Sierra Wireless Reports Fourth Quarter and Full Year 2011 Results
- Fourth Quarter 2011
- Revenue in the fourth quarter 2011 of $147.2 million
- Non-GAAP earnings from operations of $3.4 million, exceeding guidance range
- Non-GAAP net earnings of $2.5 million, or $0.08 per diluted share
Full Year 2011
- Revenue for the year ended fiscal 2011 of $578.2 million
- Non-GAAP net earnings of $3.6 million, or $0.12 per diluted share
- Core M2M revenue up 9% year-over-year
Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported fourth quarter and fiscal year 2011 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.
"In the second half of 2011, we delivered improved operating results compared to the first half, continued to strengthen our global leadership position in the Machine-to-Machine market, and established ourselves as a 4G leader in Mobile Computing," said Jason Cohenour, President and Chief Executive Officer. "As we look forward, we believe that the strength of our market position, combined with an efficient cost structure and better gross margin, will drive continued improvement in operating results."
Fourth Quarter 2011 Financial Results
Revenue for the fourth quarter of 2011 was $147.2 million, a decrease of 12% compared to $167.2 million in the fourth quarter of 2010, and comparable to $146.8 million in the third quarter of 2011. The year-over-year revenue decrease was primarily due to the absence of revenue from Barnes & Noble and Clearwire, which combined had accounted for approximately $14.8 million in revenue in the fourth quarter of 2010. Machine-to-Machine ("M2M") revenue was $71.3 million, down 15% compared to the historically high levels of fourth quarter 2010, which included $8.4 million of revenue from Barnes & Noble. Mobile Computing revenue was $75.9 million, down 9% compared to $83.2 million in the fourth quarter of 2010, which included $6.4 million of revenue from Clearwire.
On a GAAP basis, gross margin was $41.6 million, or 28.2%, in the fourth quarter of 2011, compared to $48.9 million, or 29.2%, in the fourth quarter of 2010. Operating expenses were $54.0 million and loss from operations was $12.5 million in the fourth quarter of 2011, compared to operating expenses of $49.0 million and a loss from operations of $0.2 million in the fourth quarter of 2010. The operating loss in the fourth quarter of 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 quarter. The program had no impact on our operations in prior periods nor do we expect it to have an impact on our future operations. Net loss was $13.8 million, or $0.44 per diluted share, in the fourth quarter of 2011, compared to net earnings of $0.8 million, or $0.03 per diluted share, in the fourth quarter of 2010.
On a non-GAAP basis, gross margin was 28.3% in the fourth quarter of 2011, compared to 29.3% in the fourth quarter of 2010. Operating expenses were $38.3 million and earnings from operations were $3.4 million in the fourth quarter of 2011, compared to operating expenses of $43.2 million and earnings from operations of $5.8 million in the fourth quarter of 2010. Net earnings were $2.5 million, or $0.08 per diluted share, in the fourth quarter of 2011 compared to net earnings of $4.9 million, or $0.16 per diluted share, in the fourth quarter of 2010.
Full Year 2011 Financial Results
Revenue for the year ended December 31, 2011 was $578.2 million, a decrease of 11% compared to $650.3 million for the year ended December 31, 2010. M2M revenue was $293.2 million in 2011, down 11.8% compared to $332.4 million in 2010. Excluding sales to Barnes & Noble, the company's core M2M business increased 9% in 2011 on a year-over-year basis. Mobile Computing revenue was $285.0 million in 2011, down 10.4% compared to $317.9 million in 2010. Excluding sales to Clearwire, the company's Mobile Computing business was down 1% in 2011 compared to 2010.
On a GAAP basis, gross margin was $163.5 million, or 28.3%, in 2011 compared to $190.4 million, or 29.3%, in 2010. Operating expenses were $193.4 million and the loss from operations was $29.9 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 quarter. The program had no impact on our operations in prior periods nor do we expect it to have an impact on our future operations. This compares to operating expenses of $200.7 million and a loss from operations of $10.4 million in 2010. Net loss was $29.3 million, or $0.94 per diluted share, in 2011, compared to a net loss of $14.5 million, or $0.47 per diluted share, in 2010.
On a non-GAAP basis, gross margin was 28.3% in 2011, compared to 29.3% in 2010. Operating expenses were $160.9 million and earnings from operations were $2.9 million in 2011, compared to operating expenses of $168.5 million and earnings from operations of $22.4 million in 2010. Net earnings were $3.6 million, or $0.12 per diluted share, in 2011 compared to net earnings of $20.0 million, or $0.64 per diluted share, in 2010.
Non-GAAP results exclude the impact of stock-based compensation expense, acquisition amortization, restructuring costs, integration costs, impairment, foreign exchange gains or losses on translation of balance sheet accounts, and certain tax adjustments. We disclose non-GAAP amounts as we believe that these measures provide our shareholders with better information about actual operating results and assist in comparisons from one period to another. The reconciliation between our GAAP and non-GAAP results of operations is provided in the accompanying schedules.
The following guidance for the first quarter of 2012 reflects current business indicators and expectations. In the first quarter of 2012, we expect revenue to be relatively flat compared to the fourth quarter of 2011, which is consistent with typical seasonal patterns. We expect gross margin to increase, returning to approximately the same level experienced in the third quarter of 2011 and we expect operating expenses to increase slightly on a sequential basis from the fourth quarter of 2011.
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 below. All figures are approximations based on management's current beliefs and assumptions.
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 2012 and our fiscal year 2012, 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 times;
- Expected transition period to our 4G products;
- Expected cost of goods sold;
- Expected component supply constraints;
- Our ability to "win" new business;
- That wireless network operators will deploy next generation networks when expected;
- Our operations are not adversely disrupted by component shortages or other development, operating or regulatory risks; and
- Expected tax rates and 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 forward-looking statements, including without limitation, the following factors, most of which are discussed in greater detail. 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.
- 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, price and product competition, different product mix, the loss of any of our significant customers, competition from new or established wireless communication companies;
- 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 litigation that has an adverse outcome;
- The development and timing of the introduction of our new products may be later than we expect or may be indefinitely delayed.
- Transition periods associated with the migration to new technologies may be longer than we expect.
Sierra Wireless Inc.
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 innovative, 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.