SWIR Sierra Wireless Inc

Q4 2018 revenue increased 10% to $201.4 million; and FY 2018 revenue up 15% to $793.6 million

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)

• Revenue: $201.4 million, up 9.7%; Services delivered 12% of quarterly revenue
• Earnings per Share: GAAP loss: $(0.11); Non-GAAP: $0.25
• Adjusted earnings before interest, taxes, depreciation and amortization ("Adjusted EBITDA"): $15.3 million

FY 2018 results:(1)

• Revenue: $793.6 million, up 14.9%; Services delivered 12% of annual revenue
• Earnings per Share: GAAP loss: $(0.68); Non-GAAP: $0.90
• Adjusted EBITDA: $55.9 million

(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

• Gross margin was $65.9 million, or 32.7% of revenue, in the fourth quarter of 2018 compared to $61.8 million, or 33.7% of revenue, in the fourth quarter of 2017.
• Operating expenses were $70.1 million and loss from operations was $4.2 million in the fourth quarter of 2018 compared to operating expenses of $64.8 million and loss from operations of $2.9 million in the fourth quarter of 2017.
• Net loss was $3.8 million, or $0.11 per diluted share, in the fourth quarter of 2018 compared to net loss of $3.5 million, or $0.11 per diluted share, in the fourth quarter of 2017.

NON-GAAP RESULTS(1)

• Gross margin was 32.7% in the fourth quarter of 2018 compared to 33.8% in the fourth quarter of 2017.
• Operating expenses were $55.7 million and earnings from operations were $10.2 million in the fourth quarter of 2018 compared to operating expenses of $52.5 million and earnings from operations of $9.5 million in the fourth quarter of 2017.
• Net earnings were $9.0 million, or $0.25 per diluted share, in the fourth quarter of 2018 compared to net earnings of $9.2 million, or $0.28 per diluted share, in the fourth quarter of 2017.
• Adjusted EBITDA was $15.3 million in the fourth quarter of 2018 compared to $13.9 million in the fourth quarter of 2017.

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

• Gross margin was $264.6 million, or 33.3% of revenue, in 2018 compared to $234.2 million, or 33.9% of revenue, in 2017.
• Operating expenses were $282.8 million and loss from operations was $18.3 million in 2018 compared to operating expenses of $234.1 million and earnings from operations of $0.1 million in 2017.
• Net loss was $24.6 million, or $0.68 per diluted share, in 2018 compared to net earnings of $4.5 million, or $0.14 per diluted share, in 2017.

NON-GAAP RESULTS(1)

• Gross margin was 33.4% in 2018 compared to 34.0% in 2017.
• Operating expenses were $229.7 million and earnings from operations were $35.3 million in 2018 compared to operating expenses of $195.1 million and earnings from operations of $39.6 million in 2017.
• Net earnings were $32.4 million, or $0.90 per diluted share, in 2018 compared to net earnings of $34.5million, or $1.05 per diluted share, in 2017.
• Adjusted EBITDA was $55.9 million in 2018 compared to $54.7 million in 2017.

(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.

Analysts' Days - Toronto & London

The senior management of the company will be hosting Analysts' Days in both Toronto and London in the weeks following our First Quarter 2019 earnings release and conference call on May 9th, 2019.

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.

Conference call and webcast details

Sierra Wireless President and CEO, Kent Thexton, and CFO, David McLennan, will host a conference call and webcast with analysts and investors to review the results on Wednesday, February 13, 2019, 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: 9258195

To access the webcast, please follow the link below:

Sierra Wireless Q4 and Full Year 2018 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=1893281&s=1&k=3160BBF4E8CA7F00FA55C9B1F480495D

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

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:

• Typically include words and phrases about the future such as "outlook", "will", "may", “expects”, “is expected”, “anticipates”, “believes”, “plans”, “projects”, “estimates”, “assumes”, “intends”, “strategy”, “goals”, “objectives”, “potential”, “possible”, or variations thereof.
• 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, but not limited to, 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 macro-economic business conditions;
• expected cost of sales;
• expected component supply constraints;
• our ability to win new business;
• our ability to fully integrate the business, operations and workforce of Numerex and to return the Numerex business to profitable growth and realize the expected benefits of the acquisition;
• our ability to integrate other acquired businesses and realize expected benefits;
• expected deployment of next generation networks by wireless network operators;
• our operations not being adversely disrupted by other developments, operating, cyber security, litigation, or regulatory risks; and
• expected tax and foreign exchange rates.

• Are based on our management's current expectations and we caution investors that forward-looking statements, particularly those that relate to longer periods of time, 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 competitors 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, or significant demand fluctuations from, any of our significant customers;
• our ability to attract or retain key personnel and the impact of organizational change on our business;
• deterioration in macro-economic conditions and resulting reduced demand for our products and services;
• risks related to the acquisition and ongoing integration of Numerex;
• cyber-attacks or other breaches of our information technology security;
• our financial results being subject to fluctuation;
• our ability to respond to changing technology, industry standards and customer requirements;
• 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;
• our ability to enforce our intellectual property rights;
• 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, network service interruptions, cyber-security vulnerabilities or other quality issues;
• our dependence on a limited number of third party manufacturers;
• unanticipated costs associated with litigation or settlements;
• our dependence on mobile network operators 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;
• risks inherent in foreign jurisdictions; and
• risks related to tariffs or other trade restrictions.

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.

SIERRA WIRELESS, INC.CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE EARNINGS (LOSS)(In thousands of U.S. dollars, except where otherwise stated)

  Three months ended December 31,   Twelve months ended December 31,   2018  

2017 As adjusted (1)

  2018  

2017 As adjusted (1)

Revenue       Product $ 178,205 $ 169,309 $ 699,332 $ 645,402 Services and other 23,190     14,224     94,270     45,325   201,395     183,533     793,602     690,727 Cost of sales Product 124,395 114,952 484,051 434,843 Services and other 11,105     6,767     44,980     21,645   135,500     121,719    

529,031

    456,488 Gross margin 65,895     61,814     264,571     234,239 Expenses Sales and marketing 22,353 20,436 88,587 75,135 Research and development 22,230 21,828 93,707 82,653 Administration 14,516 11,379 61,582 42,904 Restructuring 2,345 245 7,115 1,076 Acquisition-related and integration 613 4,792 3,962 8,195

Impairment

— — — 3,668

Loss on disposal of iTank business

2,064 — 2,064 —

Amortization

5,971     6,073     25,829     20,508   70,092     64,753     282,846     234,139 Earnings (loss) from operations (4,197 ) (2,939 ) (18,275 ) 100 Foreign exchange gain (loss) (2,378 ) 1,267 (5,470 ) 7,550 Other income (loss) (19 )   38     51     67 Earnings (loss) before income taxes (6,594 ) (1,634 ) (23,694 ) 7,717 Income tax expense (recovery) (2,768 )   1,880     916     3,199 Net earnings (loss) $ (3,826 )   $ (3,514 )   $ (24,610 )   $ 4,518 Other comprehensive earnings (loss): Foreign currency translation adjustments, net of taxes of $nil 249     88     (6,670 )   11,950 Comprehensive earnings (loss) $ (3,577 )   $ (3,426 )   $ (31,280 )   $ 16,468   Net earnings (loss) per share (in dollars) Basic $ (0.11 ) $ (0.11 ) $ (0.68 ) $ 0.14 Diluted (0.11 ) (0.11 ) (0.68 ) 0.14 Weighted average number of shares outstanding (in thousands) Basic 36,057 33,136 36,019 32,356 Diluted 36,057     33,136     36,019     32,893

(1) Three and twelve months ended December 31, 2017 have been adjusted to reflect the adoption of ASC 606 - Revenue from Contracts with Customers.

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

  As at December 31,   2018  

2017 As adjusted (1)

Assets Current assets Cash and cash equivalents $ 89,076 $ 65,003 Restricted cash 221 221 Accounts receivable 171,725 173,054 Inventories 50,779 53,143 Prepaids and other 11,703   8,221   323,504 299,642 Property and equipment 39,842 42,977 Intangible assets 84,890 108,599 Goodwill 211,074 218,516 Deferred income taxes 11,751 12,197 Other assets 12,855   12,713     $ 683,916   $ 694,644     Liabilities Current liabilities Accounts payable and accrued liabilities $ 184,220 $ 175,367 Deferred revenue 6,213   7,275   190,433 182,642 Long-term obligations 43,250 36,637 Deferred income taxes 6,103   7,845     239,786   227,124   Equity Shareholders’ equity Common stock: no par value; unlimited shares authorized; issued and outstanding: 36,067,415 shares (December 31, 2017 - 35,861,510 shares) 432,552 427,748 Preferred stock: no par value; unlimited shares authorized; issued and outstanding: nil shares — — Treasury stock: at cost; 119,584 shares (December 31, 2017 – 222,639 shares) (1,965 ) (3,216 ) Additional paid-in capital 30,984 27,962 Retained earnings (deficit) (8,295 ) 17,502 Accumulated other comprehensive loss (9,146 ) (2,476 )   444,130   467,520     $ 683,916   $ 694,644  

(1) December 31, 2017 has been adjusted to reflect the adoption of ASC 606 - Revenue from Contracts with Customers.

SIERRA WIRELESS, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands of U.S. dollars)

 

Three months ended December 31,

 

 

Twelve months ended December 31,

  2018  

2017 As adjusted (1)

  2018  

2017 As adjusted (1)

Cash flows provided by (used in):       Operating activities Net earnings (loss) $ (3,826 ) $ (3,514 ) $ (24,610 ) $ 4,518 Items not requiring (providing) cash Amortization 9,308 8,764 39,150 30,503 Stock-based compensation 2,743 2,869 13,060 10,341 Deferred income taxes (4,145 ) 2,092 (1,685 ) 824 Impairment — — — 3,668 Loss on disposal of iTank business 2,064 — 2,064 — Unrealized foreign exchange loss (gain) 995 (461 ) 5,973 (8,507 ) Other 58 170 279 (55 ) Changes in non-cash working capital Accounts receivable 1,236 (12,642 ) (5,526 ) (12,665 ) Inventories 183 7,387 1,508 (6,806 ) Prepaids and other 797 (142 ) (3,525 ) (5,334 ) Accounts payable and accrued liabilities 12,919 7,119 21,944 (17,750 ) Deferred revenue and credits 94     1,896     (1,402 )   335   Cash flows provided by (used in) operating activities 22,426     13,538     47,230     (928 ) Investing activities Additions to property and equipment (4,378 ) (3,221 ) (18,166 ) (14,100 ) Additions to intangible assets (1,140 ) (321 ) (2,933 ) (1,706 ) Proceeds from sale of property and equipment 17 8 93 35 Proceeds from sale of iTank business 5,000 — 5,000 — Acquisition of Numerex Corp., net of cash acquired — (18,725 ) — (18,725 ) Acquisition of GNSS business of GlobalTop, net of cash acquired —     —     —     (3,145 ) Cash flows used in investing activities (501 )   (22,259 )   (16,006 )   (37,641 ) Financing activities Issuance of common shares, net of issuance cost 101 423 2,636 5,708 Repurchase of common shares for cancellation — — (3,120 ) (2,779 ) Purchase of treasury shares for RSU distribution (1,723 ) — (2,808 ) — Taxes paid related to net settlement of equity awards (90 ) (271 ) (1,878 ) (1,367 ) Payment for contingent consideration — — (130 ) (1,397 ) Decrease in other long-term obligations (116 )   (96 )   (627 )   (436 ) Cash flows provided by (used in) financing activities (1,828 )   56     (5,927 )   (271 ) Effect of foreign exchange rate changes on cash and cash equivalents 1,519     (317 )   (1,224 )   1,292   Cash, cash equivalents and restricted cash, increase (decrease) in the period 21,616 (8,982 ) 24,073 (37,548 ) Cash, cash equivalents and restricted cash, beginning of period 67,681     74,206     65,224     102,772   Cash, cash equivalents and restricted cash, end of period $ 89,297     $ 65,224     $ 89,297     $ 65,224  

(1) Three and twelve months ended December 31, 2017 have been adjusted to reflect the adoption of ASC 606 - Revenue from Contracts with Customers.

SIERRA WIRELESS, INC.RECONCILIATION OF GAAP AND NON-GAAP RESULTS BY QUARTER

(in thousands of U.S. dollars, except where otherwise stated)     2018  

2017 (1)

 

Total Q4 Q3 Q2 Q1   Total Q4 Q3 Q2 Q1   Gross margin - GAAP $ 264,571 $ 65,895 $ 67,267 $ 69,309 $ 62,100 $ 234,239 $ 61,814 $ 57,294 $ 59,636 $ 55,495 Stock-based compensation and related social taxes 479 58 57 57 307 461 122 123 108 108 Realized gains (losses) on hedge contracts (25 ) (8 ) (11 ) —   (6 )   23   11   12   —   —   Gross margin - Non-GAAP $ 265,025 $ 65,945 $ 67,313 $ 69,366 $ 62,401 $ 234,723 $ 61,947 $ 57,429 $ 59,744 $ 55,603   Earnings (loss) from operations - GAAP $ (18,275 ) $ (4,197 ) $ 853 $ (5,055 ) $ (9,876 ) $ 100 $ (2,939 ) $ 390 $ 3,994 $ (1,345 ) Stock-based compensation and related social taxes 13,006 2,743 3,473 3,950 2,840 10,374 2,869 2,780 2,577 2,148 Acquisition-related and integration 3,962 613 570 1,014 1,765 8,195 4,792 2,077 875 451 Restructuring 7,115 2,345 227 952 3,591 1,076 245 199 259 373 Other nonrecurring costs 9,421 2,697 1,583 5,141 — 318 — — 42 276 Realized gains (losses) on hedge contracts (562 ) (296 ) (201 ) (14 ) (51 ) 419 209 210 — — Impairment — — — — — 3,668 — — — 3,668 Loss on disposal of iTank business 2,064 2,064 — — — — — — — — Acquisition-related amortization 18,575   4,261   4,354   4,426   5,534     15,486   4,306   3,845   3,694   3,641   Earnings from operations - Non-GAAP $ 35,306 $ 10,230 $ 10,859 $ 10,414 $ 3,803 $ 39,636 $ 9,482 $ 9,501 $ 11,441 $ 9,212   Net earnings (loss) - GAAP $ (24,610 ) $ (3,826 ) $ (1,037 ) $ (11,384 ) $ (8,363 ) $ 4,518 $ (3,514 ) $ 1,354 $ 6,770 $ (92 )

Stock-based compensation and related social taxes,restructuring, impairment,acquisition-related, integration, loss on disposal of iTank,and other nonrecurring costs (recoveries)

35,568 10,462 5,853 11,057 8,196 23,631 7,906 5,056 3,753 6,916 Amortization 39,150 9,308 9,483 9,651 10,708 30,503 8,764 7,548 7,194 6,997 Interest and other, net (51 ) 19 (7 ) (8 ) (55 ) (67 ) (38 ) (32 ) 12 (9 ) Foreign exchange loss (gain) 4,908 2,082 (42 ) 4,034 (1,166 ) (7,131 ) (1,058 ) (1,457 ) (3,517 ) (1,099 ) Income tax expense (recovery) 916   (2,768 ) 1,738   2,289   (343 )   3,199   1,880   735   729   (145 )   Adjusted EBITDA 55,881 15,277 15,988 15,639 8,977 54,653 13,940 13,204 14,941 12,568 Amortization (exclude acquisition-related amortization) (20,575 ) (5,047 ) (5,129 ) (5,225 ) (5,174 ) (15,017 ) (4,458 ) (3,703 ) (3,500 ) (3,356 ) Interest and other, net 51 (19 ) 7 8 55 67 38 32 (12 ) 9 Income tax expense - Non-GAAP (2,930 ) (1,245 ) (352 ) (769 ) (564 )   (5,184 ) (312 ) (1,816 ) (1,615 ) (1,441 )   Net earnings - Non-GAAP $ 32,427 $ 8,966 $ 10,514 $ 9,653 $ 3,294 $ 34,519 $ 9,208 $ 7,717 $ 9,814 $ 7,780   Diluted net earnings (loss) per share GAAP - (in dollars per share) $ (0.68 ) $ (0.11 ) $ (0.03 ) $ (0.32 ) $ (0.23 ) $ 0.14 $ (0.11 ) $ 0.04 $ 0.21 $ — Non-GAAP - (in dollars per share)     $ 0.90   $ 0.25   $ 0.29   $ 0.27   $ 0.09     $ 1.05   $ 0.28   $ 0.24   $ 0.30   $ 0.24    

(1) 2017 has been adjusted to reflect the adoption of ASC 606 - Revenue from Contracts with Customers.

SIERRA WIRELESS, INC.SEGMENTED RESULTS

(In thousands of U.S. dollars, except where otherwise stated) 2018  

2017 (1)

 

Total Q4 Q3 Q2 Q1   Total Q4 Q3 Q2 Q1   OEM Solutions Revenue $ 583,214 $ 148,708 $ 148,356 $ 150,939 $ 135,211 $ 554,537 $ 139,795 $ 137,850 $ 144,467 $ 132,425 Gross margin - GAAP $ 165,569 $ 40,284 $ 40,503 $ 45,858 $ 38,924 $ 170,307 $ 41,453 $ 40,680 $ 46,262 $ 41,912 - Non-GAAP $ 165,899 $ 40,321 $ 40,536 $ 45,900 $ 39,142 $ 170,694 $ 41,554 $ 40,787 $ 46,352 $ 42,001 Gross margin % - GAAP 28.4 % 27.1 % 27.3 % 30.4 % 28.8 % 30.7 % 29.7 % 29.5 % 32.0 % 31.6 % - Non-GAAP 28.4 % 27.1 % 27.3 % 30.4 % 28.9 % 30.8 % 29.7 % 29.6 % 32.1 % 31.7 %   Enterprise Solutions Revenue 119,927 30,257 $ 32,068 $ 28,402 $ 29,200 $ 101,535 $ 31,879 $ 26,277 $ 21,661 $ 21,718 Gross margin - GAAP $ 61,131 15,601 $ 17,318 $ 14,184 $ 14,028 $ 48,521 $ 15,129 $ 12,631 $ 10,276 $ 10,485 - Non-GAAP $ 61,202 15,610 $ 17,325 $ 14,192 $ 14,075 $ 48,593 $ 15,152 $ 12,652 $ 10,289 $ 10,500 Gross margin % - GAAP 51.0 % 51.6 % 54.0 % 49.9 % 48.0 % 47.8 % 47.5 % 48.1 % 47.4 % 48.3 % - Non-GAAP 51.0 % 51.6 % 54.0 % 50.0 % 48.2 % 47.9 % 47.5 % 48.1 % 47.5 % 48.3 %   IoT Services Revenue $ 90,461 22,430 $ 23,002 $ 22,562 $ 22,467 $ 34,655 $ 11,859 $ 8,433 $ 7,288 $ 7,075 Gross margin - GAAP $ 37,871 10,009 $ 9,446 $ 9,268 $ 9,148 $ 15,411 $ 5,232 $ 3,983 $ 3,098 $ 3,098 - Non-GAAP $ 37,924 10,014 $ 9,452 $ 9,274 $ 9,184 $ 15,436 $ 5,241 $ 3,990 $ 3,103 $ 3,102 Gross margin % - GAAP 41.9 % 44.6 % 41.1 % 41.1 % 40.7 % 44.5 % 44.1 % 47.2 % 42.5 % 43.8 % - Non-GAAP 41.9 % 44.6 % 41.1 % 41.1 % 40.9 % 44.5 % 44.2 % 47.3 % 42.6 % 43.8 %   Total Revenue $ 793,602 $ 201,395 $ 203,426 $ 201,903 $ 186,878 $ 690,727 $ 183,533 $ 172,560 $ 173,416 $ 161,218 Gross margin - GAAP $ 264,571 $ 65,894 $ 67,267 $ 69,310 $ 62,100 $ 234,239 $ 61,814 $ 57,294 $ 59,636 $ 55,495 - Non-GAAP $ 265,025 $ 65,945 $ 67,313 $ 69,366 $ 62,401 $ 234,723 $ 61,947 $ 57,429 $ 59,744 $ 55,603 Gross margin % - GAAP 33.3 % 32.7 % 33.1 % 34.3 % 33.2 % 33.9 % 33.7 % 33.2 % 34.4 % 34.4 % - Non-GAAP 33.4 % 32.7 % 33.1 % 34.4 % 33.4 % 34.0 % 33.8 % 33.3 % 34.5 % 34.5 %

(1) 2017 has been adjusted to reflect the adoption of ASC 606 - Revenue from Contracts with Customers.

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