Sierra Wireless reports fourth quarter and full year 2012 results
Vancouver, Canada – February 6, 2013 – Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported fourth
quarter and full year 2012 results. 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.
On January 28, 2013, the company announced a definitive agreement for the sale of substantially all of the assets
and operations related to its AirCard business to Netgear, Inc. In accordance with GAAP, assets and liabilities
associated with the sale have been recorded as "held for sale" and the results of operations of the AirCard business
as discontinued operations. The consolidated statements of operations and related selected financial information
have been retrospectively modified to distinguish between continuing operations and discontinued operations.
"Our fourth quarter results highlight our continued solid revenue growth and improving earnings," said Jason
Cohenour, President and Chief Executive Officer. "As the global leader in M2M and connected device solutions, we
believe that we are exceptionally well positioned to drive profitable growth both organically and through strategic
Fourth Quarter 2012
Revenue from continuing operations in the fourth quarter of 2012 was $109.4 million, compared to $82.4 million in
the fourth quarter of 2011, and $100.2 million in the third quarter of 2012. The 32.8 percent year‐over‐year revenue
increase was driven by better than expected growth in Machine‐to‐Machine ("M2M") sales, including a $15.5 million
contribution from the recently acquired M2M business of Sagemcom, along with solid growth in sales to PC OEMs.
On a GAAP basis, gross margin from continuing operations was $36.2 million, or 33.1 percent of revenue, in the
fourth quarter of 2012, compared to $25.2 million, or 30.6 percent of revenue, in the fourth quarter of 2011.
Operating expenses from continuing operations were $37.7 million and loss from continuing operations was $1.5
million in the fourth quarter of 2012, compared to operating expenses of $45.2 million and a loss from operations of
$20.0 million in the fourth quarter of 2011. Fourth quarter of 2011 operating expenses included an intangible asset
impairment charge of $11.2 million, primarily related to a software development program that was acquired through
the purchase of Wavecom, S.A. in 2009 and which we abandoned during the fourth quarter of 2011. Net earnings
from continuing operations were $15.5 million, or $0.50 per diluted share, in the fourth quarter of 2012, compared
to net loss of $20.4 million, or $0.65 per diluted share, in the fourth quarter of 2011. Net earnings from continuing
operations in 2012 included an income tax recovery that was the result of the recognition of certain tax assets that
will be realizable as a result of the sale of the AirCard business. Net earnings, including discontinued operations,
were $19.6 million, or $0.64 per diluted share, in the fourth quarter of 2012, compared to net loss, including
discontinued operations, of $13.8 million, or $0.44 per diluted share, in the fourth quarter of 2011.
On a non‐GAAP basis, gross margin from continuing operations was 33.2 percent of revenue in the fourth quarter of
2012, compared to 30.7 percent of revenue in the fourth quarter of 2011. Operating expenses from continuing
operations were $32.6 million and operating earnings from continuing operations were $3.7 million in the fourth
quarter of 2012, compared to operating expenses of $29.7 million and an operating loss of $4.4 million in the fourth
quarter of 2011. Net earnings from continuing operations were $4.5 million, or $0.15 per diluted share, in the fourth
quarter of 2012 compared to net loss of $4.4 million, or $0.14 per diluted share, in the fourth quarter of 2011.
The cash, cash equivalents, and short‐term investments balance at the end of the fourth quarter of 2012 was $63.6
million, up from $59.5 million at the end of the third quarter of 2012.
Full Year 2012
Revenue from continuing operations for the year ended December 31, 2012 was $397.3 million, compared to $333.2
million for the year ended December 31, 2011. The 19.3 percent year‐over‐year revenue increase was driven by
significant growth in M2M sales, including a $20.1 million contribution from the recently acquired M2M business of
Sagemcom, along with strong growth in sales to PC OEMs.
On a GAAP basis, gross margin from continuing operations was $125.3 million, or 31.5 percent of revenue, in 2012,
compared to $101.7 million, or 30.5 percent of revenue, in 2011. Operating expenses from continuing operations
were $147.5 million and loss from operations was $22.2 million in 2012, compared to operating expenses of $156.0
million and a loss from operations of $54.2 million in 2011. The operating loss in 2011 included an intangible asset
impairment charge of $11.2 million, primarily related to a software development program that was acquired through
the purchase of Wavecom, S.A. in 2009 and which we abandoned during the fourth quarter of 2011. Net loss from
continuing operations was $4.2 million, or $0.14 per diluted share, in 2012, compared to $50.7 million, or $1.62 per
diluted share, in 2011. Net earnings, including discontinued operations, were $27.2 million, or $0.88 per diluted
share, in 2012, compared to net loss, including discontinued operations, of $29.3 million, or $0.94 per diluted share,
On a non‐GAAP basis, gross margin from continuing operations was 31.6 percent of revenue in 2012, compared to
30.7 percent of revenue in 2011. Operating expenses from continuing operations were $124.7 million and operating
earnings from continuing operations were $0.9 million in 2012, compared to operating expenses of $124.5 million
and an operating loss of $22.4 million in 2011. Net loss from continuing operations was $0.4 million, or $0.01 per
diluted share, in 2012, compared to net loss of $18.7 million, or $0.60 per diluted share, in 2011.
Non‐GAAP results exclude the impact of stock‐based compensation expense, acquisition costs, restructuring costs,
integration costs, disposition costs, acquisition amortization, 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 useful information about operating results and assist
in comparisons from one period to another. The reconciliation between our GAAP and non‐GAAP results is provided
in the accompanying schedules.
The Company provides the following guidance for the first quarter of 2013 for its continuing operations.
In the first quarter of 2013, we expect revenue from our continuing operations to be down sequentially following the
exceptionally strong fourth quarter of 2012. We expect gross margin to be similar or slightly lower than fourth
quarter 2012 levels, and operating expenses to increase as a result of higher new product certification costs
combined with the negative impact of a strengthening euro.
Looking forward to the second quarter of 2013, we expect a return to solid sequential and year‐over‐year revenue
growth and modest profitability.
Q1 2013 Guidance Non‐GAAP ‐ Continuing
Revenue $98.0 to $102.0 million
Earnings (loss) from operations ($2.5) to ($1.5) million
Net earnings (loss) from continuing operations ($2.5) to ($1.5) million
Earnings (loss) per share from continuing operations ($0.08) to ($0.05) per share
This Non‐GAAP guidance for the first quarter of 2013 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
Conference call, webcast and instant replay details
Sierra Wireless President and CEO, Jason Cohenour, and CFO, David McLennan, will host a conference call and
webcast with analysts and investors to review the results on Wednesday, February 6, 2013, at 5:30 PM Eastern Time
(2:30 PM PT). A live slide presentation will be available for viewing during the call from the link provided below.
To participate in this conference call, please dial the following number approximately ten minutes prior to the
commencement of the call:
Toll‐free (Canada and US): 1‐877‐201‐0168
Alternate number: 1‐647‐788‐4901
Conference ID: 87240990
For those unable to participate in the live call, a replay will be available until February 27, 2013. Dial 1‐855‐859‐2056
or 1‐800‐585‐8367 and enter the Conference ID number above to access the replay.
To access the webcast, please follow the link below:
Sierra Wireless Q4 and FY2012 Financial Results Webcast
If the above link does not work, please copy and paste the following URL into your browser:
The webcast will remain available at the above link for one year following the call.
We look forward to having you participate in our call.
Cautionary Note Regarding Forward‐Looking Statements
Certain statements and information in this press release 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 ("forward‐looking statements") including statements and information relating to our financial guidance
for the first quarter of 2013 and our fiscal year 2013, our business outlook for the short and longer term and our strategy, plans
and future operating performance. Forward‐looking statements are provided to help you understand our views of our short and
longer term prospects. We caution you that forward‐looking statements may not be appropriate for other purposes. We will not
update or revise our forward‐looking statements unless we are required to do so by securities laws.
Typically include words and phrases about the future such as "outlook", "may", "estimates", "intends", "believes", "plans",
"anticipates" and "expects".
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 those listed below, which could prove to be significantly incorrect:
Our ability to develop, manufacture and sell new products and services that meet the needs of our customers
and gain commercial acceptance;
Our ability to continue to sell our products and services in the expected quantities at the expected prices and
Expected cost of goods sold;
Expected component supply situation;
Our ability to "win" new business;
Expected deployment of next generation networks by wireless network operators;
Our operations are not adversely disrupted by component shortages or other development, operating or
regulatory risks; and
Expected tax rates relative mix of earnings amongst the tax jurisdictions in which we operate, along with
foreign exchange rates.
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 forwardlooking
statements, including without limitation, the following factors. These risk factors and others are discussed in our
Annual Information Form and Management's Discussion and Analysis of Financial Condition and Results of Operations, 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.
We may experience higher than anticipated costs; disruption of, and demands on, our ongoing business;
diversion of management's time and attention; adverse effects on existing business relationships with
suppliers and customers and employee issues in connection with the divestiture of the AirCard assets and
Actual sales volumes or prices for our products and services may be lower than we expect for any reason
including, without limitation, the continuing uncertain economic conditions, competition, different product
mix, the loss of any of our significant customers;
The cost of products sold may be higher than planned or necessary component supplies may not be available,
are delayed or are not available on commercially reasonable terms;
We may be unable to enforce our intellectual property rights or may be subject to claims and litigation that
have an adverse outcome;
The development and timing of the introduction of our new products may be later than we expect or may be
Transition periods associated with the migration to new technologies may be longer than we expect.
About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) offers industry‐leading mobile computing and machine‐to‐machine (M2M)
communications products and solutions that connect people, devices, and applications over cellular networks. Wireless service
providers, equipment manufacturers, enterprises and government organizations around the world depend on us for reliable
wireless technology. We offer 2G, 3G and 4G wireless modems, routers and gateways as well as a comprehensive suite of
software, tools, and services that ensure our customers can successfully bring wireless applications to market. For more
information about Sierra Wireless, visit www.sierrawireless.com.
"AirCard" and "AirLink" are registered trademarks of Sierra Wireless. "AirPrime" and "AirVantage" are also trademarks of Sierra
Wireless. Other product or service names mentioned herein may be the trademarks of their respective owners.