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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Sierra Wireless Inc | NASDAQ:SWIR | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 30.99 | 30.98 | 31.00 | 0 | 01:00:00 |
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Form 20-F
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40-F
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ý
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Yes:
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No:
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Yes:
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No:
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Sierra Wireless, Inc.
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By:
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/s/ David G. McLennan
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David G. McLennan, Chief Financial Officer and Secretary
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Date: November 9, 2018
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MANAGEMENT’S DISCUSSION AND ANALYSIS
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CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
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OVERVIEW
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Business Overview
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Third Quarter Overview
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Outlook
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CONSOLIDATED RESULTS OF OPERATIONS
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SEGMENTED INFORMATION
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SUMMARY OF QUARTERLY RESULTS OF OPERATIONS
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LIQUIDITY AND CAPITAL RESOURCES
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NON-GAAP FINANCIAL MEASURES
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OFF-BALANCE SHEET ARRANGEMENTS
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TRANSACTIONS BETWEEN RELATED PARTIES
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CRITICAL ACCOUNTING POLICIES AND ESTIMATES
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OUTSTANDING SHARE DATA
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IMPACT OF ACCOUNTING PRONOUNCEMENTS AFFECTING CURRENT PERIOD
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IMPACT OF ACCOUNTING PRONOUNCEMENTS AFFECTING FUTURE PERIODS
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INTERNAL CONTROL OVER FINANCIAL REPORTING
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LEGAL PROCEEDINGS
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FINANCIAL RISK MANAGEMENT
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RISKS AND UNCERTAINTIES
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CONSOLIDATED FINANCIAL STATEMENTS
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•
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our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance;
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•
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our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times;
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•
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expected cost of sales;
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•
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expected component supply constraints;
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•
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our ability to win new business;
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•
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our ability to 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;
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•
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our ability to integrate other acquired businesses and realize expected benefits;
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•
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expected deployment of next generation networks by wireless network operators;
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•
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our operations not being adversely disrupted by other developments, operating, cyber security, litigation, or regulatory risks; and
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•
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expected tax rates and foreign exchange rates.
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•
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competition from new or established competitors or from those with greater resources;
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•
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risks related to the acquisition and ongoing integration of Numerex;
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•
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disruption of, and demands on, our ongoing business and diversion of management's time and attention in connection with other acquisitions or divestitures;
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•
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the loss of, or significant demand fluctuations from, any of our significant customers;
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•
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cyber-attacks or other breaches of our information technology security;
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•
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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;
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•
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risks related to the transmission, use and disclosure of user data and personal information;
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•
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our financial results being subject to fluctuation;
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•
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our ability to respond to changing technology, industry standards and customer requirements;
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•
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our ability to attract or retain key personnel;
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•
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risks related to infringement on intellectual property rights of others;
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•
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our ability to obtain necessary rights to use software or components supplied by third parties;
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•
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our ability to enforce our intellectual property rights;
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•
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our reliance on single source suppliers for certain components used in our products;
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•
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our dependence on a limited number of third party manufacturers;
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•
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unanticipated costs associated with litigation or settlements;
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•
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our dependence on mobile network operators to promote and offer acceptable wireless data services;
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•
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difficult or uncertain global economic conditions;
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•
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risks related to contractual disputes with counterparties;
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•
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risks related to governmental regulation;
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•
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risks inherent in foreign jurisdictions; and
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•
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risks related to tariffs or other trade restrictions.
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•
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Revenue was
$203.4 million
, up
17.9%
, compared to
$172.6 million
in the third quarter of 2017.
|
•
|
Gross margin was
33.1%
compared to
33.2%
in the third quarter of 2017.
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•
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Earnings from operations was
$0.9 million
compared to
$0.4 million
in the third quarter of 2017.
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•
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Net loss was
$1.0 million
, or
$0.03
per diluted share, compared to net earnings of
$1.4 million
, or
$0.04
per diluted share, in the third quarter of 2017.
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•
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Cash and cash equivalents were $67.5 million at the end of the third quarter of 2018, a decrease of$6.0 million, compared to the end of the second quarter of 2018.
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•
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Gross margin was
33.1%
compared to
33.3%
in the third quarter of 2017.
|
•
|
Earnings from operations were
$10.9 million
, up
14.3%
, compared to
$9.5 million
in the third quarter of 2017.
|
•
|
Adjusted EBITDA was
$16.0 million
, up
21.1%
, compared to
$13.2 million
in the third quarter of 2017.
|
•
|
Net earnings were
$10.5 million
, or
$0.29
per diluted share, compared to net earnings of
$7.7 million
, or
$0.24
per diluted share, in the third quarter of 2017.
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(in thousands of U.S. dollars, except where otherwise stated)
|
2018
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2017
|
||||||||||||||||||||||
Q3
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Q2
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Q1
|
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Total
|
Q4
|
Q3
|
Q2
|
Q1
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|||||||||||||||||
Statement of Operations data:
|
|
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|||||||||||||
Revenue
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$
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203,426
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$
|
201,903
|
|
$
|
186,878
|
|
|
|
$
|
690,727
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|
$
|
183,533
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$
|
172,560
|
|
$
|
173,416
|
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$
|
161,218
|
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|
|
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||||||||||||||||
Gross Margin
|
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||||||||||||||||
- GAAP
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$
|
67,267
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|
$
|
69,309
|
|
$
|
62,100
|
|
|
|
$
|
234,239
|
|
$
|
61,814
|
|
$
|
57,294
|
|
$
|
59,636
|
|
$
|
55,495
|
|
- Non-GAAP (1)
|
$
|
67,313
|
|
$
|
69,366
|
|
62,401
|
|
|
|
234,723
|
|
61,947
|
|
57,429
|
|
59,744
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|
55,603
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||||||
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||||||||||||||||
Gross Margin %
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||||||||||||||||
- GAAP
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33.1
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%
|
34.3
|
%
|
33.2
|
%
|
|
|
33.9
|
%
|
33.7
|
%
|
33.2
|
%
|
34.4
|
%
|
34.4
|
%
|
||||||||
- Non-GAAP (1)
|
33.1
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%
|
34.4
|
%
|
33.4
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%
|
|
|
34.0
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%
|
33.8
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%
|
33.3
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%
|
34.5
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%
|
34.5
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%
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||||||||
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||||||||||||||||
Earnings (loss) from operations
|
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||||||||||||||||
- GAAP
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$
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853
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|
$
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(5,055
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)
|
$
|
(9,876
|
)
|
|
|
$
|
100
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|
$
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(2,939
|
)
|
$
|
390
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|
$
|
3,994
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|
$
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(1,345
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)
|
- Non-GAAP (1)
|
10,859
|
|
10,414
|
|
3,803
|
|
|
|
39,636
|
|
9,482
|
|
9,501
|
|
11,441
|
|
9,212
|
|
||||||||
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|
|
|
|
|
|
|
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|
||||||||||||||||
Adjusted EBITDA
(1)
|
$
|
15,988
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|
$
|
15,639
|
|
$
|
8,977
|
|
|
|
$
|
54,653
|
|
$
|
13,940
|
|
$
|
13,204
|
|
$
|
14,941
|
|
$
|
12,568
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net earnings (loss)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
- GAAP
|
$
|
(1,037
|
)
|
$
|
(11,384
|
)
|
$
|
(8,363
|
)
|
|
|
$
|
4,518
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|
$
|
(3,514
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)
|
$
|
1,354
|
|
$
|
6,770
|
|
$
|
(92
|
)
|
- Non-GAAP (1)
|
10,514
|
|
9,653
|
|
3,294
|
|
|
|
34,519
|
|
9,208
|
|
7,717
|
|
9,814
|
|
7,780
|
|
||||||||
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|
|
|
|
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|
||||||||||||||||
Revenue by Segment:
|
|
|
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|
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|
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||||||||||||||||
OEM Solutions
|
$
|
148,356
|
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$
|
150,939
|
|
$
|
135,211
|
|
|
|
$
|
554,537
|
|
$
|
139,795
|
|
$
|
137,850
|
|
$
|
144,467
|
|
$
|
132,425
|
|
Enterprise Solutions
|
32,068
|
|
28,402
|
|
29,200
|
|
|
|
101,535
|
|
31,879
|
|
26,277
|
|
21,661
|
|
21,718
|
|
||||||||
IoT Services
|
23,002
|
|
22,562
|
|
22,467
|
|
|
|
34,655
|
|
11,859
|
|
8,433
|
|
7,288
|
|
7,075
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Share and per share data:
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic net earnings (loss) per share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
- GAAP
|
$
|
(0.03
|
)
|
$
|
(0.32
|
)
|
$
|
(0.23
|
)
|
|
|
$
|
0.14
|
|
$
|
(0.11
|
)
|
$
|
0.04
|
|
$
|
0.21
|
|
$
|
—
|
|
- Non-GAAP (1)
|
$
|
0.29
|
|
$
|
0.27
|
|
$
|
0.09
|
|
|
|
$
|
1.07
|
|
$
|
0.28
|
|
$
|
0.24
|
|
$
|
0.31
|
|
$
|
0.24
|
|
Diluted net earnings (loss) per share (in dollars)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
- GAAP
|
$
|
(0.03
|
)
|
$
|
(0.32
|
)
|
$
|
(0.23
|
)
|
|
|
$
|
0.14
|
|
$
|
(0.11
|
)
|
$
|
0.04
|
|
$
|
0.21
|
|
$
|
—
|
|
- Non-GAAP
(1)
|
$
|
0.29
|
|
$
|
0.27
|
|
$
|
0.09
|
|
|
|
$
|
1.05
|
|
$
|
0.28
|
|
$
|
0.24
|
|
$
|
0.30
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Common shares (in thousands)
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
At period-end
|
36,048
|
|
36,095
|
|
35,979
|
|
|
|
35,862
|
|
35,862
|
|
32,220
|
|
32,185
|
|
32,157
|
|
||||||||
Weighted average - basic
|
36,085
|
|
36,021
|
|
35,912
|
|
|
|
32,356
|
|
33,136
|
|
32,200
|
|
32,167
|
|
31,909
|
|
||||||||
Weighted average - diluted
|
36,085
|
|
36,021
|
|
35,912
|
|
|
|
32,893
|
|
33,136
|
|
32,735
|
|
32,766
|
|
31,909
|
|
||||||||
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•
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We launched AirLink® LX40, the industry's most compact cellular router optimized for the IoT, providing secure, managed connectivity out of the box for business-critical IoT enterprise applications.
|
•
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We opened a new Global Service Center in Atlanta, Georgia to support our existing and rapidly growing IoT service customer base. More than 140 employees will be based at the location, monitoring millions of Sierra's connected devices around the world and providing 24/7/365 global customer support.
|
•
|
We launched AirLink® Management Service - Advanced Reporting and Analytics providing customers with operational insight for vehicle fleet operations using our secure, cloud-based device management platform.
|
•
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We announced the appointment of Kent Thexton to the position of President & Chief Executive Officer of the Company, commencing November 1, 2018. Mr. Thexton had been serving as Interim Chief Executive Officer since May 31, 2018. Concurrently, Robin Abrams, who had served on the Company's Board of Directors since 2010, was appointed Chair of the Board of Directors, replacing Mr. Thexton who joined the Board in March 2005 and has served as Chair since February 2016. Mr. Thexton continues to serve as a Director of the Company.
|
•
|
We announced the appointment of Russell N. Jones, CPA, CA, to the Company's Board of Directors. Mr. Jones is an accomplished business and technology executive, bringing more than 37 years of international operational and leadership experience with leading technology companies, including Canadian e-commerce leader Shopify, Mitel Corporation, Newbridge Networks, Watchfire and Quake Technologies. Mr. Jones replaces outgoing Director Chuck Levine, who stepped down from the Board of Directors effective October 24, 2018.
|
•
|
We announced the appointment of Joy Chik to the Company's Board of Directors. Ms. Chik is Corporate Vice President for Identity Division in Microsoft's Cloud + AI group. Since joining Microsoft in 1998, as a software engineer, Ms. Chik has risen as an established leader of some of the industry's most impactful engineering teams. She is a member of the Anita Borg Institute and is also active in charities focused on encouraging women and girls to pursue careers in technology.
|
•
|
We announced the appointment of Jason Krause to the position of Chief Operating Officer of the Company. Mr. Krause will be responsible for all aspects of the Company's product and services, including: product portfolio strategy; product management; engineering; supply chain; quality; and global MNVO network and service operations. Prior to Mr. Krause's new position, he was Senior Vice President and General Manager of the Enterprise Solutions business unit, and before that, he was Senior Vice President of Marketing, Strategy, and Corporate Development. Before joining the Company in 2007, he worked at the Boston Consulting Group and held marketing and engineering roles at Altera Corporation. He has an MBA from the Rotman School of Management at the University of Toronto and a BASc in Electronics Engineering from Simon Fraser University.
|
•
|
the strength of our competitive position in the market;
|
•
|
the timely ramp up of sales of our new products recently launched or currently under development;
|
•
|
our ability to integrate Numerex's business, operations and workforce with ours and our ability to return the Numerex business to profitable growth and to realize the anticipated benefits of the acquisition;
|
•
|
contributions to our operating results from the acquisitions we completed in 2015, 2016 and 2017;
|
•
|
the level of success our customers achieve with sales of connected solutions;
|
•
|
fluctuations in customer demand and inventory levels, particularly large customers;
|
•
|
our ability to manage component supply issues when they arise;
|
•
|
our ability to attract and retain effective channel partners;
|
•
|
the timely launch and ramp up of new customer programs;
|
•
|
our ability to secure future design wins with both existing and new customers;
|
•
|
the end-of-life of existing customer programs;
|
•
|
manufacturing capacity at our various manufacturing sites;
|
•
|
our ability to manage component and product quality compliance;
|
•
|
fluctuations in foreign exchange rates;
|
•
|
general economic conditions in the markets we serve; and
|
•
|
seasonality in demand.
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||||||||||
(in thousands of U.S. dollars, except where otherwise stated)
|
2018
|
|
2017
|
|
2018
|
|
2017
|
||||||||||||||||
|
$
|
% of
Revenue
|
|
$
|
% of
Revenue
|
|
$
|
% of
Revenue
|
|
|
$
|
% of
Revenue
|
|
||||||||||
Revenue
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
179,390
|
|
88.2
|
%
|
|
161,523
|
|
93.6
|
%
|
|
521,127
|
|
88.0
|
%
|
|
476,093
|
|
93.9
|
%
|
||||
Services and other
|
24,036
|
|
11.8
|
%
|
|
11,037
|
|
6.4
|
%
|
|
71,080
|
|
12.0
|
%
|
|
31,101
|
|
6.1
|
%
|
||||
|
203,426
|
|
100.0
|
%
|
|
172,560
|
|
100.0
|
%
|
|
592,207
|
|
100.0
|
%
|
|
507,194
|
|
100.0
|
%
|
||||
Cost of sales
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Product
|
124,528
|
|
61.2
|
%
|
|
110,131
|
|
63.8
|
%
|
|
359,656
|
|
60.7
|
%
|
|
319,891
|
|
63.1
|
%
|
||||
Services and other
|
11,631
|
|
5.7
|
%
|
|
5,135
|
|
3.0
|
%
|
|
33,875
|
|
5.7
|
%
|
|
14,878
|
|
2.9
|
%
|
||||
|
136,159
|
|
66.9
|
%
|
|
115,266
|
|
66.8
|
%
|
|
393,531
|
|
66.5
|
%
|
|
334,769
|
|
66.0
|
%
|
||||
Gross margin
|
67,267
|
|
33.1
|
%
|
|
57,294
|
|
33.2
|
%
|
|
198,676
|
|
33.5
|
%
|
|
172,425
|
|
34.0
|
%
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Sales and marketing
|
21,743
|
|
10.7
|
%
|
|
17,975
|
|
10.4
|
%
|
|
66,234
|
|
11.2
|
%
|
|
54,699
|
|
10.8
|
%
|
||||
Research and development
|
22,621
|
|
11.1
|
%
|
|
21,044
|
|
12.2
|
%
|
|
71,477
|
|
12.1
|
%
|
|
60,825
|
|
12.0
|
%
|
||||
Administration
|
14,998
|
|
7.4
|
%
|
|
10,560
|
|
6.1
|
%
|
|
47,066
|
|
7.9
|
%
|
|
31,525
|
|
6.2
|
%
|
||||
Restructuring
|
227
|
|
0.1
|
%
|
|
199
|
|
0.1
|
%
|
|
4,770
|
|
0.8
|
%
|
|
831
|
|
0.2
|
%
|
||||
Acquisition-related and integration
|
570
|
|
0.3
|
%
|
|
2,077
|
|
1.2
|
%
|
|
3,349
|
|
0.6
|
%
|
|
3,403
|
|
0.7
|
%
|
||||
Impairment
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
—
|
|
—
|
%
|
|
3,668
|
|
0.7
|
%
|
||||
Amortization
|
6,255
|
|
3.1
|
%
|
|
5,049
|
|
2.9
|
%
|
|
19,858
|
|
3.4
|
%
|
|
14,435
|
|
2.8
|
%
|
||||
|
66,414
|
|
32.6
|
%
|
|
56,904
|
|
33.0
|
%
|
|
212,754
|
|
35.9
|
%
|
|
169,386
|
|
33.4
|
%
|
||||
Earnings (loss) from operations
|
853
|
|
0.4
|
%
|
|
390
|
|
0.2
|
%
|
|
(14,078
|
)
|
(2.4
|
)%
|
|
3,039
|
|
0.6
|
%
|
||||
Foreign exchange gain (loss)
|
(159
|
)
|
|
|
1,667
|
|
|
|
(3,092
|
)
|
|
|
6,283
|
|
|
||||||||
Other income (loss)
|
7
|
|
|
|
32
|
|
|
|
70
|
|
|
|
29
|
|
|
||||||||
Earnings (loss) before income taxes
|
701
|
|
|
|
2,089
|
|
|
|
(17,100
|
)
|
|
|
9,351
|
|
|
||||||||
Income tax expense (recovery)
|
1,738
|
|
|
|
735
|
|
|
|
3,684
|
|
|
|
1,319
|
|
|
||||||||
Net earnings (loss)
|
(1,037
|
)
|
|
|
1,354
|
|
|
|
(20,784
|
)
|
|
|
8,032
|
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Basic net earnings (loss) per share (in dollars)
|
$
|
(0.03
|
)
|
|
|
$
|
0.04
|
|
|
|
$
|
(0.58
|
)
|
|
|
$
|
0.25
|
|
|
||||
Diluted net earnings (loss) per share (in dollars)
|
$
|
(0.03
|
)
|
|
|
$
|
0.04
|
|
|
|
$
|
(0.58
|
)
|
|
|
$
|
0.25
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
|
|
|
|
|
% change
|
|||||||||||
|
Q3, 2018
|
|
|
Q3, 2017
|
|
|
Q3 YTD,
2018
|
|
|
Q3 YTD,
2017
|
|
|
Q3, 2018 vs Q3, 2017
|
|
Q3 YTD, 2018 vs Q3 YTD, 2017
|
|
|
Revenue
|
|
148,356
|
|
|
137,850
|
|
|
434,506
|
|
|
414,742
|
|
|
7.6
|
%
|
4.8
|
%
|
Cost of sales
|
|
107,853
|
|
|
97,170
|
|
|
309,221
|
|
|
285,888
|
|
|
11.0
|
%
|
8.2
|
%
|
Gross margin
|
|
40,503
|
|
|
40,680
|
|
|
125,285
|
|
|
128,854
|
|
|
(0.4
|
)%
|
(2.8
|
)%
|
Gross margin %
|
|
27.3
|
%
|
|
29.5
|
%
|
|
28.8
|
%
|
|
31.1
|
%
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
|
|
|
|
|
% change
|
|||||||||||
|
Q3, 2018
|
|
|
Q3, 2017
|
|
|
Q3 YTD,
2018
|
|
|
Q3 YTD,
2017
|
|
|
Q3, 2018 vs Q3, 2017
|
|
Q3 YTD, 2018 vs Q3 YTD, 2017
|
|
|
Revenue
|
|
32,068
|
|
|
26,277
|
|
|
89,670
|
|
|
69,656
|
|
|
22.0
|
%
|
28.7
|
%
|
Cost of sales
|
|
14,750
|
|
|
13,646
|
|
|
44,141
|
|
|
36,264
|
|
|
8.1
|
%
|
21.7
|
%
|
Gross margin
|
|
17,318
|
|
|
12,631
|
|
|
45,529
|
|
|
33,392
|
|
|
37.1
|
%
|
36.3
|
%
|
Gross margin %
|
|
54.0
|
%
|
|
48.1
|
%
|
|
50.8
|
%
|
|
47.9
|
%
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
|
|
|
|
|
% change
|
|||||||||||
|
Q3, 2018
|
|
|
Q3, 2017
|
|
|
Q3 YTD,
2018
|
|
|
Q3 YTD,
2017
|
|
|
Q3, 2018 vs Q3, 2017
|
|
Q3 YTD, 2018 vs Q3 YTD, 2017
|
|
|
Revenue
|
|
23,002
|
|
|
8,433
|
|
|
68,031
|
|
|
22,796
|
|
|
172.8
|
%
|
198.4
|
%
|
Cost of sales
|
|
13,556
|
|
|
4,450
|
|
|
40,169
|
|
|
12,617
|
|
|
204.6
|
%
|
218.4
|
%
|
Gross margin
|
|
9,446
|
|
|
3,983
|
|
|
27,862
|
|
|
10,179
|
|
|
137.2
|
%
|
173.7
|
%
|
Gross margin %
|
|
41.1
|
%
|
|
47.2
|
%
|
|
41.0
|
%
|
|
44.7
|
%
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
2018
|
2017
|
2016
|
|||||||||||||||||||||
Q3
|
Q2
|
Q1
|
Q4
|
Q3
|
Q2
|
Q1
|
Q4
|
|||||||||||||||||
Revenue
|
$
|
203,426
|
|
$
|
201,903
|
|
$
|
186,878
|
|
$
|
183,533
|
|
$
|
172,560
|
|
$
|
173,416
|
|
$
|
161,218
|
|
$
|
162,429
|
|
Cost of sales
|
136,159
|
|
132,594
|
|
124,778
|
|
121,719
|
|
115,266
|
|
113,780
|
|
105,723
|
|
94,085
|
|
||||||||
Gross margin
|
67,267
|
|
69,309
|
|
62,100
|
|
61,814
|
|
57,294
|
|
59,636
|
|
55,495
|
|
68,344
|
|
||||||||
Gross margin %
|
33.1
|
%
|
34.3
|
%
|
33.2
|
%
|
33.7
|
%
|
33.2
|
%
|
34.4
|
%
|
34.4
|
%
|
42.1
|
%
|
||||||||
|
|
|
|
|
|
|
|
|
||||||||||||||||
Expenses
|
|
|
|
|
|
|
|
|
||||||||||||||||
Sales and marketing
|
21,743
|
|
22,066
|
|
22,425
|
|
20,436
|
|
17,975
|
|
18,699
|
|
18,025
|
|
16,970
|
|
||||||||
Research and development
|
22,621
|
|
24,391
|
|
24,465
|
|
21,828
|
|
21,044
|
|
20,470
|
|
19,311
|
|
17,645
|
|
||||||||
Administration
|
14,998
|
|
19,804
|
|
12,264
|
|
11,379
|
|
10,560
|
|
10,579
|
|
10,386
|
|
9,708
|
|
||||||||
Restructuring
|
227
|
|
952
|
|
3,591
|
|
245
|
|
199
|
|
259
|
|
373
|
|
—
|
|
||||||||
Acquisition-related and integration
|
570
|
|
1,014
|
|
1,765
|
|
4,792
|
|
2,077
|
|
875
|
|
451
|
|
376
|
|
||||||||
Impairment
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
3,668
|
|
—
|
|
||||||||
Amortization
|
6,255
|
|
6,137
|
|
7,466
|
|
6,073
|
|
5,049
|
|
4,760
|
|
4,626
|
|
4,372
|
|
||||||||
|
66,414
|
|
74,364
|
|
71,976
|
|
64,753
|
|
56,904
|
|
55,642
|
|
56,840
|
|
49,071
|
|
||||||||
Earnings (loss) from operations
|
853
|
|
(5,055
|
)
|
(9,876
|
)
|
(2,939
|
)
|
390
|
|
3,994
|
|
(1,345
|
)
|
19,273
|
|
||||||||
Foreign exchange gain (loss)
|
(159
|
)
|
(4,048
|
)
|
1,115
|
|
1,267
|
|
1,667
|
|
3,517
|
|
1,099
|
|
(3,547
|
)
|
||||||||
Other income (expense)
|
7
|
|
8
|
|
55
|
|
38
|
|
32
|
|
(12
|
)
|
9
|
|
2
|
|
||||||||
Earnings (loss) before income tax
|
701
|
|
(9,095
|
)
|
(8,706
|
)
|
(1,634
|
)
|
2,089
|
|
7,499
|
|
(237
|
)
|
15,728
|
|
||||||||
Income tax expense (recovery)
|
1,738
|
|
2,289
|
|
(343
|
)
|
1,880
|
|
735
|
|
729
|
|
(145
|
)
|
(5
|
)
|
||||||||
Net earnings (loss)
|
$
|
(1,037
|
)
|
$
|
(11,384
|
)
|
$
|
(8,363
|
)
|
$
|
(3,514
|
)
|
$
|
1,354
|
|
$
|
6,770
|
|
$
|
(92
|
)
|
$
|
15,733
|
|
Earnings (loss) per share - in dollars
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic and diluted
|
$
|
(0.03
|
)
|
$
|
(0.32
|
)
|
$
|
(0.23
|
)
|
$
|
(0.11
|
)
|
$
|
0.04
|
|
$
|
0.21
|
|
$
|
—
|
|
$
|
0.49
|
|
Weighted average number of shares (in thousands)
|
|
|
|
|
|
|
|
|
||||||||||||||||
Basic
|
36,085
|
|
36,021
|
|
35,915
|
|
33,136
|
|
32,200
|
|
32,167
|
|
31,909
|
|
31,962
|
|
||||||||
Diluted
|
36,085
|
|
36,021
|
|
35,912
|
|
33,136
|
|
32,735
|
|
32,766
|
|
31,909
|
|
32,367
|
|
||||||||
|
|
|
|
|
|
|
|
|
(in thousands of U.S. dollars)
|
|
Three months ended September 30
|
|
Nine months ended September 30
|
||||||||||||||||
|
2018
|
|
2017
|
|
Change
|
|
|
2018
|
|
2017
|
|
Change
|
|
|||||||
Cash flows provided (used) before changes in non-cash working capital:
|
|
$
|
13,395
|
|
$
|
9,415
|
|
$
|
3,980
|
|
|
$
|
27,034
|
|
$
|
31,372
|
|
$
|
(4,338
|
)
|
Changes in non-cash working capital
|
|
|
|
|
|
|
|
|
||||||||||||
Accounts receivable
|
|
(5,070
|
)
|
(12,751
|
)
|
7,681
|
|
|
(6,762
|
)
|
(23
|
)
|
(6,739
|
)
|
||||||
Inventories
|
|
2,114
|
|
9,047
|
|
(6,933
|
)
|
|
1,325
|
|
(14,193
|
)
|
15,518
|
|
||||||
Prepaid expense and other
|
|
1,396
|
|
(367
|
)
|
1,763
|
|
|
(4,322
|
)
|
(5,192
|
)
|
870
|
|
||||||
Accounts payable and accrued liabilities
|
|
(9,401
|
)
|
(17,039
|
)
|
7,638
|
|
|
9,025
|
|
(24,869
|
)
|
33,894
|
|
||||||
Deferred revenue
|
|
193
|
|
(349
|
)
|
542
|
|
|
(1,496
|
)
|
(1,561
|
)
|
65
|
|
||||||
|
|
(10,768
|
)
|
(21,459
|
)
|
10,691
|
|
|
(2,230
|
)
|
(45,838
|
)
|
43,608
|
|
||||||
Cash flows provided by (used in):
|
|
|
|
|
|
|
|
|
||||||||||||
Operating activities
|
|
2,627
|
|
(12,044
|
)
|
14,671
|
|
|
24,804
|
|
(14,466
|
)
|
39,270
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Investing activities
|
|
(5,082
|
)
|
(3,227
|
)
|
(1,855
|
)
|
|
(15,505
|
)
|
(15,382
|
)
|
(123
|
)
|
||||||
Acquisitions
|
|
—
|
|
—
|
|
—
|
|
|
—
|
|
(3,145
|
)
|
3,145
|
|
||||||
Capital expenditures and increase in intangible assets
|
|
(5,096
|
)
|
(3,227
|
)
|
(1,869
|
)
|
|
(15,581
|
)
|
(12,264
|
)
|
(3,317
|
)
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Financing activities
|
|
(3,350
|
)
|
89
|
|
(3,439
|
)
|
|
(4,099
|
)
|
(327
|
)
|
(3,772
|
)
|
||||||
Issue of common shares
|
|
1,257
|
|
363
|
|
894
|
|
|
2,535
|
|
5,285
|
|
(2,750
|
)
|
||||||
Repurchase of common shares for cancellation
|
|
(3,120
|
)
|
—
|
|
(3,120
|
)
|
|
(3,120
|
)
|
(2,779
|
)
|
(341
|
)
|
||||||
Purchase of treasury shares for RSU distribution
|
|
(1,085
|
)
|
—
|
|
(1,085
|
)
|
|
(1,085
|
)
|
—
|
|
(1,085
|
)
|
||||||
Taxes paid related to net settlement of equity awards
|
|
(334
|
)
|
(7
|
)
|
(327
|
)
|
|
(1,788
|
)
|
(1,096
|
)
|
(692
|
)
|
||||||
Payment for contingent consideration
|
|
—
|
|
(161
|
)
|
161
|
|
|
(130
|
)
|
(1,397
|
)
|
1,267
|
|
||||||
|
|
|
|
|
|
|
|
|
||||||||||||
Free Cash Flow
(1)
|
|
$
|
(2,469
|
)
|
$
|
(15,271
|
)
|
$
|
12,802
|
|
|
$
|
9,223
|
|
$
|
(26,730
|
)
|
$
|
35,953
|
|
|
|
|
|
|
|
|
|
|
Payments due by period
(in thousands of U.S. dollars)
|
Total
|
|
2018
|
|
2019
|
|
2020
|
|
2021
|
|
2022
|
|
Thereafter
|
|
|||||||
Operating lease obligations
|
$
|
23,320
|
|
$
|
1,791
|
|
$
|
5,742
|
|
$
|
5,502
|
|
$
|
3,977
|
|
$
|
2,321
|
|
$
|
3,987
|
|
Capital lease obligations
|
1,208
|
|
169
|
|
520
|
|
373
|
|
146
|
|
—
|
|
—
|
|
|||||||
Purchase obligations
- Contract Manufacturers
(1)
|
141,928
|
|
141,928
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
|||||||
Purchase obligations - Mobile Network Operators
(2)
|
12,306
|
|
2,721
|
|
3,570
|
|
3,920
|
|
1,495
|
|
600
|
|
—
|
|
|||||||
Other obligations
|
771
|
|
303
|
|
55
|
|
17
|
|
13
|
|
383
|
|
—
|
|
|||||||
Total
|
$
|
179,533
|
|
$
|
146,912
|
|
$
|
9,887
|
|
$
|
9,812
|
|
$
|
5,631
|
|
$
|
3,304
|
|
$
|
3,987
|
|
|
|
|
|
|
|
|
|
(in thousands of U.S. dollars, except where otherwise stated)
|
2018
|
|
|
2017
|
|
||||||||||||||||||||||
Q3
|
Q2
|
Q1
|
|
|
Total
|
Q4
|
Q3
|
Q2
|
Q1
|
|
|||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Gross margin - GAAP
|
$
|
67,267
|
|
$
|
69,309
|
|
$
|
62,100
|
|
|
|
$
|
234,239
|
|
$
|
61,814
|
|
$
|
57,294
|
|
$
|
59,636
|
|
$
|
55,495
|
|
|
Stock-based compensation and related social taxes
|
57
|
|
57
|
|
307
|
|
|
|
461
|
|
122
|
|
123
|
|
108
|
|
108
|
|
|
||||||||
Realized gains (losses) on hedge contracts
|
(11
|
)
|
—
|
|
(6
|
)
|
|
|
23
|
|
11
|
|
12
|
|
—
|
|
—
|
|
|
||||||||
Gross margin - Non-GAAP
|
$
|
67,313
|
|
$
|
69,366
|
|
$
|
62,401
|
|
|
|
$
|
234,723
|
|
$
|
61,947
|
|
$
|
57,429
|
|
$
|
59,744
|
|
$
|
55,603
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Earnings (loss) from operations - GAAP
|
$
|
853
|
|
$
|
(5,055
|
)
|
$
|
(9,876
|
)
|
|
|
$
|
100
|
|
$
|
(2,939
|
)
|
$
|
390
|
|
$
|
3,994
|
|
$
|
(1,345
|
)
|
|
Stock-based compensation and related social taxes
|
3,473
|
|
3,950
|
|
2,840
|
|
|
|
10,374
|
|
2,869
|
|
2,780
|
|
2,577
|
|
2,148
|
|
|
||||||||
Acquisition-related and integration
|
570
|
|
1,014
|
|
1,765
|
|
|
|
8,195
|
|
4,792
|
|
2,077
|
|
875
|
|
451
|
|
|
||||||||
Restructuring
|
227
|
|
952
|
|
3,591
|
|
|
|
1,076
|
|
245
|
|
199
|
|
259
|
|
373
|
|
|
||||||||
Other nonrecurring costs
|
1,583
|
|
5,141
|
|
—
|
|
|
|
318
|
|
—
|
|
—
|
|
42
|
|
276
|
|
|
||||||||
Realized gains (losses) on hedge contracts
|
(201
|
)
|
(14
|
)
|
(51
|
)
|
|
|
419
|
|
209
|
|
210
|
|
—
|
|
—
|
|
|
||||||||
Impairment
|
—
|
|
—
|
|
—
|
|
|
|
3,668
|
|
—
|
|
—
|
|
—
|
|
3,668
|
|
|
||||||||
Acquisition-related amortization
|
4,354
|
|
4,426
|
|
5,534
|
|
|
|
15,486
|
|
4,306
|
|
3,845
|
|
3,694
|
|
3,641
|
|
|
||||||||
Earnings from operations - Non-GAAP
|
$
|
10,859
|
|
$
|
10,414
|
|
$
|
3,803
|
|
|
|
$
|
39,636
|
|
$
|
9,482
|
|
$
|
9,501
|
|
$
|
11,441
|
|
$
|
9,212
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Net earnings (loss) - GAAP
|
$
|
(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 and other nonrecurring costs (recoveries)
|
5,853
|
|
11,057
|
|
8,196
|
|
|
|
23,631
|
|
7,906
|
|
5,056
|
|
3,753
|
|
6,916
|
|
|
||||||||
Amortization
|
9,483
|
|
9,651
|
|
10,708
|
|
|
|
30,503
|
|
8,764
|
|
7,548
|
|
7,194
|
|
6,997
|
|
|
||||||||
Interest and other, net
|
(7
|
)
|
(8
|
)
|
(55
|
)
|
|
|
(67
|
)
|
(38
|
)
|
(32
|
)
|
12
|
|
(9
|
)
|
|
||||||||
Foreign exchange loss (gain)
|
(42
|
)
|
4,034
|
|
(1,166
|
)
|
|
|
(7,131
|
)
|
(1,058
|
)
|
(1,457
|
)
|
(3,517
|
)
|
(1,099
|
)
|
|
||||||||
Income tax expense (recovery)
|
1,738
|
|
2,289
|
|
(343
|
)
|
|
|
3,199
|
|
1,880
|
|
735
|
|
729
|
|
(145
|
)
|
|
||||||||
Adjusted EBITDA
|
15,988
|
|
15,639
|
|
8,977
|
|
|
|
54,653
|
|
13,940
|
|
13,204
|
|
14,941
|
|
12,568
|
|
|
||||||||
Amortization (exclude acquisition-related amortization)
|
(5,129
|
)
|
(5,225
|
)
|
(5,174
|
)
|
|
|
(15,017
|
)
|
(4,458
|
)
|
(3,703
|
)
|
(3,500
|
)
|
(3,356
|
)
|
|
||||||||
Interest and other, net
|
7
|
|
8
|
|
55
|
|
|
|
67
|
|
38
|
|
32
|
|
(12
|
)
|
9
|
|
|
||||||||
Income tax expense - Non-GAAP
|
(352
|
)
|
(769
|
)
|
(564
|
)
|
|
|
(5,184
|
)
|
(312
|
)
|
(1,816
|
)
|
(1,615
|
)
|
(1,441
|
)
|
|
||||||||
Net earnings - Non-GAAP
|
$
|
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)
|
$
|
(0.03
|
)
|
$
|
(0.32
|
)
|
$
|
(0.23
|
)
|
|
|
$
|
0.14
|
|
$
|
(0.11
|
)
|
$
|
0.04
|
|
$
|
0.21
|
|
$
|
—
|
|
|
Non-GAAP - (in dollars per share)
|
$
|
0.29
|
|
$
|
0.27
|
|
$
|
0.09
|
|
|
|
$
|
1.05
|
|
$
|
0.28
|
|
$
|
0.24
|
|
$
|
0.30
|
|
$
|
0.24
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 31
|
|
Nine months ended September 30
|
|||||||||||
(in thousands of U.S. dollars)
|
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
|
||||
Cash flows from operating activities
|
|
$
|
2,627
|
|
$
|
(12,044
|
)
|
|
$
|
24,804
|
|
$
|
(14,466
|
)
|
|
Capital expenditures and increase in intangible assets
|
|
(5,096
|
)
|
(3,227
|
)
|
|
(15,581
|
)
|
(12,264
|
)
|
|
||||
Free Cash Flow
|
|
$
|
(2,469
|
)
|
$
|
(15,271
|
)
|
|
$
|
9,223
|
|
$
|
(26,730
|
)
|
|
|
|
|
|
|
|
|
|
•
|
competition from more established and larger companies with strong brands and greater financial, technical and marketing resources or companies with different business models;
|
•
|
business combinations or strategic alliances by our competitors which could weaken our competitive position;
|
•
|
introduction of new products or services by us that put us in direct competition with major new competitors;
|
•
|
existing or future competitors who may be able to respond more quickly to technological developments and changes and introduce new products or services before we do; and
|
•
|
competitors who may independently develop and patent technologies and products that are superior to ours or achieve greater acceptance due to factors such as more favorable pricing, more desired or better-quality features or more efficient sales channels.
|
•
|
the potential distraction to our current business and specific initiatives;
|
•
|
the difficulties and management challenges inherent in integrating the business, operations and workforce of Numerex with those of Sierra Wireless;
|
•
|
the difficulties and management challenges inherent in returning the Numerex business to profitable growth;
|
•
|
our assessment of the achievability of Numerex’s financial projections and our expectation that the Transaction will not be accretive to earnings per share until approximately 12 months after the closing, assuming efficiencies and anticipated growth are fully realized;
|
•
|
the risk that the anticipated benefits of the Transaction will not be realized in full or in part, including the risk that expected synergies, expected growth and expected cost savings will not be achieved or not achieved in the expected time frame;
|
•
|
the risk of diverting the attention of our senior management from other strategic priorities to implement the Transaction and make arrangements for integration of Sierra Wireless’ and Numerex’s operations and infrastructure following the Transaction;
|
•
|
risks associated with managing the technology transitions; and
|
•
|
other risks relating to acquisitions generally described below under
“Risk Factors - Acquisitions and divestitures of businesses or technologies may result in disruptions to our business or may not achieve the anticipated benefits”
.
|
•
|
exposure to unknown liabilities or risks of acquired companies, including unknown litigation related to acts or omissions of an acquired company and/or its directors and officers prior to the acquisition, deficiencies in disclosure controls and procedures of the acquired company and deficiencies in internal controls over financial reporting of the acquired company;
|
•
|
higher than anticipated acquisition and integration costs and expenses;
|
•
|
the difficulty and expense of integrating the operations and personnel of the acquired companies;
|
•
|
use of cash to support the operations of an acquired business;
|
•
|
increased foreign exchange translation risk depending on the currency denomination of the revenue and expenses of the acquired business;
|
•
|
disruption of, and demands on, our ongoing business as a result of integration activities including diversion of management's time and attention from the ongoing business;
|
•
|
failure to maximize our financial and strategic position by the successful incorporation of acquired technology;
|
•
|
the inability to implement uniform standards, disclosure controls and procedures, internal controls over financial reporting and other procedures and policies in a timely manner;
|
•
|
the potential loss of key employees and customers;
|
•
|
decrease in our share price if the market perceives that an acquisition does not fit our strategy, the price paid is excessive in light of other similar transactions or that the terms of the acquisition are not favorable to our earnings growth;
|
•
|
failure to anticipate or adequately address regulatory requirements that may need to be satisfied as part of a business acquisition or disposition;
|
•
|
litigation and settlement costs if shareholders bring lawsuits triggered by acquisition or divestiture activities;
|
•
|
decrease in our share price, if, as a result of our acquisition strategy or growth, we decide to raise additional capital through an offering of securities; and
|
•
|
dilution to our shareholders if the purchase price is paid in common shares or securities convertible into common shares.
|
•
|
price and product competition which may result in lower selling prices for some of our products and services or lost market share;
|
•
|
price and demand pressure on our products and services from our customers as they experience pressure in their businesses;
|
•
|
demand fluctuation based on the success of our customers in selling their products and solutions which incorporate our wireless products, services and software;
|
•
|
development and timing of the introduction of our new products including the timing of sales orders, OEM and distributor customer sell through and design win cycles in our embedded wireless module business;
|
•
|
transition periods associated with the migration to new technologies;
|
•
|
potential commoditization and saturation in certain markets;
|
•
|
our ability to accurately forecast demand in order to properly align the purchase of components and the appropriate level of manufacturing capability;
|
•
|
product mix of our sales (our products have different gross margins - for example the embedded wireless module product line has lower gross margins than the higher margin rugged mobile product line);
|
•
|
possible delays or shortages in component supplies;
|
•
|
possible delays in the manufacture or shipment of current or new products and the introduction of new services;
|
•
|
possible product or service quality or factory yield issues that may increase our cost of sales;
|
•
|
concentration in our customer base;
|
•
|
seasonality in demand;
|
•
|
amount of inventory held by our channel partners;
|
•
|
possible fluctuations in certain foreign currencies relative to the U.S. dollar that may affect foreign denominated revenue, cost of sales and operating expenses;
|
•
|
impairment of our goodwill or intangible assets which may result in a significant charge to earnings in the period in which an impairment is determined;
|
•
|
achievement of milestones related to our professional services contracts; and
|
•
|
operating expenses that are generally fixed in the short-term and therefore difficult to rapidly adjust to different levels of business.
|
•
|
our ability to design and manufacture products or implement solutions and services at an acceptable cost and quality;
|
•
|
our ability to attract and retain skilled technical employees;
|
•
|
the availability of critical components from third parties;
|
•
|
our ability to successfully complete the development of products in a timely manner; and
|
•
|
the ability of third parties to complete and deliver on outsourced product development engagements.
|
•
|
we may be found to be liable for potentially substantial damages, liabilities and litigation costs, including attorneys' fees;
|
•
|
we may be prohibited from further use of intellectual property because of an injunction and may be required to cease selling our products that are subject to the claim;
|
•
|
we may have to license third party intellectual property, incurring royalty fees that may or may not be on commercially reasonable terms; in addition, there is no assurance that we will be able to successfully negotiate and obtain such a license from the third party;
|
•
|
we may have to develop a non-infringing alternative, which could be costly and delay or result in the loss of sales; in addition, there is no assurance that we will be able to develop such a non-infringing alternative;
|
•
|
management attention and resources may be diverted;
|
•
|
our relationships with customers may be adversely affected; and
|
•
|
we may be required to indemnify our customers for certain costs and damages they incur in respect of such a claim.
|
•
|
non-recognition of the proprietary nature or inadequate protection of our methodologies in the United States, Canada, France or other foreign countries;
|
•
|
undetected misappropriation of our intellectual property;
|
•
|
the substantial legal and other costs of protecting and enforcing our rights in our intellectual property; and
|
•
|
development of similar technologies by our competitors.
|
•
|
potential business interruption due to unexpected events such as natural disasters, labor unrest, cyber-attacks, technological issues or geopolitical events;
|
•
|
the absence of guaranteed or adequate manufacturing capacity;
|
•
|
potential violations of laws and regulations by our manufacturers that may subject us to additional costs for duties, monetary penalties, seizure and loss of our products or loss of our import privileges, and damage to our reputation;
|
•
|
reduced control over delivery schedules, production levels, manufacturing yields, costs and product quality;
|
•
|
the inability of our contract manufacturers to secure adequate volumes of components in a timely manner at a reasonable cost; and
|
•
|
unexpected increases in manufacturing costs.
|
•
|
compliance with the laws of the United States, Canada and other countries that apply to our international operations, including import and export legislation, lawful access and privacy laws;
|
•
|
compliance with existing and emerging anti-corruption laws, including the Foreign Corrupt Practices Act of the United States, the
Corruption of Foreign Public Officials Act
of Canada and the UK Bribery Act;
|
•
|
increased reliance on third parties to establish and maintain foreign operations;
|
•
|
the complexities and expense of administering a business abroad;
|
•
|
complications in compliance with, and unexpected changes in, foreign regulatory requirements, including requirements relating to content filtering and requests from law enforcement authorities;
|
•
|
trading and investment policies;
|
•
|
consumer protection laws that impose additional obligations on us or restrict our ability to provide limited warranty protection;
|
•
|
instability in economic or political conditions, including inflation, recession and actual or anticipated military conflicts, social upheaval or political uncertainty;
|
•
|
foreign currency fluctuations;
|
•
|
foreign exchange controls and cash repatriation restrictions;
|
•
|
emerging protectionist trends in certain countries leading to new or higher tariffs and other trade barriers;
|
•
|
difficulties in collecting accounts receivable;
|
•
|
potential adverse tax consequences;
|
•
|
uncertainties of laws and enforcement relating to the protection of intellectual property or secured technology;
|
•
|
litigation in foreign court systems;
|
•
|
cultural and language differences;
|
•
|
difficulty in managing a geographically dispersed workforce in compliance with local laws and customs that vary from country to country; and
|
•
|
other factors, depending upon the country involved.
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
2018
|
|
|
2017 As adjusted
|
|
|
2018
|
|
|
2017 As adjusted
|
|
||||
Revenue
|
|
|
|
|
|
|
|
||||||||
Product
|
$
|
179,390
|
|
|
$
|
161,523
|
|
|
$
|
521,127
|
|
|
$
|
476,093
|
|
Services and other
|
24,036
|
|
|
11,037
|
|
|
71,080
|
|
|
31,101
|
|
||||
|
203,426
|
|
|
172,560
|
|
|
592,207
|
|
|
507,194
|
|
||||
Cost of sales
|
|
|
|
|
|
|
|
||||||||
Product
|
124,528
|
|
|
110,131
|
|
|
359,656
|
|
|
319,891
|
|
||||
Services and other
|
11,631
|
|
|
5,135
|
|
|
33,875
|
|
|
14,878
|
|
||||
|
136,159
|
|
|
115,266
|
|
|
393,531
|
|
|
334,769
|
|
||||
Gross margin
|
67,267
|
|
|
57,294
|
|
|
198,676
|
|
|
172,425
|
|
||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Sales and marketing
|
21,743
|
|
|
17,975
|
|
|
66,234
|
|
|
54,699
|
|
||||
Research and development
|
22,621
|
|
|
21,044
|
|
|
71,477
|
|
|
60,825
|
|
||||
Administration
|
14,998
|
|
|
10,560
|
|
|
47,066
|
|
|
31,525
|
|
||||
Restructuring (note 6)
|
227
|
|
|
199
|
|
|
4,770
|
|
|
831
|
|
||||
Acquisition-related and integration
|
570
|
|
|
2,077
|
|
|
3,349
|
|
|
3,403
|
|
||||
Impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
3,668
|
|
||||
Amortization
|
6,255
|
|
|
5,049
|
|
|
19,858
|
|
|
14,435
|
|
||||
|
66,414
|
|
|
56,904
|
|
|
212,754
|
|
|
169,386
|
|
||||
Earnings (loss) from operations
|
853
|
|
|
390
|
|
|
(14,078
|
)
|
|
3,039
|
|
||||
Foreign exchange gain (loss)
|
(159
|
)
|
|
1,667
|
|
|
(3,092
|
)
|
|
6,283
|
|
||||
Other income (loss)
|
7
|
|
|
32
|
|
|
70
|
|
|
29
|
|
||||
Earnings (loss) before income taxes
|
701
|
|
|
2,089
|
|
|
(17,100
|
)
|
|
9,351
|
|
||||
Income tax expense
|
1,738
|
|
|
735
|
|
|
3,684
|
|
|
1,319
|
|
||||
Net earnings (loss)
|
$
|
(1,037
|
)
|
|
$
|
1,354
|
|
|
$
|
(20,784
|
)
|
|
$
|
8,032
|
|
Other comprehensive earnings (loss):
|
|
|
|
|
|
|
|
||||||||
Foreign currency translation adjustments, net of taxes of $nil
|
322
|
|
|
3,822
|
|
|
(6,919
|
)
|
|
11,862
|
|
||||
Comprehensive earnings (loss)
|
$
|
(715
|
)
|
|
$
|
5,176
|
|
|
$
|
(27,703
|
)
|
|
$
|
19,894
|
|
|
|
|
|
|
|
|
|
|
|||||||
Net earnings (loss) per share (in dollars) (note 8)
|
|
|
|
|
|
|
|
|
|||||||
Basic
|
$
|
(0.03
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.58
|
)
|
|
$
|
0.25
|
|
Diluted
|
(0.03
|
)
|
|
0.04
|
|
|
(0.58
|
)
|
|
0.25
|
|
||||
Weighted average number of shares outstanding (in thousands) (note 8)
|
|
|
|
|
|
|
|
||||||||
Basic
|
36,085
|
|
|
32,200
|
|
|
36,007
|
|
|
32,093
|
|
||||
Diluted
|
36,085
|
|
|
32,735
|
|
|
36,007
|
|
|
32,665
|
|
|
September 30, 2018
|
|
|
December 31, 2017 As adjusted
|
|
||
Assets
|
|
|
|
||||
Current assets
|
|
|
|
||||
Cash and cash equivalents
|
$
|
67,460
|
|
|
$
|
65,003
|
|
Restricted cash
|
221
|
|
|
221
|
|
||
Accounts receivable, net of allowance for doubtful accounts of $2,656 (December 31, 2017 - $1,827)
|
173,285
|
|
|
173,054
|
|
||
Inventories (note 9)
|
51,430
|
|
|
53,143
|
|
||
Prepaids and other (note 10)
|
12,205
|
|
|
8,221
|
|
||
|
304,601
|
|
|
299,642
|
|
||
Property and equipment
|
42,451
|
|
|
42,977
|
|
||
Intangible assets
|
91,743
|
|
|
108,599
|
|
||
Goodwill
|
213,663
|
|
|
218,516
|
|
||
Deferred income taxes
|
9,018
|
|
|
12,197
|
|
||
Other assets
|
12,824
|
|
|
12,713
|
|
||
|
$
|
674,300
|
|
|
$
|
694,644
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
||||
Current liabilities
|
|
|
|
||||
Accounts payable and accrued liabilities (note 11)
|
$
|
173,739
|
|
|
$
|
175,367
|
|
Deferred revenue
|
6,248
|
|
|
7,275
|
|
||
|
179,987
|
|
|
182,642
|
|
||
Long-term obligations (note 12)
|
40,771
|
|
|
36,637
|
|
||
Deferred income taxes
|
6,866
|
|
|
7,845
|
|
||
|
227,624
|
|
|
227,124
|
|
||
Equity
|
|
|
|
||||
Shareholders’ equity
|
|
|
|
||||
Common stock: no par value; unlimited shares authorized; issued and
outstanding: 36,047,933 shares (December 31, 2017 - 35,861,510 shares)
|
432,211
|
|
|
427,748
|
|
||
Preferred stock: no par value; unlimited shares authorized;
issued and outstanding: nil shares
|
—
|
|
|
—
|
|
||
Treasury stock: at cost; 42,066 shares (December 31, 2017 – 222,639 shares)
|
(754
|
)
|
|
(3,216
|
)
|
||
Additional paid-in capital
|
29,083
|
|
|
27,962
|
|
||
Retained earnings (deficit)
|
(4,469
|
)
|
|
17,502
|
|
||
Accumulated other comprehensive loss (note 13)
|
(9,395
|
)
|
|
(2,476
|
)
|
||
|
446,676
|
|
|
467,520
|
|
||
|
$
|
674,300
|
|
|
$
|
694,644
|
|
|
|
|
|
||||||||||||||||||||||||||
|
Common Stock
|
|
Treasury Stock
|
|
|
|
|
|
|
|
|
||||||||||||||||||
|
# of shares
|
|
|
$
|
|
# of shares
|
|
|
$
|
|
Additional paid-in capital
|
|
|
Retained earnings (deficit)
|
|
|
Accumulated other comprehensive earnings (loss)
|
|
|
Total
|
|
||||||||
Balance as at December 31, 2016
|
31,859,960
|
|
|
$
|
342,450
|
|
|
355,471
|
|
|
$
|
(5,134
|
)
|
|
$
|
24,976
|
|
|
$
|
13,938
|
|
|
$
|
(14,426
|
)
|
|
$
|
361,804
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Common share cancellation
|
(170,217
|
)
|
|
(1,825
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(954
|
)
|
|
—
|
|
|
(2,779
|
)
|
||||||
Stock option exercises
|
500,184
|
|
|
8,122
|
|
|
—
|
|
|
—
|
|
|
(2,282
|
)
|
|
—
|
|
|
—
|
|
|
5,840
|
|
||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,341
|
|
|
—
|
|
|
—
|
|
|
10,341
|
|
||||||
Distribution of vested RSUs
|
90,751
|
|
|
1,788
|
|
|
(132,832
|
)
|
|
1,918
|
|
|
(5,073
|
)
|
|
—
|
|
|
—
|
|
|
(1,367
|
)
|
||||||
Issue of shares on Numerex acquisition, net of share issue cost of $132 (note 4)
|
3,580,832
|
|
|
77,213
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
77,213
|
|
||||||
Net earnings
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
4,518
|
|
|
—
|
|
|
4,518
|
|
||||||
Foreign currency translation adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,950
|
|
|
11,950
|
|
||||||
Balance as at December 31, 2017
|
35,861,510
|
|
|
$
|
427,748
|
|
|
222,639
|
|
|
$
|
(3,216
|
)
|
|
$
|
27,962
|
|
|
$
|
17,502
|
|
|
$
|
(2,476
|
)
|
|
$
|
467,520
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Common share cancellation (note 14)
|
(161,500
|
)
|
|
(1,933
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,187
|
)
|
|
—
|
|
|
(3,120
|
)
|
||||||
Stock option exercises (note 7)
|
212,117
|
|
|
3,480
|
|
|
—
|
|
|
—
|
|
|
(945
|
)
|
|
—
|
|
|
—
|
|
|
2,535
|
|
||||||
Stock-based compensation (note 7)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,317
|
|
|
—
|
|
|
—
|
|
|
10,317
|
|
||||||
Purchase of treasury shares for RSU distribution
|
—
|
|
|
—
|
|
|
55,000
|
|
|
(1,085
|
)
|
|
—
|
|
|
|
|
|
|
(1,085
|
)
|
||||||||
Distribution of vested RSUs
|
135,806
|
|
|
2,916
|
|
|
(235,573
|
)
|
|
3,547
|
|
|
(8,251
|
)
|
|
—
|
|
|
—
|
|
|
(1,788
|
)
|
||||||
Net loss
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(20,784
|
)
|
|
—
|
|
|
(20,784
|
)
|
||||||
Foreign currency translation adjustments, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(6,919
|
)
|
|
(6,919
|
)
|
||||||
Balance as at September 30, 2018
|
36,047,933
|
|
|
$
|
432,211
|
|
|
42,066
|
|
|
$
|
(754
|
)
|
|
$
|
29,083
|
|
|
$
|
(4,469
|
)
|
|
$
|
(9,395
|
)
|
|
$
|
446,676
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30, |
||||||||||||
|
2018
|
|
|
2017
As adjusted
|
|
|
2018
|
|
|
2017
As adjusted
|
|
||||
Cash flows provided by (used in):
|
|
|
|
|
|
|
|
||||||||
Operating activities
|
|
|
|
|
|
|
|
||||||||
Net earnings (loss)
|
$
|
(1,037
|
)
|
|
$
|
1,354
|
|
|
$
|
(20,784
|
)
|
|
$
|
8,032
|
|
Items not requiring (providing) cash
|
|
|
|
|
|
|
|
||||||||
Amortization
|
9,483
|
|
|
7,548
|
|
|
29,842
|
|
|
21,739
|
|
||||
Stock-based compensation (note 7)
|
3,266
|
|
|
2,769
|
|
|
10,317
|
|
|
7,472
|
|
||||
Deferred income taxes
|
1,378
|
|
|
(11
|
)
|
|
2,460
|
|
|
(1,268
|
)
|
||||
Impairment
|
—
|
|
|
—
|
|
|
—
|
|
|
3,668
|
|
||||
Unrealized foreign exchange loss (gain)
|
653
|
|
|
(2,202
|
)
|
|
4,978
|
|
|
(8,046
|
)
|
||||
Other
|
(348
|
)
|
|
(43
|
)
|
|
221
|
|
|
(225
|
)
|
||||
Changes in non-cash working capital
|
|
|
|
|
|
|
|
||||||||
Accounts receivable
|
(5,070
|
)
|
|
(12,751
|
)
|
|
(6,762
|
)
|
|
(23
|
)
|
||||
Inventories
|
2,114
|
|
|
9,047
|
|
|
1,325
|
|
|
(14,193
|
)
|
||||
Prepaids and other
|
1,396
|
|
|
(367
|
)
|
|
(4,322
|
)
|
|
(5,192
|
)
|
||||
Accounts payable and accrued liabilities
|
(9,401
|
)
|
|
(17,039
|
)
|
|
9,025
|
|
|
(24,869
|
)
|
||||
Deferred revenue
|
193
|
|
|
(349
|
)
|
|
(1,496
|
)
|
|
(1,561
|
)
|
||||
Cash flows provided by (used in) operating activities
|
2,627
|
|
|
(12,044
|
)
|
|
24,804
|
|
|
(14,466
|
)
|
||||
Investing activities
|
|
|
|
|
|
|
|
||||||||
Additions to property and equipment
|
(4,789
|
)
|
|
(2,939
|
)
|
|
(13,788
|
)
|
|
(10,879
|
)
|
||||
Additions to intangible assets
|
(307
|
)
|
|
(288
|
)
|
|
(1,793
|
)
|
|
(1,385
|
)
|
||||
Proceeds from sale of property and equipment
|
14
|
|
|
—
|
|
|
76
|
|
|
27
|
|
||||
Acquisition of GNSS business
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,145
|
)
|
||||
Cash flows used in investing activities
|
(5,082
|
)
|
|
(3,227
|
)
|
|
(15,505
|
)
|
|
(15,382
|
)
|
||||
Financing activities
|
|
|
|
|
|
|
|
||||||||
Issuance of common shares
|
1,257
|
|
|
363
|
|
|
2,535
|
|
|
5,285
|
|
||||
Repurchase of common shares for cancellation
|
(3,120
|
)
|
|
—
|
|
|
(3,120
|
)
|
|
(2,779
|
)
|
||||
Purchase of treasury shares for RSU distribution
|
(1,085
|
)
|
|
—
|
|
|
(1,085
|
)
|
|
—
|
|
||||
Taxes paid related to net settlement of equity awards
|
(334
|
)
|
|
(7
|
)
|
|
(1,788
|
)
|
|
(1,096
|
)
|
||||
Payment for contingent consideration
|
—
|
|
|
(161
|
)
|
|
(130
|
)
|
|
(1,397
|
)
|
||||
Decrease in other long-term obligations
|
(68
|
)
|
|
(106
|
)
|
|
(511
|
)
|
|
(340
|
)
|
||||
Cash flows provided by (used in) financing activities
|
(3,350
|
)
|
|
89
|
|
|
(4,099
|
)
|
|
(327
|
)
|
||||
Effect of foreign exchange rate changes on cash and cash equivalents
|
(146
|
)
|
|
376
|
|
|
(2,743
|
)
|
|
1,609
|
|
||||
Cash, cash equivalents and restricted cash, increase (decrease) in the period
|
(5,951
|
)
|
|
(14,806
|
)
|
|
2,457
|
|
|
(28,566
|
)
|
||||
Cash, cash equivalents and restricted cash, beginning of period
|
73,632
|
|
|
89,012
|
|
|
65,224
|
|
|
102,772
|
|
||||
Cash, cash equivalents and restricted cash, end of period
|
$
|
67,681
|
|
|
$
|
74,206
|
|
|
$
|
67,681
|
|
|
$
|
74,206
|
|
1.
|
BASIS OF PRESENTATION
|
2.
|
ACCOUNTING STANDARDS
|
Three months ended September 30, 2017
|
As previously reported
|
|
|
Effect of adoption of ASC 606
|
|
|
As adjusted
|
|
|||
|
|
|
|
|
|
||||||
Revenue
|
$
|
173,241
|
|
|
$
|
(681
|
)
|
|
$
|
172,560
|
|
Cost of sales
|
115,466
|
|
|
(200
|
)
|
|
115,266
|
|
|||
Sales and marketing
|
18,127
|
|
|
(152
|
)
|
|
17,975
|
|
|||
Research and development
|
21,525
|
|
|
(481
|
)
|
|
21,044
|
|
|||
Income tax expense
|
710
|
|
|
25
|
|
|
735
|
|
|||
Basic net earnings per share (in dollars)
|
$
|
0.04
|
|
|
$
|
—
|
|
|
$
|
0.04
|
|
Nine months ended September 30, 2017
|
As previously reported
|
|
|
Effect of adoption of ASC 606
|
|
|
As adjusted
|
|
|||
|
|
|
|
|
|
||||||
Revenue
|
$
|
508,544
|
|
|
$
|
(1,350
|
)
|
|
$
|
507,194
|
|
Cost of sales
|
335,411
|
|
|
(642
|
)
|
|
334,769
|
|
|||
Sales and marketing
|
55,138
|
|
|
(439
|
)
|
|
54,699
|
|
|||
Research and development
|
61,533
|
|
|
(708
|
)
|
|
60,825
|
|
|||
Income tax expense
|
1,247
|
|
|
72
|
|
|
1,319
|
|
|||
Basic net earnings per share (in dollars)
|
$
|
0.24
|
|
|
$
|
0.01
|
|
|
$
|
0.25
|
|
As of December 31, 2017
|
As previously reported
|
|
|
Effect of adoption of ASC 606
|
|
|
As adjusted
|
|
|||
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
||||||
Accounts receivable
|
$
|
168,503
|
|
|
$
|
4,551
|
|
|
$
|
173,054
|
|
Inventories
|
53,026
|
|
|
117
|
|
|
53,143
|
|
|||
Prepaids and other
|
8,006
|
|
|
215
|
|
|
8,221
|
|
|||
Other assets
|
12,058
|
|
|
655
|
|
|
12,713
|
|
|||
|
|
|
|
|
|
||||||
Liabilities
|
|
|
|
|
|
||||||
Accounts payable and accrued liabilities
|
172,395
|
|
|
2,972
|
|
|
175,367
|
|
|||
Deferred revenue
|
5,455
|
|
|
1,820
|
|
|
7,275
|
|
|||
Deferred income tax liability
|
7,702
|
|
|
143
|
|
|
7,845
|
|
|||
|
|
|
|
|
|
||||||
Equity
|
|
|
|
|
|
||||||
Retained earnings
|
16,899
|
|
|
603
|
|
|
17,502
|
|
3.
|
SIGNIFICANT ACCOUNTING POLICIES
|
|
September 30, 2018
|
|
December 31, 2017
|
|
Change
|
|
|||
|
|
|
|
||||||
Contract assets
|
$
|
1,839
|
|
$
|
852
|
|
$
|
987
|
|
Deferred revenue - current
|
6,248
|
|
7,275
|
|
(1,027
|
)
|
|||
Deferred revenue - noncurrent
|
4,188
|
|
3,346
|
|
842
|
|
|||
|
|
|
|
4.
|
Acquisition of Numerex Corp.
|
|
|
$
|
|
Issuance of common shares
|
|
77,346
|
|
Debt extinguishment
|
|
20,155
|
|
|
|
97,501
|
|
|
|
$
|
|
Cash
|
|
1,430
|
|
Deferred income tax asset
|
|
1,049
|
|
Property and equipment
|
|
7,244
|
|
Identifiable intangible assets
|
|
45,890
|
|
Goodwill
|
|
51,658
|
|
Other working capital
|
|
(8,623
|
)
|
Long-term obligations
|
|
(1,147
|
)
|
Fair value of net assets acquired
|
|
97,501
|
|
|
|
Estimated
useful life
|
|
$
|
|
Customer relationships
|
|
9 years
|
|
26,390
|
|
Existing technology
|
|
3 years
|
|
10,220
|
|
Brand
|
|
13 years
|
|
9,280
|
|
|
|
|
|
45,890
|
|
|
Year ended December 31,
|
||||||
|
2017
|
|
|
2016
|
|
||
Pro forma information
|
|
|
|
||||
Revenue
|
$
|
747,719
|
|
|
$
|
686,252
|
|
Loss from operations
|
(8,973
|
)
|
|
(5,205
|
)
|
||
Net loss
|
(3,577
|
)
|
|
(7,334
|
)
|
||
|
|
|
|
||||
Basic and diluted loss per share (in dollars)
|
$
|
(0.10
|
)
|
|
$
|
(0.21
|
)
|
5.
|
SEGMENTED INFORMATION
|
|
OEM
Solutions
|
|
Enterprise
Solutions
|
|
IoT
Services
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Three months ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
148,356
|
|
|
$
|
32,068
|
|
|
$
|
23,002
|
|
|
$
|
203,426
|
|
Cost of sales
|
107,853
|
|
|
14,750
|
|
|
13,556
|
|
|
136,159
|
|
||||
Gross margin
|
40,503
|
|
|
17,318
|
|
|
9,446
|
|
|
67,267
|
|
||||
Gross margin %
|
27.3
|
%
|
|
54.0
|
%
|
|
41.1
|
%
|
|
33.1
|
%
|
||||
Expenses
|
|
|
|
|
|
|
66,414
|
|
|||||||
Earnings from operations
|
|
|
|
|
|
|
853
|
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Three months ended September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
137,850
|
|
|
$
|
26,277
|
|
|
$
|
8,433
|
|
|
$
|
172,560
|
|
Cost of sales
|
97,170
|
|
|
13,646
|
|
|
4,450
|
|
|
115,266
|
|
||||
Gross margin
|
40,680
|
|
|
12,631
|
|
|
3,983
|
|
|
57,294
|
|
||||
Gross margin %
|
29.5
|
%
|
|
48.1
|
%
|
|
47.2
|
%
|
|
33.2
|
%
|
||||
Expenses
|
|
|
|
|
|
|
56,904
|
|
|||||||
Earnings from operations
|
|
|
|
|
|
|
390
|
|
|
OEM
Solutions
|
|
Enterprise
Solutions
|
|
IoT
Services
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Nine months ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
434,506
|
|
|
$
|
89,670
|
|
|
$
|
68,031
|
|
|
$
|
592,207
|
|
Cost of sales
|
309,221
|
|
|
44,141
|
|
|
40,169
|
|
|
393,531
|
|
||||
Gross margin
|
125,285
|
|
|
45,529
|
|
|
27,862
|
|
|
198,676
|
|
||||
Gross margin %
|
28.8
|
%
|
|
50.8
|
%
|
|
41.0
|
%
|
|
33.5
|
%
|
||||
Expenses
|
|
|
|
|
|
|
212,754
|
|
|||||||
Loss from operations
|
|
|
|
|
|
|
(14,078
|
)
|
|||||||
|
|
|
|
|
|
|
|
||||||||
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
||||||||
Revenue
|
$
|
414,742
|
|
|
$
|
69,656
|
|
|
$
|
22,796
|
|
|
$
|
507,194
|
|
Cost of sales
|
285,888
|
|
|
36,264
|
|
|
12,617
|
|
|
334,769
|
|
||||
Gross margin
|
128,854
|
|
|
33,392
|
|
|
10,179
|
|
|
172,425
|
|
||||
Gross margin %
|
31.1
|
%
|
|
47.9
|
%
|
|
44.7
|
%
|
|
34.0
|
%
|
||||
Expenses
|
|
|
|
|
|
|
169,386
|
|
|||||||
Earnings from operations
|
|
|
|
|
|
|
3,039
|
|
|
OEM
Solutions
|
|
Enterprise
Solutions
|
|
IoT
Services
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Three months ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
37,211
|
|
|
$
|
27,330
|
|
|
$
|
17,285
|
|
|
$
|
81,826
|
|
Europe, Middle East and Africa
|
31,730
|
|
|
2,701
|
|
|
5,684
|
|
|
40,115
|
|
||||
Asia-Pacific
|
79,415
|
|
|
2,037
|
|
|
33
|
|
|
81,485
|
|
||||
|
$
|
148,356
|
|
|
$
|
32,068
|
|
|
$
|
23,002
|
|
|
$
|
203,426
|
|
|
|
|
|
|
|
|
|
||||||||
Three months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|||||||
Americas
|
$
|
30,648
|
|
|
$
|
22,430
|
|
|
$
|
2,650
|
|
|
$
|
55,728
|
|
Europe, Middle East and Africa
|
35,973
|
|
|
2,909
|
|
|
5,762
|
|
|
44,644
|
|
||||
Asia-Pacific
|
71,229
|
|
|
938
|
|
|
21
|
|
|
72,188
|
|
||||
|
$
|
137,850
|
|
|
$
|
26,277
|
|
|
$
|
8,433
|
|
|
$
|
172,560
|
|
|
OEM
Solutions
|
|
Enterprise
Solutions
|
|
IoT
Services
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Nine months ended September 30, 2018
|
|
|
|
|
|
|
|
||||||||
Americas
|
$
|
102,862
|
|
|
$
|
76,405
|
|
|
$
|
50,130
|
|
|
$
|
229,397
|
|
Europe, Middle East and Africa
|
101,123
|
|
|
6,604
|
|
|
17,822
|
|
|
125,549
|
|
||||
Asia-Pacific
|
230,521
|
|
|
6,661
|
|
|
79
|
|
|
237,261
|
|
||||
|
$
|
434,506
|
|
|
$
|
89,670
|
|
|
$
|
68,031
|
|
|
$
|
592,207
|
|
|
|
|
|
|
|
|
|
||||||||
Nine months ended September 30, 2017
|
|
|
|
|
|
|
|
|
|||||||
Americas
|
$
|
101,002
|
|
|
$
|
59,664
|
|
|
$
|
7,043
|
|
|
$
|
167,709
|
|
Europe, Middle East and Africa
|
105,539
|
|
|
6,042
|
|
|
15,711
|
|
|
127,292
|
|
||||
Asia-Pacific
|
208,201
|
|
|
3,950
|
|
|
42
|
|
|
212,193
|
|
||||
|
$
|
414,742
|
|
|
$
|
69,656
|
|
|
$
|
22,796
|
|
|
$
|
507,194
|
|
6.
|
RESTRUCTURING
|
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||||
|
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Balance, beginning of period
|
|
$
|
1,067
|
|
|
$
|
578
|
|
|
$
|
540
|
|
|
$
|
—
|
|
Expensed in period
|
|
227
|
|
|
199
|
|
|
4,770
|
|
|
831
|
|
||||
Disbursements
|
|
(331
|
)
|
|
(222
|
)
|
|
(4,291
|
)
|
|
(319
|
)
|
||||
Foreign exchange
|
|
3
|
|
|
11
|
|
|
(53
|
)
|
|
54
|
|
||||
|
|
$
|
966
|
|
|
$
|
566
|
|
|
$
|
966
|
|
|
$
|
566
|
|
|
|
|
|
|
|
|
|
|
||||||||
Classification:
|
|
|
|
|
|
|
|
|
|
|||||||
Accounts payable and accrued liabilities
|
|
966
|
|
|
566
|
|
|
966
|
|
|
566
|
|
||||
|
|
$
|
966
|
|
|
$
|
566
|
|
|
$
|
966
|
|
|
$
|
566
|
|
|
|
|
|
|
|
|
|
|
||||||||
By restructuring initiative:
|
|
|
|
|
|
|
|
|
|
|||||||
February 2017
|
|
$
|
75
|
|
|
$
|
566
|
|
|
$
|
75
|
|
|
$
|
566
|
|
March 2018
|
|
891
|
|
|
—
|
|
|
891
|
|
|
—
|
|
||||
|
|
$
|
966
|
|
|
$
|
566
|
|
|
$
|
966
|
|
|
$
|
566
|
|
7.
|
STOCK-BASED PAYMENTS
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30, |
||||||||||||
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
||||
Cost of goods sold
|
$
|
57
|
|
|
$
|
123
|
|
|
$
|
433
|
|
|
$
|
339
|
|
Sales and marketing
|
713
|
|
|
647
|
|
|
2,085
|
|
|
1,785
|
|
||||
Research and development
|
603
|
|
|
547
|
|
|
1,703
|
|
|
1,476
|
|
||||
Administration
|
1,893
|
|
|
1,452
|
|
|
6,096
|
|
|
3,872
|
|
||||
|
$
|
3,266
|
|
|
$
|
2,769
|
|
|
$
|
10,317
|
|
|
$
|
7,472
|
|
|
|
|
|
|
|
|
|
||||||||
Stock option plan
|
$
|
751
|
|
|
$
|
873
|
|
|
$
|
2,624
|
|
|
$
|
2,395
|
|
Restricted stock plan
|
2,515
|
|
|
1,896
|
|
|
7,693
|
|
|
5,077
|
|
||||
|
$
|
3,266
|
|
|
$
|
2,769
|
|
|
$
|
10,317
|
|
|
$
|
7,472
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||
Number of Options
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Outstanding, beginning of period
|
1,609,321
|
|
|
1,525,334
|
|
|
1,463,481
|
|
|
1,315,623
|
|
Granted
|
4,761
|
|
|
30,626
|
|
|
341,743
|
|
|
681,225
|
|
Exercised
|
(95,667
|
)
|
|
(32,819
|
)
|
|
(212,117
|
)
|
|
(453,391
|
)
|
Forfeited / expired
|
(124,176
|
)
|
|
(10,183
|
)
|
|
(198,868
|
)
|
|
(30,499
|
)
|
Outstanding, end of period
|
1,394,239
|
|
|
1,512,958
|
|
|
1,394,239
|
|
|
1,512,958
|
|
Exercisable, beginning of period
|
684,100
|
|
|
347,248
|
|
|
404,758
|
|
|
494,938
|
|
Exercisable, end of period
|
546,073
|
|
|
379,054
|
|
|
546,073
|
|
|
379,054
|
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||
|
2018
|
|
2017
|
|
2018
|
|
2017
|
Risk-free interest rate
|
2.57%
|
|
1.53%
|
|
2.22%
|
|
1.36%
|
Annual dividends per share
|
Nil
|
|
Nil
|
|
Nil
|
|
Nil
|
Expected stock price volatility
|
54%
|
|
57%
|
|
55%
|
|
55%
|
Expected option life (in years)
|
4.0
|
|
4.0
|
|
4.0
|
|
4.0
|
Average fair value of options granted (in dollars)
|
$8.66
|
|
$11.38
|
|
$7.20
|
|
$11.15
|
|
Three months ended
September 30, |
|
Nine months ended
September 30, |
||||||||
Number of RSUs
|
2018
|
|
|
2017
|
|
|
2018
|
|
|
2017
|
|
Outstanding, beginning of period
|
886,935
|
|
|
859,462
|
|
|
876,741
|
|
|
745,974
|
|
Granted
|
74,045
|
|
|
64,056
|
|
|
518,930
|
|
|
452,331
|
|
Vested / settled
|
(85,598
|
)
|
|
(11,697
|
)
|
|
(476,187
|
)
|
|
(254,578
|
)
|
Forfeited
|
(1,822
|
)
|
|
(3,732
|
)
|
|
(45,924
|
)
|
|
(35,638
|
)
|
Outstanding, end of period
|
873,560
|
|
|
908,089
|
|
|
873,560
|
|
|
908,089
|
|
|
|
|
|
|
|
|
|
||||
Outstanding – vested and not settled
|
126,763
|
|
|
166,687
|
|
|
126,763
|
|
|
166,687
|
|
Outstanding – unvested
|
746,797
|
|
|
741,402
|
|
|
746,797
|
|
|
741,402
|
|
Outstanding, end of period
|
873,560
|
|
|
908,089
|
|
|
873,560
|
|
|
908,089
|
|
8.
|
EARNINGS (LOSS) PER SHARE
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30, |
||||||||||||
|
2018
|
|
|
2017 As adjusted
|
|
|
2018
|
|
|
2017 As adjusted
|
|
||||
Net earnings (loss)
|
$
|
(1,037
|
)
|
|
$
|
1,354
|
|
|
$
|
(20,784
|
)
|
|
$
|
8,032
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average shares used in computation of:
|
|
|
|
|
|
|
|
||||||||
Basic
|
36,085
|
|
|
32,200
|
|
|
36,007
|
|
|
32,093
|
|
||||
Assumed conversion
|
—
|
|
|
535
|
|
|
—
|
|
|
572
|
|
||||
Diluted
|
36,085
|
|
|
32,735
|
|
|
36,007
|
|
|
32,665
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Net earnings (loss) per share (in dollars):
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.03
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.58
|
)
|
|
$
|
0.25
|
|
Diluted
|
(0.03
|
)
|
|
0.04
|
|
|
(0.58
|
)
|
|
0.25
|
|
9.
|
INVENTORIES
|
|
September 30, 2018
|
|
|
December 31, 2017 As adjusted
|
|
||
Electronic components
|
$
|
32,715
|
|
|
$
|
32,753
|
|
Finished goods
|
18,715
|
|
|
20,390
|
|
||
|
$
|
51,430
|
|
|
$
|
53,143
|
|
10.
|
PREPAIDS AND OTHER
|
|
September 30, 2018
|
|
|
December 31, 2017 As adjusted
|
|
||
Inventory advances
|
$
|
4,463
|
|
|
$
|
93
|
|
Insurance and licenses
|
699
|
|
|
608
|
|
||
Deposits
|
1,975
|
|
|
2,161
|
|
||
Contract acquisition and fulfillment costs
|
843
|
|
|
1,053
|
|
||
Other
|
4,225
|
|
|
4,306
|
|
||
|
$
|
12,205
|
|
|
$
|
8,221
|
|
11.
|
ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
|
|
September 30, 2018
|
|
|
December 31, 2017 As adjusted
|
|
||
Trade payables and accruals
|
$
|
87,570
|
|
|
$
|
94,775
|
|
Inventory commitment reserve
|
1,666
|
|
|
1,440
|
|
||
Accrued royalties
|
14,690
|
|
|
14,548
|
|
||
Accrued payroll and related liabilities
|
19,279
|
|
|
17,572
|
|
||
Deferred rent
|
2,242
|
|
|
2,597
|
|
||
Professional services
|
5,622
|
|
|
4,153
|
|
||
Taxes payable (including sales taxes)
|
3,949
|
|
|
4,070
|
|
||
Product warranties (note 16 (a)(iii))
|
8,225
|
|
|
8,159
|
|
||
Sales credits
|
7,193
|
|
|
3,984
|
|
||
Restructuring liability (note 6)
|
966
|
|
|
540
|
|
||
Other
|
22,337
|
|
|
23,529
|
|
||
|
$
|
173,739
|
|
|
$
|
175,367
|
|
12.
|
LONG-TERM OBLIGATIONS
|
|
September 30, 2018
|
|
|
December 31, 2017
|
|
||
Accrued royalties
|
$
|
27,113
|
|
|
$
|
24,318
|
|
Deferred revenue
|
4,188
|
|
|
3,346
|
|
||
Other
|
9,470
|
|
|
8,973
|
|
||
|
$
|
40,771
|
|
|
$
|
36,637
|
|
13.
|
ACCUMULATED OTHER COMPREHENSIVE LOSS
|
|
Three months ended September 30,
|
|
Nine months ended September 30,
|
||||||||||
|
2018
|
|
2017
|
|
|
2018
|
|
2017
|
|
||||
Balance, beginning of period
|
$
|
(9,717
|
)
|
$
|
(6,386
|
)
|
|
$
|
(2,476
|
)
|
$
|
(14,426
|
)
|
Foreign currency translation adjustments
|
691
|
|
2,049
|
|
|
(5,042
|
)
|
6,169
|
|
||||
Gain (loss) on long term intercompany balances
|
(369
|
)
|
1,773
|
|
|
(1,877
|
)
|
5,693
|
|
||||
Balance, end of period
|
$
|
(9,395
|
)
|
$
|
(2,564
|
)
|
|
$
|
(9,395
|
)
|
$
|
(2,564
|
)
|
14.
|
SHARE CAPITAL
|
15.
|
FINANCIAL INSTRUMENTS
|
Level 1 -
|
Quoted prices in active markets for identical assets or liabilities.
|
Level 2 -
|
Observable inputs other than quoted prices in active markets for identical assets and liabilities, such as quoted prices for identical or similar assets or liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable market data for substantially the full term of the assets or liabilities.
|
Level 3 -
|
Inputs that are generally unobservable and are supported by little or no market activity and that are significant to the fair value determination of the assets or liabilities.
|
16.
|
COMMITMENTS AND CONTINGENCIES
|
(i)
|
Under license agreements, we are committed to make royalty payments based on the sales of products using certain technologies. We recognize royalty obligations as determinable in accordance with agreement terms. Where agreements are not in place, we have recognized our current best estimate of the obligation under accrued liabilities and long-term obligations. When agreements are finalized or the obligation becomes statute barred, the estimate will be revised accordingly.
|
(ii)
|
We are a party to a variety of agreements in the ordinary course of business under which we may be obligated to indemnify a third party with respect to certain matters. Typically, these obligations arise as a result of contracts for sale of our products to customers where we provide indemnification against losses arising from matters such as potential intellectual property infringements and product liabilities. The impact on our future financial results is not subject to reasonable estimation because considerable uncertainty exists as to whether claims will be made and the final outcome of potential claims. To date, we have not incurred material costs related to these types of indemnifications.
|
(iii)
|
We accrue product warranty costs, when we sell the related products, to provide for the repair or replacement of defective products. Our accrual is based on an assessment of historical experience and on management’s estimates. Changes in the liability for product warranties were as follows:
|
|
Three months ended
September 30, 2018
|
|
Nine months ended
September 30, 2018 |
||||
Balance, beginning of period
|
$
|
8,287
|
|
|
$
|
8,235
|
|
Effect of adoption of ASC 606
|
—
|
|
|
(76
|
)
|
||
|
8,287
|
|
|
8,159
|
|
||
Provisions
|
757
|
|
|
2,562
|
|
||
Expenditures
|
(819
|
)
|
|
(2,496
|
)
|
||
Balance, end of period
|
$
|
8,225
|
|
|
$
|
8,225
|
|
|
|
|
|
Head Office
|
|
Sierra Wireless, Inc.
|
|
13811 Wireless Way
|
|
Richmond
|
|
British Columbia
|
|
Canada V6V 3A4
|
|
|
|
Telephone :: 604 231 1100
|
|
|
|
Facsimile :: 604 231 1109
|
|
|
|
Website :: www.sierrawireless.com
|
1 Year Sierra Wireless Chart |
1 Month Sierra Wireless Chart |
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