Form 6-K SIERRA WIRELESS INC For: Jun 30

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August 4, 2016 4:59 PM EDT


UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 6-K
 
Report of Foreign issuer
Pursuant to Rule 13a-16 or 15d-16 of the
Securities Exchange Act of 1934
  
For the Month of August 2016
 
(Commission File.  No 0-30718).
 
SIERRA WIRELESS, INC., A CANADIAN CORPORATION
(Translation of registrant’s name in English)
 
13811 Wireless Way
Richmond, British Columbia, Canada V6V 3A4
(Address of principal executive offices and zip code)
 
Registrant’s Telephone Number, including area code: 604-231-1100
 
Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F:
 
 
Form 20-F
o
40-F
ý
 
Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934:
 
 
Yes:
o
No:
ý

SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
Sierra Wireless, Inc.
 
 
 
 
 
By:
/s/ David G. McLennan
 
 
 
 
 
David G. McLennan, Chief Financial Officer and Secretary
 
 
 
 
Date: August 4, 2016
 







Sierra Wireless Reports Second Quarter 2016 Results


•
Revenue of $156.2 million in the second quarter of 2016
•
GAAP net earnings of $0.7 million and diluted EPS of $0.02
•
Non-GAAP net earnings of $6.4 million and diluted EPS of $0.20


VANCOUVER, BRITISH COLUMBIA - August 4, 2016 - Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results for its second quarter ending June 30, 2016. 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.

Revenue for the second quarter of 2016 was $156.2 million, a decrease of 1.1% compared to $158.0 million in the second quarter of 2015. Revenue from OEM Solutions was $132.6 million in the second quarter of 2016, down 4.0% compared to $138.2 million in the second quarter of 2015. Revenue from Enterprise Solutions was $16.6 million in the second quarter of 2016, up 10.0% compared to $15.0 million in the second quarter of 2015. Revenue from Cloud and Connectivity Services was $7.0 million in the second quarter of 2016, up 46.8% compared to $4.8 million in the second quarter of 2015.

Our gross margin in the second quarter of 2016 was 33.8%, compared to 32.3% in the same period of 2015. During the quarter, we received reimbursement of certain legal costs pursuant to a favorable arbitration decision on a contract dispute with an intellectual property licensor. The reimbursement resulted in a favorable impact of $1.9 million in cost of goods sold.

“Revenue and non-GAAP earnings improved sequentially in the second quarter, driven by stronger OEM and Enterprise sales,” said Jason Cohenour, President and CEO. “We also strengthened our strategic position in the important Fleet Management and Asset Tracking segments with the acquisition of GenX Mobile.”


GAAP RESULTS
•
Gross margin was $52.7 million, or 33.8% of revenue, in the second quarter of 2016, compared to $50.9 million, or 32.3% of revenue, in the second quarter of 2015.
•
Operating expenses were $49.3 million and earnings from operations were $3.4 million in the second quarter of 2016, compared to operating expenses of $46.8 million and earnings from operations of $4.1 million in the second quarter of 2015.
•
Net earnings were $0.7 million, or $0.02 per diluted share, in the second quarter of 2016, compared to net earnings of $4.1 million, or $0.12 per diluted share, in the second quarter of 2015.




NON-GAAP RESULTS
•
Gross margin was 33.8% in the second quarter of 2016, compared to 32.4% in the second quarter of 2015.
•
Operating expenses were $44.4 million and earnings from operations were $8.4 million in the second quarter of 2016, compared to operating expenses of $40.4 million and earnings from operations of $10.7 million in the second quarter of 2015.
•
Net earnings were $6.4 million, or $0.20 per diluted share, in the second quarter of 2016, compared to net earnings of $8.6 million, or $0.26 per diluted share, in the second quarter of 2015. The non-GAAP tax rate in the second quarter of 2016 was 24.7%.
•
Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") were $12.1 million in the second quarter of 2016, compared to $13.1 million in the second quarter of 2015.
•
Excluding the previously mentioned recovery of $1.9 million in the quarter, gross margin was 32.6%; adjusted EBITDA was $10.2 million; earnings from operations were $6.5 million; and EPS was $0.14 per share. 


Cash and cash equivalents at the end of the second quarter of 2016 were $98.4 million, representing an increase of $12.3 million compared to the end of the first quarter of 2016. Cash generated from operations during the second quarter was $16.5 million.


Acquisition of GenX Mobile
On August 3, 2016, we completed the acquisition of all of the outstanding shares of GenX Mobile Incorporated ("GenX") for total cash consideration of $7.8 million ($6.0 million, net of cash acquired), subject to working capital adjustments. GenX is a provider of in-vehicle cellular devices for the fleet management, asset tracking and transportation markets. The company's products are complementary to our existing Enterprise Solutions portfolio of mobile and industrial gateways. GenX is based in San Jose, California and has 22 employees. We believe that the acquisition of GenX expands our strategic position in key market segments and bolsters our telematics and location capabilities. The GenX business and team will be integrated with our Enterprise Solutions business unit. In the first half of 2016, GenX recorded revenue of approximately $6.7 million and non-GAAP earnings from operations were approximately breakeven.


Financial Guidance
As a global leader in intelligent wireless solutions for the Internet of Things, we believe that we are well positioned to drive strong long term growth. However, our short term outlook is more cautious. While we expect to see continued solid revenue contributions from new OEM programs, we are seeing signs of softer short term demand and tighter inventory management with some established OEM customers and programs. For the third quarter of 2016, we expect revenue to be in the range of $145 million to $155 million and non-GAAP earnings per share to be in the range of $0.06 to $0.13. In the fourth quarter of 2016, we expect to see sequential and year-over-year growth, although not to the levels previously anticipated. Given this softer short term outlook, we now expect full year 2016 revenue and non-GAAP EPS to be below the low end of our previously stated annual guidance range of $630 million to $670 million in revenue and non-GAAP EPS of $0.60 to $0.90.

This guidance excludes any contribution from the recently acquired GenX and 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.

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 disposition costs, restructuring costs, integration costs and impairment.

Non-GAAP net earnings (loss) and non-GAAP diluted earnings (loss) per share exclude the impact of stock-based compensation expense and related social taxes, amortization related to acquisitions, acquisition-related and disposition costs, restructuring costs, integration costs, impairment, foreign exchange gains or losses on translation of certain balance sheet accounts 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 earnings (loss) from operations plus stock-based compensation expense and related social taxes, acquisition-related and integration costs, restructuring costs, impairment and amortization. Adjusted EBITDA can also be calculated as non-GAAP earnings (loss) from operations plus amortization excluding acquisition related amortization. We believe that Adjusted EBITDA 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. Adjusted EBITDA is also used by investors and analysts for valuation purposes.

Conference call and webcast 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 Thursday, August 4, 2016, 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 start of the call:
•
Toll-free (Canada and US): 1-877-201-0168
•
Alternate number: 1-647-788-4901
•
Conference ID: 32898601

To access the webcast, please follow the link below:
Sierra Wireless Q2 2016 Conference Call and Webcast
If the above link does not work, please copy and paste the following URL into your browser:
http://event.on24.com/r.htm?e=1210427&s=1&k=A4B4540BFF24C511667C7B65E817E267

The webcast will remain available at the above link for one year following the call.



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
 
 

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 third quarter of 2016 and our fiscal year 2016, 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:
•
Typically include words and phrases about the future such as “outlook”, “will”, “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 cost of goods sold;
•
expected component supply constraints;
•
our ability to "win" new business;
•
our ability to integrate acquired businesses and realize expected benefits;
•
expected deployment of next generation networks by wireless network operators;
•
our operations not being 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. 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:
•
competition from new or established service providers or from those with greater resources;
•
disruption of, and demands on, our ongoing business and diversion of management's time and attention in connection with acquisitions or divestitures;
•
the loss of any of our significant customers;
•
cyber-attacks or other breaches of our information technology security;
•
difficult or uncertain global economic conditions;
•
our financial results being subject to fluctuation;
•
our ability to attract or retain key personnel;
•
risks related to infringement on intellectual property rights of others;
•
our ability to obtain necessary rights to use software or components supplied by third parties;
•
we may be unable to enforce our intellectual property rights;
•
our ability to respond to changing technology, industry standards and customer requirements;
•
our reliance on single source suppliers for certain components used in our products;
•
failures of our products or services due to design flaws and errors, component quality issues, manufacturing defects or other quality issues;
•
our dependence on a limited number of third party manufacturers;
•
unanticipated costs associated with litigation or settlements;
•
our dependence on wireless network carriers to promote and offer acceptable wireless data services;
•
risks related to contractual disputes with counterparties;
•
risks related to governmental regulation;
•
risks related to the transmission, use and disclosure of user data and personal information; and
•
risks inherent in foreign jurisdictions.

About Sierra Wireless
Sierra Wireless (NASDAQ: SWIR) (TSX: SW) is building the Internet of Things with intelligent wireless solutions that empower organizations to innovate in the connected world. We offer the industry’s most comprehensive portfolio of 2G, 3G and 4G embedded modules and gateways, seamlessly integrated with our secure cloud and connectivity services. OEMs and enterprises worldwide trust our innovative solutions to get their connected products and services to market faster. Sierra Wireless has more than 1,000 employees globally and operates R&D centers in North America, Europe and Asia. For more information, visit www.sierrawireless.com.

"AirPrime," "AirLink," and "AirVantage" are trademarks 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 COMPREHENSIVE EARNINGS (LOSS)
(In thousands of U.S. dollars, except where otherwise stated)
(unaudited)
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2016

 
2015

 
2016

 
2015

Revenue
$
156,229

 
$
157,965

 
$
299,026

 
$
308,371

Cost of goods sold
103,465

 
107,018

 
199,447

 
208,588

Gross margin
52,764

 
50,947

 
99,579

 
99,783

 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
Sales and marketing
16,046

 
12,828

 
31,675

 
25,973

Research and development
18,237

 
18,402

 
37,015

 
37,494

Administration
10,286

 
11,092

 
19,813

 
21,512

Restructuring
—

 
711

 
—

 
711

Acquisition-related and integration
59

 
1,015

 
433

 
2,118

Amortization
4,725

 
2,787

 
8,487

 
5,389

 
49,353

 
46,835

 
97,423

 
93,197

Earnings from operations
3,411

 
4,112

 
2,156

 
6,586

Foreign exchange gain (loss)
(1,071
)
 
1,550

 
1,221

 
(10,343
)
Other income
32

 
13

 
58

 
118

Earnings (loss) before income taxes
2,372

 
5,675

 
3,435

 
(3,639
)
Income tax expense
1,654

 
1,599

 
1,999

 
1,938

Net earnings (loss)
$
718

 
$
4,076

 
$
1,436

 
$
(5,577
)
Other comprehensive income (loss):
 
 
 
 
 
 
 
Foreign currency translation adjustments, net of
taxes of $nil
(4,251
)
 
4,568

 
881

 
1,050

Comprehensive earnings (loss)
$
(3,533
)
 
$
8,644

 
$
2,317

 
$
(4,527
)
 
 
 
 
 
 
 
 
Net earnings (loss) per share (in dollars)
 
 
 
 
 
 
 
Basic
$
0.02

 
$
0.13

 
$
0.04

 
$
(0.17
)
Diluted
0.02

 
0.12

 
0.04

 
(0.17
)
Weighted average number of shares outstanding (in thousands)
 
 
 
 
 
 
 
Basic
31,966

 
32,166

 
32,061

 
32,075

Diluted
32,430

 
32,915

 
32,465

 
32,075






SIERRA WIRELESS, INC.
CONSOLIDATED BALANCE SHEETS
(In thousands of U.S. dollars, except where otherwise stated)
(unaudited)

 
June 30, 2016

 
December 31, 2015

Assets
 
 
 
Current assets
 
 
 
Cash and cash equivalents
$
98,433

 
$
93,936

Accounts receivable, net of allowance for doubtful accounts of $2,339 (December 31, 2015 - $2,088)
128,542

 
116,246

Inventories
20,033

 
32,829

Prepaids and other
13,217

 
14,179

 
260,225

 
257,190

Property and equipment
32,541

 
28,947

Intangible assets
78,886

 
84,250

Goodwill
157,600

 
156,488

Deferred income taxes
14,916

 
14,865

Other assets
5,662

 
4,592

 
$
549,830

 
$
546,332

 
 
 
 
Liabilities
 
 
 
Current liabilities
 
 
 
Accounts payable and accrued liabilities
$
133,606

 
$
128,537

Deferred revenue and credits
2,863

 
3,479

 
136,469

 
132,016

Long-term obligations
46,703

 
44,353

Deferred income taxes
11,684

 
11,667

 
194,856

 
188,036

Equity
 
 
 
Shareholders’ equity
 
 
 
Common stock: no par value; unlimited shares authorized; issued and
outstanding: 32,035,149 shares (December 31, 2015 - 32,337,201 shares)
344,230

 
346,453

Preferred stock: no par value; unlimited shares authorized;
issued and outstanding: nil shares
—

 
—

Treasury stock: at cost: 355,471 shares (December 31, 2015 – 240,613 shares)
(5,134
)
 
(4,017
)
Additional paid-in capital
21,960

 
23,998

Retained earnings (deficit)
1,015

 
(160
)
Accumulated other comprehensive loss
(7,097
)
 
(7,978
)
 
354,974

 
358,296

 
$
549,830

 
$
546,332






SIERRA WIRELESS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands of U.S. dollars)
(unaudited)
 
Three months ended
June 30,
 
Six months ended
June 30,
 
2016

 
2015

 
2016

 
2015

Cash flows provided by (used in):
 
 
 
 
 
 
 
Operating activities
 
 
 
 
 
 
 
Net earnings (loss)
$
718

 
$
4,076

 
$
1,436

 
$
(5,577
)
Items not requiring (providing) cash
 
 
 
 
 
 
 
Amortization
6,706

 
4,452

 
12,274

 
9,583

Stock-based compensation
1,902

 
2,437

 
3,937

 
4,734

Other
(115
)
 
61

 
(111
)
 
6,251

Changes in non-cash working capital
 
 
 
 
 
 
 
Accounts receivable
(10,900
)
 
1,432

 
(11,334
)
 
(20,845
)
Inventories
6,097

 
(6,642
)
 
13,177

 
(9,236
)
Prepaids and other
(830
)
 
(8,829
)
 
(59
)
 
(7,188
)
Accounts payable and accrued liabilities
13,417

 
15,526

 
5,549

 
12,383

Deferred revenue and credits
(473
)
 
425

 
(747
)
 
883

Cash flows provided by (used in) operating activities
16,522

 
12,938

 
24,122

 
(9,012
)
Investing activities
 
 
 
 
 
 
 
Additions to property and equipment
(5,427
)
 
(3,906
)
 
(8,270
)
 
(5,817
)
Proceeds from sale of property and equipment
—

 
—

 
3

 
—

Additions to intangible assets
(241
)
 
(354
)
 
(536
)
 
(587
)
Acquisition of Wireless Maingate AB, net of cash acquired
—

 
—

 
—

 
(88,449
)
Acquisition of Accel Networks LLC
—

 
(9,250
)
 
—

 
(9,250
)
Cash flows used in investing activities
(5,668
)
 
(13,510
)
 
(8,803
)
 
(104,103
)
Financing activities
 
 
 
 
 
 
 
Issuance of common shares
943

 
580

 
1,471

 
2,725

Repurchase of common shares for cancellation
(62
)
 
—

 
(6,206
)
 
—

Purchase of treasury shares for RSU distribution
—

 
(1,656
)
 
(4,214
)
 
(2,453
)
Taxes paid related to net settlement of equity awards
(425
)
 
(452
)
 
(777
)
 
(2,194
)
Excess tax benefits from equity awards
150

 
510

 
150

 
2,180

Payment for contingent consideration
(16
)
 
—

 
(16
)
 
—

Decrease in other long-term obligations
(75
)
 
(70
)
 
(138
)
 
(144
)
Cash flows provided by (used in) financing activities
515

 
(1,088
)
 
(9,730
)
 
114

Effect of foreign exchange rate changes on cash and cash equivalents
944

 
(1,421
)
 
(1,092
)
 
2,413

Cash and cash equivalents, increase (decrease) in the period
12,313

 
(3,081
)
 
4,497

 
(110,588
)
Cash and cash equivalents, beginning of period
86,120

 
99,555

 
93,936

 
207,062

Cash and cash equivalents, end of period
$
98,433

 
$
96,474

 
$
98,433

 
$
96,474






SIERRA WIRELESS, INC. 

RECONCILIATION OF GAAP AND NON-GAAP RESULTS BY QUARTER

(in thousands of U.S. dollars, except where otherwise stated)
 
2016
 
 
2015
 
 
Q2
Q1
 
 
Total
Q4
Q3
Q2
Q1
 
 
 
 
 
 
 
 
 
 
 
 
 
Gross margin - GAAP
 
$
52,764

$
46,815

 
 
$
193,855

$
45,063

$
49,009

$
50,947

$
48,836

 
Stock-based compensation and related social taxes
 
107

106

 
 
647

106

146

147

248

 
Gross margin - Non-GAAP
 
$
52,871

$
46,921

 
 
$
194,502

$
45,169

$
49,155

$
51,094

$
49,084

 
 
 
 
 
 
 
 
 
 
 
 
 
Earnings (loss) from operations - GAAP
 
$
3,411

$
(1,255
)
 
 
$
10,114

$
(674
)
$
4,202

$
4,112

$
2,474

 
Stock-based compensation and related social taxes
 
1,902

1,993

 
 
9,685

1,670

2,557

2,858

2,600

 
Acquisition-related and integration
 
59

374

 
 
1,945

(616
)
443

1,015

1,103

 
Restructuring
 
—

—

 
 
951

201

39

711

—

 
Acquisition related amortization
 
3,058

2,530

 
 
9,666

2,734

2,234

2,029

2,669

 
Earnings from operations - Non-GAAP
 
$
8,430

$
3,642

 
 
$
32,361

$
3,315

$
9,475

$
10,725

$
8,846

 
Amortization (excluding acquisition related amortization)
 
3,648

3,038

 
 
10,550

3,030

2,635

2,423

2,462

 
Adjusted EBITDA
 
$
12,078

$
6,680

 
 
$
42,911

$
6,345

$
12,110

$
13,148

$
11,308

 
 
 
 
 
 
 
 
 
 
 
 
 
Net earnings (loss) - GAAP
 
$
718

$
718

 
 
$
(2,674
)
$
(383
)
$
3,286

$
4,076

$
(9,653
)
 
Stock-based compensation and related social taxes, restructuring, impairment, acquisition-related, integration, and acquisition related amortization, net of tax
 
5,013

4,893

 
 
22,063

4,016

5,232

6,443

6,372

 
Foreign exchange loss (gain)
 
1,097

(2,292
)
 
 
11,596

1,393

(51
)
(1,581
)
11,835

 
Income tax adjustments
 
(452
)
(698
)
 
 
(5,211
)
(2,490
)
(1,048
)
(301
)
(1,372
)
 
Net earnings - Non-GAAP
 
$
6,376

$
2,621

 
 
$
25,774

$
2,536

$
7,419

$
8,637

$
7,182

 
 
 
 
 
 
 
 
 
 
 
 
 
Diluted net earnings (loss) per share
 
 
 
 
 
 
 
 
 
 
 
GAAP - (in dollars)
 
$
0.02

$
0.02

 
 
$
(0.08
)
$
(0.01
)
$
0.10

$
0.12

$
(0.30
)
 
Non-GAAP - (in dollars)
 
$
0.20

$
0.08

 
 
$
0.80

$
0.08

$
0.23

$
0.26

$
0.22

 
 
 
 
 
 
 
 
 
 
 
 
 










Q2 2016 RECONCILIATION OF GAAP AND NON-GAAP RESULTS 

 
 
Acquisition Related Amortization
Acquisition-related & Integration
Stock-based Compensation & Related Social Taxes
Foreign Exchange Loss
Tax Adjustments
 
(In thousands of U.S. dollars, except where otherwise stated)
GAAP
Non GAAP
Q2 2016
Q2 2016
 
 
 
 
 
 
 
 
Revenue
156,229

 
 
 
 
 
156,229

Cost of goods sold
103,465

 
 
107

 
 
103,358

Gross margin
52,764

—

—

(107
)
—

—

52,871

GM%
33.8
%
 
 
 
 
 
33.8
%
 
 
 
 
 
 
 
 
Sales and marketing
16,046

 
 
427

 
 
15,619

Research and development
18,237

115

 
327

 
 
17,795

Administration
10,286

 
 
1,041

 
 
9,245

Acquisition-related and integration
59

 
59

 
 
 
—

Amortization
4,725

2,943

 
 
 
 
1,782

Total operating expenses
49,353

3,058

59

1,795

—

—

44,441

 
 
 
 
 
 
 
 
Earnings from operations
3,411

(3,058
)
(59
)
(1,902
)
—

—

8,430

 
 
 
 
 
 
 
 
Foreign exchange loss
(1,071
)
 
 
 
(1,071
)
 
—

Other income
32

 
 
 
 
 
32

Total other income (expense)
(1,039
)
—

—

—

(1,071
)
—

32

 
 
 
 
 
 
 
 
Earnings before income taxes
2,372

(3,058
)
(59
)
(1,902
)
(1,071
)
—

8,462

 
 
 
 
 
 
 
 
Income tax expense
1,654

 
(6
)
 
26

(452
)
2,086

 
 
 
 
 
 
 
 
Net earnings
718

(3,058
)
(53
)
(1,902
)
(1,097
)
452

6,376

 
 
 
 
 
 
 
 
Diluted earnings per share
0.02

 
 
 
 
 
0.20

 
 
 
 
 
 
 
 
Weighted average diluted shares
32,430

 
 
 
 
 
32,430

 
 
 
 
 
 
 
 





SIERRA WIRELESS, INC. 

SEGMENTED RESULTS 
(In thousands of U.S. dollars, except where otherwise stated)
 
2016
2015
 
 
Q2
Q1
Total
Q4
Q3
Q2
Q1
 
 
 
 
 
 
 
 
 
 
 
OEM Solutions
 
 
 
 
 
 
 
 
 
Revenue
 
$
132,667

$
120,874

$
523,366

$
121,540

$
130,653

$
138,133

$
133,040

 
Gross margin (2)
 
 
 
 
 
 
 
 
 
- GAAP
 
$
41,005

$
34,290

$
151,807

$
33,416

$
37,440

$
40,990

$
39,961

 
- Non-GAAP
 
$
41,096

$
34,380

$
152,368

$
33,506

$
37,563

$
41,119

$
40,180

 
Gross margin % (2)
 
 
 
 
 
 
 
 
 
- GAAP
 
30.9
%
28.4
%
29.0
%
27.5
%
28.7
%
29.7
%
30.0
%
 
- Non-GAAP
 
31.0
%
28.4
%
29.1
%
27.6
%
28.8
%
29.8
%
30.2
%
 
 
 
 
 
 
 
 
 
 
 
Enterprise Solutions
 
 
 
 
 
 
 
 
 
Revenue
 
$
16,577

$
14,995

$
63,072

$
16,506

$
17,734

$
15,074

$
13,758

 
Gross margin (1) (2)
 
 
 

 
 
 
 
 
- GAAP
 
$
8,922

$
9,752

$
33,127

$
8,837

$
8,911

$
7,917

$
7,462

 
- Non-GAAP
 
$
8,934

$
9,763

$
33,192

$
8,848

$
8,928

$
7,930

$
7,486

 
Gross margin % (1) (2)
 
 
 
 
 
 
 
 
 
- GAAP
 
53.8
%
65.0
%
52.5
%
53.5
%
50.2
%
52.5
%
54.2
%
 
- Non-GAAP
 
53.9
%
65.1
%
52.6
%
53.6
%
50.3
%
52.6
%
54.4
%
 
 
 
 
 
 
 
 
 
 
 
Cloud and Connectivity Services
 
 
 
 
 
 
 
 
 
Revenue
 
$
6,985

$
6,928

$
21,360

$
6,800

$
6,194

$
4,758

$
3,608

 
Gross margin
 
 
 
 
 
 
 
 
 
- GAAP
 
$
2,837

$
2,773

$
8,921

$
2,810

$
2,658

$
2,040

$
1,413

 
- Non-GAAP
 
$
2,841

$
2,778

$
8,942

$
2,815

$
2,664

$
2,045

$
1,418

 
Gross margin %
 
 
 
 
 
 
 
 
 
- GAAP
 
40.6
%
40.0
%
41.8
%
41.3
%
42.9
%
42.9
%
39.2
%
 
- Non-GAAP
 
40.7
%
40.1
%
41.9
%
41.4
%
43.0
%
43.0
%
39.3
%
 
 
 
 
 
 
 
 
 
 
 
Total
 
 
 
 
 
 
 
 
 
Revenue
 
$
156,229

$
142,797

$
607,798

$
144,846

$
154,581

$
157,965

$
150,406

 
Gross margin
 
 
 
 
 
 
 
 
 
- GAAP
 
$
52,764

$
46,815

$
193,855

$
45,063

$
49,009

$
50,947

$
48,836

 
- Non-GAAP
 
$
52,871

$
46,921

$
194,502

$
45,169

$
49,155

$
51,094

$
49,084

 
Gross margin %
 
 
 
 
 
 
 
 
 
- GAAP
 
33.8
%
32.8
%
31.9
%
31.1
%
31.7
%
32.3
%
32.5
%
 
- Non-GAAP
 
33.8
%
32.9
%
32.0
%
31.2
%
31.8
%
32.4
%
32.6
%
 
 
 
 
 
 
 
 
 
 
 
(1) Q1 2016 Enterprise Solutions results include a $1.9 million recovery from a legal settlement with a supplier related to a quality issue with a component used in some of our gateway products. Excluding this recovery, GAAP and Non-GAAP gross margin percentage would have been 52.4% and 52.5%, respectively.
(2) Q2 2016 OEM Solutions results include a $1.7 million recovery from certain legal costs pursuant to a favorable arbitration decision on a contract dispute with an intellectual property licensor. Excluding this recovery, GAAP and Non-GAAP gross margin percentage would have been 29.6% and 29.7%, respectively. Q2 2016 Enterprise Solutions results also include a $0.2 million recovery from this arbitration decision. Excluding this recovery, GAAP and Non-GAAP gross margin percentage would have been 52.7% and 52.8%, respectively.



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