sierra wireless investor update - jefferies group · 2013. 5. 14. · software solutions and...

Page Sierra Wireless Proprietary and Confidential 1

Sierra Wireless Investor Update March 2013

Safe Harbor Statement Certain statements and information in this presentation are not based on historical facts and constitute forward-looking statements within the meaning applicable securities

laws (“forward-looking statements”) including statements and information relating to our financial guidance summary for Q2 2013 and fiscal year 2013, our guidance drivers

for 2013 and our business outlook for 2013. Forward-looking statements are provided to help you understand our views of our short and longer term prospects. We caution

you that forward-looking statements may not be appropriate for other purposes. We will not update or revise our forward-looking statements unless we are required to do so

by securities laws.

Forward-looking statements:

● typically include words about the future, such as: “look forward to”, “outlook”, “may”, “intend”, “believe”, “plan”, “anticipate”, “expect”, “goals”, “targets”, “forecasts”, “well

positioned for”, “trending” and “will continue to”.

● are not promises or guarantees of future performance. They represent our current views and may change significantly;

● are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect:

Our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance;

Our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times;

Expected transition period to our 4G products;

Expected cost of goods sold;

Expected component supply constraints;

Our ability to “win” new business;

Expected deployment of next generation networks by wireless network operators;

Our operations are not adversely disrupted by component shortages or other development, operating or regulatory risks; and

Expected tax rates and foreign exchange rates.

● are subject to substantial known and unknown material risks and uncertainties. Many factors could cause our actual results, achievements and developments in our

business to differ significantly from those expressed or implied by our forward-looking statements, including, without limitation, the following factors, which are discussed in

greater detail. 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.

We may experience higher than anticipated costs; disruption of, and demands on, our ongoing business; diversion of management ’s time and attention;

adverse effects on existing business relationships with suppliers and customers and employee issues in connection with the divestiture of the AirCard assets

and operations;

Actual sales volumes or prices for our products and services may be lower than we expect for any reason including, without limitation, the continuing

uncertain economic conditions, price and product competition, different product mix, the loss of any of our significant customers, competition from new or

established wireless communication companies;

The cost of products sold may be higher than planned or necessary component supplies may not be available, are delayed or are not available on

commercially reasonable terms;

We may be unable to enforce our intellectual property rights or may be subject to litigation that has an adverse outcome;

The development and timing of the introduction of our new products may be later than we expect or may be indefinitely delayed;

Transition periods associated with the migration to new technologies may be longer than we expect.

USE OF NON-GAAP FINANCIAL MEASURES This presentation contains references to certain non-GAAP financial measures and should be viewed in conjunction with our press release and supplementary

information on our website (www.sierrawireless.com), which present a complete reconciliation of GAAP and Non-GAAP results.

© Sierra Wireless 2013

Corporate profile


• The global leader in M2M devices and cloud services

• Industry’s most comprehensive offering

• Proven technology innovators with experienced

leadership

R&D

R&D R&D

Head office:

Vancouver, BC

Founded in 1993

2012 revenue: $397 million

Publicly listed:

NASDAQ (SWIR)

TSX (SW)

Approx. 850 employees worldwide

Customers in 130+ countries

1. FY 2012, Continuing operations

Page

We are enabling a connected world

By providing intelligent wireless solutions

4 © Sierra Wireless 2013

Long term growth opportunity

5

1.4B connected

devices

Embedded

modules market

$1.0B

Embedded

modules market

$1.8B

12B+


Billions of connected devices

Source: ABI Research, Machina

connected

devices

2016 2012

Page

Innovative device-to-cloud offering


Embedded

Wireless Modules

Intelligent

Gateways & Modems

M2M Cloud

Leading-edge

intelligent devices

M2M cloud

services platform

Value creation

& competitive barriers + =

OEM Solutions Enterprise Solutions

Sierra Wireless is the clear market leader

Blue-chip customers and

partners

#1 in machine-to-machine

market globally

Source: ABI Research, company filings, Sierra Wireless


33%

25%

20%

22%

Sierra

Wireless

Others

Company B

Company A

M2M Embedded Cellular Devices

Estimated Market Share in 2012

Strong position in key M2M segments


Segment Typical

Applications

Sample

Customers 2015 Market*

(est. unit shipments)

Automotive

• Safety

• Driver assistance

• Navigation

• Infotainment

18M units ‘11-15 CAGR: 58%

Networking • Enterprise routers

• Fixed line

replacement

9M units ‘11-15 CAGR: 12%

Sales & Payment • Point-of-sale terminals

• ATM machines

• Vending

4M units

‘11-15 CAGR: 13%

Energy: oil & gas,

electricity

• Smart metering / grid

• Infrastructure

monitoring

15M units ‘11-15 CAGR: 22%

*Source: ABI Research

Page

Solid revenue growth

© Sierra Wireless 2013 9

Q1 '11 Q1 '12 Q1 '13

Q1 Revenue (USD millions)

101.4

79.6

92.3

13%

CAGR

Growth drivers

• New products

• Design win momentum

• M2M market growth

• Sagemcom acquisition

Operating model improvements


$92.3

$101.4

Q1 '12 Q1 '13

Revenue (USD millions)

30.3% 33.0%

Q1 '12 Q1 '13

Gross Margin (% of revenue)

Non-GAAP* Operating Results – Continuing Business

Earnings (Loss) from Operations (USD millions)

* Non-GAAP results exclude the impact of: stock-based compensation expense, acquisition and disposition costs, acquisition amortization,

impairment, integration costs, restructuring costs, foreign exchange gains or losses on foreign currency contracts as well as translation of

balance sheet accounts, and certain tax adjustments

$(2.8)

$(1.4)

Q1 '12 Q1 '13

Q1 ‘13 Q1 ‘12

Strong cash position and debt free

Cash used in Q1: $7.7 million

• Cash used in operations: $5.5 million

• Capital expenditures: $2.9 million

Pro-forma cash balance of over $160 million,

including proceeds from AirCard divestiture

Purchased 124,300 shares under NCIB

during Q1


* Non-GAAP results exclude the impact of: stock-based compensation expense, acquisition and disposition costs,

acquisition amortization, impairment, integration costs, restructuring costs, foreign exchange gains or losses on foreign

currency contracts as well as translation of balance sheet accounts, and certain tax adjustments

.

Q3 '12 Q4 '12 Q1 '13

$63.6

$55.9 $59.5

Cash, Cash Equivalents & Short Term Investments (USD millions, as of March 31)

Page

Q2 financial guidance summary

12

Q2 2013

Non-GAAP*

Revenue $107.0 to $111.0 million

Earnings from Operations $0.5 to $1.8 million

Net Earnings from continuing operations $0.4 to $1.2 million

Earnings per Share from continuing operations $0.01 to $0.04 / share


Non-GAAP* Financial Guidance for Continuing Operations (USD millions, except EPS)

* Non-GAAP results exclude the impact of: stock-based compensation expense, acquisition amortization, impairment,

acquisition costs, integration costs, restructuring costs, foreign exchange gains or losses on foreign currency contracts as

well as translation of balance sheet accounts, and certain tax adjustments

.

Sierra Wireless: The global leader in M2M

devices and cloud services

World’s leading M2M pure play

Technology innovator, global presence,

blue-chip customer base

Strong balance sheet: $160M+ cash, no debt

Proven track record of building value

organically and through successful

acquisitions


Page

Additional Information:

M2M Products and Markets


AirPrime Embedded Wireless Modules

Wireless modules, software and services for OEMs

• 4G LTE

• 3G HSPA/HSPA+

• 3G EVDO

• 2G 1xRTT

• 2G GPRS/EDGE

• GPS

embedded SIM

management

services

embedded

applications

embedded modules software solutions and

services

development

tools


AirLink ® Intelligent Gateways

Wireless terminals for M2M and mobile applications

• Ruggedized and commercial grade

• 2G, 3G and 4G platforms

• Rapid configuration and programmability

security

public safety

utilities &

infrastructure

sales & payment gateways and routers

software solutions and services

business continuity

device management

and diagnostics

embedded intelligence

and security

fleet management

& field service


application framework

Page

AirVantage™ M2M Cloud


Page

Intelligent wireless solutions

Management Service

Enterprise Platform

M2M Cloud

Secure Cloud Services

OEM

Machine

Enterprise Applications

ERP

Wireless Network

Powerful Tools and Application Frameworks

Sierra Wireless Developer Suite

web APIs

Embedded Wireless Modules

Gateways & Modems

Intelligent M2M Devices

standard interfaces pre-integrated


Page

A customer success: Nespresso

M2M Cloud Programmable

Modem

Custom Web Application

Web APIs • Asset Data Management

• Device Management

• Subscription Management

Hardware Integration

ERP

Accelerating M2M Application Development & Deployment


Network

Operator

Page

Automotive

20

Typical applications Sample Customers Market Dynamics

Market demand drivers: Regulation

Increasing post-crash survival rates

Regulation & Consumer Pull Tracking stolen vehicles

Consumer Demand In vehicle comms & entertainment

Tier 1 OEM

Market moving to higher bandwidth requirements for internet, entertainment, etc…

Crash Safety (eg. eCall)

Telematics & Navigation

In Vehicle Internet


Market Size (unit shipments)

3M

18M

Source: ABI

CAGR 58%

2011 2015

Page

Transportation

21


and pay-as-you-drive insurance, ITS (Intelligent Transport Systems), etc…

Stolen Vehicle Tracking

Fleet management

Market demand through efficiency Fleet & collection efficiency

Less fuel/CO2, shorter routes, faster deliveries, road toll revenue

Personal & business road assets Stolen vehicle recovery, insurance premiums tuned, on-road efficiency

eToll & eTax Collect



10M

28M

Source: ABI

CAGR 31%

2011 2015

Page

Energy

22


Renewable Energy EV Charging Station

Electricity – Gas – Water

Smart Metering

Transmission & Distribution

Demand drivers: regulation, grid efficiency, social conscience Energy Efficiency - Green Energy

CO2 emissions targets, smart grid: load management/optimization, grid contribution by consumer

Consumer monitored energy Web based home monitoring


2011 2015

7M

15M

Source: ABI


EDMI and Sierra Wireless awarded for

the best innovation for Utilities

CAGR 22%

Page

Industrial & Infrastructure

23


Digital Signage

Industrial Automation

Infrastructure / Building Monitoring

Demand drivers: regulation, grid efficiency, social conscience Energy Efficiency - Green Energy

CO2 emissions targets, smart grid: load management/optimization, grid contribution by consumer

Consumer monitored energy Web based home monitoring



5M

12M

Source: ABI

CAGR 21%

2011 2015

Page

Security

24


Market demand drivers: Consumer pull

Protecting homes and loved ones

Business pull Protecting premises and assets

Anti-terrorism Protecting citizens

and criminal trackers, high value asset tracking and much more…

Personal Security

Video Surveillance

Premise Monitoring



4M

11M

Source: ABI

CAGR 32%

2011 2015

Page

Networking


Business Continuity

SMB & Residential Market demand through Broadband proliferation

3G and LTE technology provide rich end user experience or monitoring for large media applications

Internet access 24hr/24hr Area and service provider provisioning access without adequate wireline infrastructure or landline back-up



5M

9M

Source: ABI

CAGR 12%

2011 2015

Page

Sales & Payment

26


Market driven by “cashless” society Convenience & security

Pay for anything, anytime, anywhere, securely.

Government regulation Electronic VAT collection to avoid fraud.

Point of Sale

ATM & Cash Registers

Vending



2.5M

4.1M

Source: ABI

CAGR 13%

2011 2015

Page

Field Service

27


Market driven by efficiency Mission critical

Prevent downtime, diagnose and fix issues. Support incident and disaster management.

Labour & Time saving Customer care, efficiency ,productivity, location to reduce cost and enhance productivity.

Public Safety

Utility

Consumer



1.6M

2.7M

Source: ABI

CAGR 15%

2011 2015

Page

Healthcare

28


Medical

Well Being

Sport & Fitness

Well being monitoring sub-segments: Diabetes, Cardiac, Blood Pressure, Sleep, Home medical hub,...

Market driven by Cost models and payment structure To support the industry Wireless and Telemedicine services

Curbing health expenditure and enabling new ways to manage health, disease and life-style



0.5M

3.8M

Source: ABI

CAGR 66%

2011 2015

sierra wireless investor update - jefferies group · 2013. 5. 14. · software solutions and...

Documents