Corporate Overview May 2018

Transcription

1 Sierra Wireless Corporate Overview May 2018

2 Cautionary Note Regarding Forward-Looking Statements Certain statements and information in this presentation are not based on historical facts and constitute forward-looking statements within the meaning of applicable securities laws ( forward-looking statements ) including statements and information relating to our Q2 18 business outlook and beyond; statements regarding our strategy, plans 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; expectations regarding the recent acquisition of Numerex Corp. ("Numerex"); 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 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 longer term plans, expectations, and prospects. We caution you that forward-looking statements may not be appropriate for other purposes. We do not intend to update or revise our forward-looking statements unless we are required to do so by securities laws. Forward-looking statements: typically include words and phrases about the future, such as: outlook, will, may, estimates, intends, believes, plans, anticipates and expects ; are not promises or guarantees of future performance. They represent our current views and may change significantly; are based on a number of material assumptions, including those listed below, which could prove to be significantly incorrect: our ability to develop, manufacture and sell new products and services that meet the needs of our customers and gain commercial acceptance; our ability to continue to sell our products and services in the expected quantities at the expected prices and expected times; expected cost of goods sold; expected component supply constraints; our ability to win new business; expected deployment of next generation networks by wireless network operators; our operations not be adversely disrupted by component shortages or other development, operating or regulatory risks; and expected tax rates and foreign exchange rates. are based on a number of material assumptions, including those listed below, which could prove to be significantly 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 and on EDGAR at 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 cloud and connectivity service providers or from those with greater resources; disruption of, and demands on, our ongoing business and diversion of management's time and attention in connection with acquisitions or divestitures; the loss of any of our significant customers; cyber-attacks or other breaches of our information technology security; difficult or uncertain global economic conditions; our financial results being subject to fluctuation; our ability to attract or retain key personnel; risks related to infringement on intellectual property rights of others; our ability to obtain necessary rights to use software or components supplied by third parties; our ability to enforce our intellectual property rights; our ability to respond to changing technology, industry standards and customer requirements; our reliance on single source suppliers for certain components used in our products; failures of our products or services due to design flaws and errors, component quality issues, manufacturing defects or other quality issues; our dependence on a limited number of third party manufacturers; unanticipated costs associated with litigation or settlements; our dependence on wireless network carriers to offer and promote acceptable wireless service programs; risks related to contractual disputes with counterparties; risks related to governmental regulation; risks related to the transmission, use and disclosure of user data and personal information; and risks inherent in foreign jurisdictions. Investors are cautioned not to place undue reliance on these forward-looking statements. No forward-looking statement is a guarantee of future results. 2 Proprietary and Confidential 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, which contains further information regarding our use of non-gaap financial measures, including a reconciliation of such information to our GAAP results

3 IoT growth opportunity 27B Connected Devices 15B Connected Devices 5B IoT Devices 0.3B Cellular IoT 2016 Billions of connected devices Trillions of dollars in economic value 15B IoT Devices 1.2B Cellular IoT Proprietary and Confidential Source: Ericsson, ABI Research, Sierra Wireless

4 Growth opportunity $30B for IoT device-tocloud solutions Cloud + connectivity Sierra Wireless Addressable Market ($USD) Gateways + Routers $3B Short range (BL, WiFi, ZgB) Cellular modules + GNSS Proprietary and Confidential

5 IoT is transforming industries Companies globally are beginning to adopt IoT and revolutionize their businesses 5 Proprietary and Confidential

6 IoT deployments are complex IoT drivers IoT challenges Improves operational efficiency Improves customer outcomes Improves business model Creates new revenue streams IoT Deployments are difficult Cyber security concerns Shortage of IoT and analytical skills IoT ecosystem is complex Customers Start with Sierra to simplify IoT deployments 6 Proprietary and Confidential

7 Sierra Wireless Leader, Innovator, Trusted Partner in the IoT #1 in cellular modules and gateways IoT leader in device-to-cloud solutions $692m LTM Revenue Innovator Essential IP in Cat M1 edge intelligence open systems customers in 130+ countries founded in m devices shipped 7 Proprietary and Confidential Source: ABI Research, IHS Research

8 Our vision: To empower businesses to reimagine their future in the connected world. 8 Proprietary and Confidential

9 Our position: Sierra Wireless is an IoT pioneer empowering businesses and industries to transform and thrive in the connected economy. 9 Proprietary and Confidential

10 Global operations Vancouver, Canada Corporate Headquarters San Jose San Diego New York Atlanta Cambridge London Munich Paris Toulouse Karlskrona Sophia Antipolis Shenzhen Beijing Taipei Tainan Seoul Tokyo Flextronics & USI (Shanghai) Jabil (Brazil) Bangalore Jabil (Vietnam) Hong Kong = R&D, Marketing, Sales, Operations = Manufacturing = Sales and Support Johannesburg Melbourne 10 Proprietary and Confidential Sierra Wireless operates worldwide serving global OEMs and enterprises

11 Leader in device-to-cloud solutions for the IoT Intelligent Edge Devices Smart Connectivity Market Ready Vertical Solutions Embedded solutions Smart SIM, Managed Connectivity Networking solutions Ready to Connect Connected devices and machines Big data and enterprise integration Distributed Cloud Platform Fully integrated solution for IoT applications 11 Proprietary and Confidential

12 Well positioned in key IoT market segments Automotive & Transport Energy & Industrial Enterprise Residential & Healthcare Automotive, Fleet, Transit, User-based Insurance, Public Safety Smart Meters, Smart Grid, Industrial Machines, Public Infrastructure Payment, Mobile Computing, Networking, Retail, Surveillance Home Security, Home Automation, Patient Monitoring 12 Proprietary and Confidential

13 Business Unit Slides

14 Three business segments OEM Solutions Enterprise Solutions IoT Services Q1 18 revenue: $ 135.2M Q1 18 revenue: $ 29.2M Q1 18 revenue: $ 22.5M AirPrime embedded modules provide 2G, 3G, 4G, LPWA, WiFi, Bluetooth, and GNSS connectivity AirLink intelligent gateways, routers and management services for secure connectivity AirVantage IoT Platform, Sierra Smart SIM technology & Managed Connectivity Services 14 Proprietary and Confidential

15 OEM Solutions: market and technology leader Air interface innovator first to market track record: 4G LTE, LPWA, LTE-M, NB-IoT Miniaturization and common form factor footprint (CF3) Edge intelligence leader with application frameworks & tools to maximize investment at the edge, accelerate customers TTM Open Source Platform Leader Open source Linux-based application framework Open hardware to enable rapid prototyping & commercialization Complimentary Short-Range and Positioning Bluetooth and WiFi modules, proven Bluetooth protocol stacks Global Navigation Satellite System embedded modules 15 Proprietary and Confidential

16 Q OEM Solutions Q1 Revenue $135.2 million Year-over-year revenue growth in Automotive and Enterprise Design win volume increased year-over-year and sequentially +2.1% yr over yr with wins in Automotive, Energy, Enterprise and Transportation Q1 18 GAAP GM: 28.8% Q1 18 Non-GAAP GM: 28.9% Sierra s HL78 cellular module for LPWA selected by KDDI for large gas metering deployment in Japan 16 Proprietary and Confidential

17 KDDI selects AirPrime HL78 LPWA module for LTE-M IoT applications in Japan LP gas smart meters first products deployed in Japan on KDDI network using LPWA modules HL Modules deliver best-in-class power performance extending battery life of devices by up to10 times Modules provide exceptional low-power performance so smart gas meters use minimal electricity and perform two-way telecommunication for about 10 years 17 Proprietary and Confidential

18 Bosch software innovations develops connected agriculture IoT applications Data sent via Sierra Wireless gateway based on mangoh Red open source platform, AirPrime WP8548 module and smart connectivity services Humidifier and sensor connected via the Bosch IoT Suite s device and gateway management capabilities Connected greenhouses designed to optimize harvests, with sensors to measure humidity, temperature, and luminosity for different plants 18 Proprietary and Confidential

19 Enterprise Solutions: secure, managed LTE networking Mobile Networking Industrial Networking Enterprise Networking Secure intelligent gateways and routers with telematics capability for public safety, transit, fleets Low power, secure, intelligent connectivity for fixed assets and infrastructure in energy & industrial Secure 4G LTE primary and failover connectivity for distributed enterprise and retail 19 Proprietary and Confidential

20 Q Enterprise Solutions Q1 Revenue $29.2 million Solid demand for new networking products in First Quarter Strong yr over yr growth in Industrial, Public Safety and Telematics +34.5% yr over yr Q1 18 GAAP GM: 48.0% Q1 18 Non-GAAP GM: 48.2% Atlas Copco deploys FX30 programmable IoT gateways and AirVantage Cloud for industrial machine intelligence Launched AirLink LX60 the industry s first LPWA cellular router 20 Proprietary and Confidential

21 Atlas Copco selects Device-to-Cloud solution to transform industrial compressor business FX30 Programmable Gateway, Legato, AirVantage IoT Platform enable deployment of Industrial IoT applications securely and reliably push data from connected assets to enterprise systems increase machine intelligence, productivity and efficiency by deploying applications at the edge of the network 21 Proprietary and Confidential

22 Girbau selects Device-to-Cloud solution to transform commercial laundry machines FX30 programmable gateway, Legato, smart connectivity services enable Girbau to rapidly develop and deploy Industrial IoT applications Sapphire machines monitor production volume, usage and operations Girbau customers maintain fleet of laundry machines more efficiently, reduce downtime, optimize operating costs and increase profitability 22 Proprietary and Confidential

23 IoT Services: cloud, connectivity and managed solutions Smart SIM Managed Connectivity Solutions Asset tracking Home Security Elderly Tracking Ready-to-Connect Offender Tracking Satellite monitoring Tank monitoring Smart Connectivity Services Global connectivity services, from regional data plans to managed connectivity solutions IoT Cloud Platform Unified platform for comprehensive operations management and application enablement Market Ready Vertical Solutions End-to-end managed IoT solutions specific to various industries and vertical markets 23 Proprietary and Confidential

24 Q IoT Services Q1 Revenue $22.5 million + 218% yr over yr Q1 18 GAAP GM: 40.7% Q1 18 Non-GAAP GM: 40.9% Solid progress on integration of Numerex business - Numerex revenue in Q1 in-line with our expectations Organic growth in IoT Services of 28.8% (excluding Numerex) Design wins in Security, Asset Tracking, Transportation and Retail IVA selected Sierra s Smart SIM services and Cloud platform to transform the largest global vending machine network Sierra Wireless customers deploying our integrated Device-to-Cloud solution 24 Proprietary and Confidential

25 IVA selects Sierra Wireless to revolutionize the global vending experience Smart SIM and AirVantage IoT Platform enables digital transformation: Collecting data from retail assets enables: preventative maintenance restocking optimization automated merchandising New business model & customer experience 25 Proprietary and Confidential

26 Q Non-GAAP operating results Quarterly Revenue (USD millions) $186.9 Adjusted EBITDA (1) (USD millions) Earnings per share (2) (USD) $161.2 $7.1 $21.7 $22.5 $29.2 IoT Svcs Enterprise $12.6 $9.0 $0.24 $132.4 $135.2 OEM $0.09 Q1 17 (3) Q1 18 Q1 17 (3) Q1 18 Q1 17 (3) Q (1) Adjusted EBITDA as defined equates to net earnings (loss) plus stock-based compensation expense and related social taxes, acquisition-related expense, restructuring expense, integration expense, impairment, certain other non-recurring expenses or recoveries, amortization, foreign exchange gains or losses on translation of balance sheet accounts, unrealized foreign exchange gains or losses on forward contracts, interest and income tax. (2) Non-GAAP financial measures exclude the impact of: stock-based compensation expense and related social taxes, acquisition-related expense, acquisition amortization, impairment, integration expense, restructuring expense, certain other non-recurring expenses or recoveries, foreign exchange gains or losses on translation of balance sheet accounts, unrealized foreign exchange gains or losses on forward contracts and certain tax adjustments. (3) The comparative period in 2017 has been adjusted to reflect the adoption of ASC606 (Revenue Recognition). These adjustments do not have a material effect.

27 Q Cash Position & Free Cash Flow Cash & cash equivalents (USD millions) Solid balance sheet and debt free $65.0 $70.6 Q Cash flow from operations $ 10.9 Capital Expenditures $ (4.9) Free Cash Flow $ 6.0 Other $ (0.4) Increase in Cash Balance $ 5.6 Q4 17 Q

28 Summary Leadership: Global leader in Device-to-Cloud IoT solutions Innovation: Intelligent edge devices, Legato, LPWA and 5G Portfolio: #1 share in cellular modules and gateways Services: Building global MVNO with Smart SIM connectivity Execution: Supporting blue-chip customers worldwide Growth: Expanding applications and addressable market in IoT 28 Proprietary and Confidential

29 Thank you Wireless Way :: Richmond, British Columbia, Canada, V6V 3A4 sierrawireless.com