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Sierra Wireless Reports Third Quarter 2017 Results - Revenue Increases 12.8% Year-Over-Year
Thursday, November 2, 2017Company Profile | Careers | Follow Company
Revenue increases 12.8% year-over-year to $173.2 million in the third quarter of 2017
Richmond, BC, November 2, 2017--(T-Net)--Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results for its third quarter ending September 30, 2017. 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 third quarter of 2017, we delivered strong revenue and profitability growth on a year-over-year basis, driven by performance improvements in each of our three business segments,” said Jason Cohenour, President and CEO. “We continue to strengthen our leadership position in the Internet of Things with technology innovations, new product launches, new customer wins and strategic acquisitions."
Revenue for the third quarter of 2017 was $173.2 million, an increase of 12.8% compared to $153.6 million in the third quarter of 2016. Revenue from OEM Solutions was $138.5 million in the third quarter of 2017, up 8.4% compared to $127.8 million in the third quarter of 2016. Revenue from Enterprise Solutions was $26.3 million in the third quarter of 2017, up 38.8% compared to $18.9 million in the third quarter of 2016. Revenue from Cloud and Connectivity Services was $8.4 million in the third quarter of 2017, up 23.0% compared to $6.9 million in the third quarter of 2016.
GAAP RESULTS
NON-GAAP RESULTS
Cash and cash equivalents at the end of the third quarter of 2017 were $74.2 million, representing a decrease of $14.8 million compared to the end of the second quarter of 2017. The decrease in cash was primarily due to high working capital requirements.
Acquisition
On August 2, 2017, we entered into a definitive merger agreement (the "Merger Agreement") to acquire Numerex Corp. ("Numerex") in a stock-for-stock merger transaction (the "Transaction"). Under the terms of the Merger Agreement, Numerex stockholders will receive a fixed exchange ratio of 0.18 common shares of Sierra Wireless for each share of Numerex common stock. Concurrent with closing, Numerex's debt of approximately $20 million and other obligations of approximately $4 million will be repaid with cash.
We expect the acquisition to expand our position as a leading global IoT pure-play and significantly increase our subscription-based recurring services revenue. On October 23, 2017, the Transaction was granted early termination of the waiting period pursuant to the U.S. Hart-Scott-Rodino Antitrust Improvements Act of 1976.
On October 30, 2017, the U.S. Securities and Exchange Commission declared our Registration Statement on Form F-4 (containing the proxy statement/prospectus relating to the Transaction) effective under the U.S. Securities Act of 1933 and the proxy statement/prospectus was mailed to Numerex's stockholders shortly thereafter. The special meeting of Numerex stockholders to consider and vote on the approval of the Transaction has been scheduled for December 6, 2017. The Transaction is expected to close in December 2017, subject to the receipt of Numerex stockholder approval, certain regulatory approvals, and satisfaction of other customary closing conditions.
Financial Guidance
For the fourth quarter of 2017, we expect revenue to be in the range of $172 million to $180 million and non-GAAP earnings per share to be in the range of $0.21 to $0.29.
This Non-GAAP guidance 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 and assumptions.
Non-GAAP Financial Measures
We disclose non-GAAP financial measures as we believe they provide useful information on actual operating performance and 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.
Non-GAAP gross margin excludes the impact of stock-based compensation expense and related social taxes and certain other nonrecurring costs or recoveries.
Non-GAAP earnings (loss) from operations excludes the impact of stock-based compensation expense and related social taxes, amortization related to acquisitions, acquisition-related and integration expense, restructuring expense, impairment and certain other nonrecurring costs or recoveries.
In addition to the above, Non-GAAP net earnings (loss) and non-GAAP earnings (loss) per share exclude the impact of foreign exchange gains or losses on translation of certain balance sheet accounts, unrealized foreign exchange gains or losses on forward contracts and certain tax adjustments.
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 also use non-GAAP earnings from operations as one component in determining short-term incentive compensation for management employees.
Adjusted EBITDA is defined as net earnings (loss) plus stock-based compensation expense and related social taxes, acquisition-related and integration expense, restructuring expense, impairment, certain other nonrecurring costs or recoveries, amortization, foreign exchange gains or losses on translation of certain balance sheet accounts, unrealized foreign exchange gains or losses on forward contracts, interest and income tax expense. Adjusted EBITDA is a metric used by investors and analysts for valuation purposes and we believe that it 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 capital expenditures.
Investor and Media Contact: | |
David Climie | |
Vice President, Investor Relations | |
+1 (604) 231-1137 | |
Investor Contact: | |
David G. McLennan | |
Chief Financial Officer | |
+1 (604) 231-1181 | |
About Sierra Wireless
"AirPrime," "AirLink," and "AirVantage" are trademarks of Sierra Wireless. Other product or service names mentioned herein may be the trademarks of their respective owners. |
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 fourth quarter of 2017 and our fiscal year 2017, our business outlook for the short and longer term, statements regarding our strategy, plans and future operating performance. 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. We do not intend to update or revise our forward-looking statements unless we are required to do so by securities laws.
Forward-looking statements:
Company Snapshot |
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Sierra Wireless (a Semtech Company)
Richmond, BC (Wireless)
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