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Sierra Wireless Reports Third Quarter 2015 Results

The following excerpt is from the company's SEC filing.

Revenue of $154.6 million, an increase of 7.9% compared to Q3 2014

Non-GAAP earnings from operations of $9.5 million compared to $8.4 million in Q3 2014

Adjusted EBITDA of $12.1 million compared to $11.8 million in Q3 2014

Non-GAAP diluted EPS of $0.23 compared to $0.24 in Q3 2014

VANCOUVER, BRITISH COLUMBIA - November 5, 2015 - Sierra Wireless, Inc. (NASDAQ: SWIR) (TSX: SW) today reported results for its third quarter, ending September 30, 2015. All results are reported in U.S. dollars and are prepared in accordance with United States generally accepted accounting principles (GAAP), e xcept as otherwise indicated below.

“We delivered solid year-over-year growth in revenue and operating profit in the third quarter of 2015,” said Jason Cohenour, President and Chief Executive Officer. “While our Q3 results were solid, revenue was slightly below our expectations, as demand for 4G enabled enterprise notebooks encountered temporary headwinds as the industry transitions to a new processor platform. We see the mobile computing segment moving back to normalized demand levels in the coming months. All of our other segments and lines of business performed as expected, and we delivered exceptional design win results. In addition, we closed the acquisition of MobiquiThings, significantly bolstering our Cloud and Connectivity offering, customer base and services team.”

Revenue for the third quarter of 2015 was $154.6 million, an increase of 7.9% compared to $143.3 million in the third quarter of 2014. Revenue from OEM Solutions was $130.7 million in the third quarter of 2015, up 5.1% compared to $124.3 million in the third quarter of 2014. Revenue from Enterprise Solutions was $23.9 million in the third quarter of 2015, up 26.3% compared to $19.0 million in the third quarter of 2014.

GAAP RESULTS

Gross margin was $49.0 million, or 31.7% of revenue, in the third quarter of 2015, compared to $47.1 million, or 32.8% of revenue, in the third quarter of 2014.

Operating expenses were $44.8 million and earnings from operations were $4.2 million in the third quarter of 2015, compared to operating expenses of $44.1 million and earnings from operations of $2.9 million in the third quarter of 2014.

Net earnings were $3.3 million, or $0.10 per diluted share, in the third quarter of 2015, compared to a net loss of $2.9 million, or $0.09 per diluted share, in the third quarter of 2014.

NON-GAAP RESULTS

Gross margin was 31.8% in the third quarter of 2015, compared to 32.9% in the third quarter of 2014.

Operating expenses were $39.7 million and earnings from operations were $9.5 million in the third quarter of 2015, compared to operating expenses of $38.8 million and earnings from operations of $8.4 million in the third quarter of 2014.

Net earnings were $7.4 million, or $0.23 per diluted share, in the third quarter of 2015, compared to net earnings of $7.7 million, or $0.24 per diluted share, in the third quarter of 2014. The non-GAAP tax rate in the third quarter of 2015 was 21.8%.

Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA") were $12.1 million in the third quarter of 2015, compared to $11.8 million in the third quarter of 2014.

Cash and cash equivalents at the end of the third quarter of 2015 were $88.4 million, representing a decrease of $8.1 million, compared to the end of the second quarter of 2015. The decrease was primarily due to the net payment of $14.9 million for the purchase of MobiquiThings SAS, and $3.6 million for capital expenditures, partially offset by $10.4 million generated from operations in the quarter.

We disclose non-GAAP financial measures as we believe they provide useful information on actual operating results 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 results exclude the impact of stock-based compensation expense and related social taxes, acquisition costs, restructuring costs, integration costs, acquisition amortization, impairment, foreign exchange gains or losses on translation of balance sheet accounts, and certain tax adjustments.

Adjusted EBITDA as defined equates to earnings (loss) from operations plus stock-based compensation expense and related social taxes, acquisition costs, restructuring costs, integration costs, impairment, and amortization. The reconciliation between our GAAP and non-GAAP results is provided in the accompanying schedules.

Financial Guidance

In the fourth quarter of 2015, compared to the third quarter of 2015, we expect revenue to be down slightly, primarily reflecting a short term situation with an Automotive customer. We expect gross margin percentage to be slightly lower, resulting from a higher cost end of life component used in some of our legacy OEM products; and operating expenses to increase slightly, driven by targeted investment in Sales and R&D. This results in the following non-GAAP guidance for the fourth quarter of 2015:

Q4 2015 Guidance

Consolidated

$148.0 to $151.0 million

Earnings from operations

$4.0 to $5.0 million

$3.0 to $3.7 million

Earnings per share

$0.09 to $0.11 per share

This non-GAAP guidance for the fourth quarter of 2015 reflects current business indicators and expectations. Inherent in this guidance are risk...


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