
                                                      ----------   ----------
                                                      $ 218,488    $ 211,608
                                                      ----------   ----------
                                                      ----------   ----------

    Liabilities and Shareholders' Equity
    Current liabilities:
      Accounts payable............................... $  27,768    $  16,608
      Accrued liabilities............................    29,265       39,543
      Deferred revenue and credits...................       859          633
      Current portion of long-term liabilities.......       529          841
      Current portion of obligations under
       capital lease.................................         3            6
                                                      ----------   ----------
                                                         58,424       57,631

    Long-term liabilities............................       951        1,145

    Shareholders' equity:
      Share capital..................................   222,088      221,861
      Additional paid-in capital.....................     4,027        3,240
      Warrants.......................................     1,538        1,538
      Deficit........................................   (67,804)     (73,061)
      Accumulated other comprehensive loss...........      (736)        (746)
                                                      ----------   ----------
                                                        159,113      152,832
                                                      ----------   ----------
                                                      $ 218,488    $ 211,608
                                                      ----------   ----------
                                                      ----------   ----------



                            SIERRA WIRELESS, INC.

                    Consolidated Statements of Cash Flows
              (Expressed in thousands of United States dollars)
               (Prepared in accordance with United States GAAP)

    Three Months Ended March 31,                           2007         2006
    ----------------------------                      ----------   ----------

    Cash flows from operating activities:
      Net earnings for the period.................... $   5,257    $   2,587
      Adjustments to reconcile net earnings to
       net cash provided by (used in) operating
       activities....................................
        Amortization.................................     2,809        2,124
        Stock-based compensation.....................       885          881
        Loss on disposal.............................         -            6
        Utilization of pre-acquisition tax losses....       200            -
      Changes in operating assets and liabilities
        Accounts receivable..........................     7,505          993
        Inventories..................................    (9,056)      (7,929)
        Prepaid expenses and other assets............     1,274          598
        Accounts payable.............................    11,160        3,695
        Accrued liabilities..........................   (10,278)      (3,809)
        Deferred revenue and credits.................       226            8
                                                      ----------   ----------
      Net cash provided by (used in) operating
       activities....................................     9,982         (846)

    Cash flows from investing activities:
        Deferred acquisition costs...................      (381)           -
        Purchase of fixed assets.....................    (2,826)      (1,215)
        Proceeds on disposal of fixed assets.........         -            4
        Increase in intangible assets................      (177)        (179)
        Purchase of short-term investments...........   (54,502)      (7,221)
        Proceeds on maturity of short-term
         investments.................................    37,210       17,095
                                                      ----------   ----------
      Net cash provided by (used in) investing
       activities....................................   (20,676)       8,484

    Cash flows from financing activities:
        Issue of common shares.......................       129          154
        Repayment of long-term liabilities...........      (509)        (306)
                                                      ----------   ----------
      Net cash used in financing activities..........      (380)        (152)
                                                      ----------   ----------

    Net increase (decrease) in cash and cash
     equivalents.....................................   (11,074)       7,486
    Cash and cash equivalents, beginning of period...    46,438       64,611
                                                      ----------   ----------
    Cash and cash equivalents, end of period......... $  35,364    $  72,097
                                                      ----------   ----------
                                                      ----------   ----------
    

    %SEDAR: 00011917E




For further information:

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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SIERRA WIRELESS, INC.

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