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Sierra Wireless Reports 4th Quarter and Full Year 2018 Results - Revenue Up 15% to $793.6 Million U.S. ($1.05B CDN)
Thursday, February 14, 2019Company Profile | Careers | Follow Company
Richmond, BC, February 14, 2019--(T-Net)--Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results for its fourth quarter and fiscal year ended December 31, 2018.
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.
"We are accelerating the transformation of the company into a global IoT solutions and services provider. We are centralizing our R&D, combining our global sales team and driving efficiency programs throughout our operations," said Kent Thexton, President and CEO of Sierra Wireless.
"As we deliver cost savings, we are investing today in innovative cellular technologies to enhance our Device To Cloud offering and drive recurring subscription-based revenue. To accomplish this, we are developing innovative technologies such as edge network software, soft-SIM capabilities, LPWA and 5G embedded modules, as well as advanced security for data management. We plan to leverage our strong device position into the mass deployment of LPWA Cat M1/NB1 this year and the roll-out of high-speed 5G technology over the next couple of years. We have much to accomplish in 2019 and I believe the company is making the right investments as we enter the next phase of global growth in the Internet of Things."
Q4 2018 results:(1)
FY 2018 results:(1)
(1) See "Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results by Quarter" below.
Fourth Quarter 2018
Revenue for the fourth quarter of 2018 was $201.4 million, an increase of 9.7% compared to $183.5 million in the fourth quarter of 2017. Product revenue was $178.2 million, up 5.3% year-over-year, and Services and other revenue was $23.2 million, up 63.0% compared to the fourth quarter of 2017. Quarterly revenue for the three business segments was as follows: (i) Revenue from OEM Solutions was $148.7 million in the fourth quarter of 2018, up 6.4% compared to $139.8 million in the fourth quarter of 2017; (ii) Revenue from Enterprise Solutions was $30.3 million in the fourth quarter of 2018, down 5.1% compared to $31.9 million in the fourth quarter of 2017; and (iii) Revenue from IoT Services was $22.4 million in the fourth quarter of 2018, up 89.1%, compared to
$11.9 million in the fourth quarter of 2017, driven by the contribution from Numerex and organic subscriber growth.
GAAP RESULTS
NON-GAAP RESULTS(1)
Cash and cash equivalents at the end of the fourth quarter of 2018 were $89.1 million, representing an increase of $21.6 million compared to $67.5 million at the end of the third quarter of 2018. The increase in cash was mainly due to lower working capital requirements, proceeds from sale of our iTank business and the absence of Numerex acquisition-related costs.
FULL YEAR 2018
Revenue for 2018 was $793.6 million, an increase of 14.9%, compared to $690.7 million in 2017. Product revenue was $699.3 million, up 8.4% year-over-year, and Services and other revenue was $94.3 million, up 108.0% compared to 2017. Annual revenue for the three business segments was as follows: (i) Revenue from OEM Solutions was $583.2 million in 2018, up 5.2% compared to $554.5 million in 2017; (ii) Revenue from Enterprise Solutions was $119.9 million in 2018, up 18.1% compared to $101.5 million in 2017; and (iii) Revenue from IoT Services was $90.5 million in 2018, up 161.0%, compared to $34.7 million in 2017, driven by the contribution from Numerex and organic subscriber growth.
GAAP RESULTS
NON-GAAP RESULTS(1)
(1) See "Non-GAAP Financial Measures" and "Reconciliation of GAAP and Non-GAAP Results by Quarter" below.
Accounting Standard Adoption
We adopted the new accounting standard for revenue recognition (ASC 606) effective January 1, 2018. Our fourth quarter and full year 2018 financial results reflect the adoption of this new standard and prior periods have been adjusted accordingly.
Financial Guidance - Full Year & Q1 2019
Given the current macro-economic environment and some weakness that we are experiencing in the automotive, enterprise networking and mobile computing markets, we provide the following quarterly and full year guidance for 2019 (see below). The company is undertaking a cost reduction program over the next 18 to 24 months while also investing in new solutions and technologies including LPWA, 5G, embedded SIM, security, and edge networking software.
For the year ended December 31, 2019, we expect revenue to be flat year-over-year and Adjusted EBITDA is expected to be approximately $35.0 million. Non-GAAP net earnings per share is expected to be approximately $0.30 for Full Year 2019.
For the first quarter of 2019, we expect revenue to be in the range of $170.0 million to $174.0 million and Adjusted EBITDA to be in the range of $2.0 million to $4.0 million. Non-GAAP net loss per share is expected to be approximately $0.02 to $0.06 in the First Quarter of 2019.
This non-GAAP guidance constitutes "forward-looking statements" within the meaning of applicable securities laws and reflects current business indicators and expectations. These statements are based on management's current beliefs and assumptions, which could prove to be significantly incorrect. Forward-looking statements, particularly those that relate to longer periods of time, are subject to substantial known and unknown risks and uncertainties that could cause actual events or results to differ significantly from those expressed or implied by our forward-looking statements, including those described in our regulatory filings. See "Cautionary Note Regarding Forward-Looking Statements" below.
About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) is an IoT pioneer, empowering businesses and industries to transform and thrive in the connected economy. Customers start with Sierra because we offer a device to cloud solution, comprised of embedded and networking solutions seamlessly integrated with our secure cloud and connectivity services. OEMs and enterprises worldwide rely on our expertise in delivering fully integrated solutions to reduce complexity, turn data into intelligence and get their connected products and services to market faster. Sierra Wireless has more than 1,300 employees globally and operates R&D centers in North America, Europe and Asia. For more information, visit www.sierrawireless.com.
AirPrime, AirLink, AirVantage, mangOH and Legato are trademarks of Sierra Wireless. Other product or service names mentioned herein may be the trademarks of their respective owners.
Non-GAAP Financial Measures
We disclose these non-GAAP financial measures as we believe they provide useful information to investors and analysts to assist them in their evaluation of our operating results and to 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 includes allocation of realized gains or losses on forward contracts and excludes the impact of stock-based compensation expense and related social taxes, acquisition-related amortization, acquisition-related and integration costs, restructuring costs, impairment and certain other non-recurring costs or recoveries.
Non-GAAP income tax expense includes certain tax adjustments and taxes on acquisition-related amortization, acquisition-related and integration costs, restructuring costs, other non-recurring costs and foreign exchange.
In addition to the above, Non-GAAP net earnings (loss) and non-GAAP net earnings (loss) per share exclude the impact of foreign exchange gains or losses on translation of certain balance sheet accounts, 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 costs, restructuring cost, 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 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 fund future capital expenditures.
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") and may include statements and information relating to our Q4'18 corporate update; financial guidance for the first quarter of 2019 and our fiscal year 2019, our business outlook for the short and longer term, statements regarding our strategy, plans, goals, objectives, expectations and future operating performance; the Company's liquidity and capital resources; the Company's financial and operating objectives and strategies to achieve them; general economic conditions; estimates of our expenses, future revenues, non-GAAP earnings per share and capital requirements; our expectations regarding the legal proceedings we are involved in; statements with respect to the Company's estimated working capital; expectations with respect to the adoption of IoT solutions; expectations regarding trends in the IoT market and wireless module market; expectations regarding product and price competition from other wireless device manufacturers and solution providers; and our ability to implement effective control procedures. 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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