Sierra Wireless Reports Strong Third Quarter Results, Growth in Revenue and Earnings - Company Financial Information

Edge: Work-Group Computing Report, Nov 1, 1999

Sierra Wireless, Inc. (TSE:SW.) has reported strong growth in revenues and earnings for the third quarter of 1999.

Revenue for the three months ended September 30, 1999 increased 52.7% to $8.6 million from $5.7 million in the third quarter of 1998. Gross margins increased to $4.6 million or 53.0% of revenue, a 60.6% increase from $2.9 million (50.4% of revenue) in the third quarter of 1998. Sales and Marketing and Research and Development expenses amounted to $3.3 million (37.7% of revenue), compared to $2.0 million in 1998 (35.5% of revenue). The increase in these expenditures highlights the Company's planned and continuing investment in the development and marketing of new technology.

Net earnings increased 89.1% to $1.2 million from $608,000 in the third quarter of 1998. Basic earnings per share increased 33.3% to $0.08 from $0.06 in the third quarter of 1998, and fully diluted earnings per share increased 60% to $0.08 from $0.05 for the same period in 1998.

Results for the nine months ended September 30, 1999 also showed strong growth in revenue and earnings. Revenue increased 35.3% to $25.4 million from $18.8 million in the first nine months of 1998. Gross margins increased 44% to $12.9 million (50.5% of revenue) from $8.9 million (47.5%) in the first nine months of 1998. Sales and Marketing and Research and Development expenditures amounted to $9.1 million (35.8% of revenue), compared to $5.7 million in 1998 (30.3%). Net earnings increased 46.1% to $2.5 million compared to $1.7 million in the first nine months of 1998. Basic earnings per share increased 17.6% to $0.20 from $0.17 in the first nine months of 1998, and fully diluted earnings per share increased 18.7% to $0.19 from $0.16 for the same period in 1998.

"We are satisfied with our overall results and we are continuing on track with our business strategy," said David Sutcliffe, Sierra Wireless, Inc.'s President and CEO. "In particular we are very pleased with our sales of the MP series of products and the AirCard 300 for Notebooks, both of which exceeded our expectations. Gross margins in this quarter benefited from improvements in product mix, product cost reductions and product quality. OEM sales were lower than anticipated, and we continue to invest in business development in this area. New CDMA product development is proceeding well."

There were further highlights in this quarter as follows:

- In August, the Company received FCC approval and began commercial shipment of AirCard 300 for Windows, the industry's first cellular network interface card with support for Microsoft Windows CE, 95, 98 and NT operating systems. Sales of this product have been very encouraging and are in excess of our expectations.

- In August, the Company announced the AirCombo 350, a wireless solution designed to provide portability and power to mobile users together with the flexibility to use their laptops in the most demanding conditions and the confidence to have cellular access even in remote cellular coverage areas.

- In September, the Company was named The Fastest Growing Technology Company in the 1999 Canadian Technology Fast 50 program. This prestigious award, made by Deloitte & Touche, is an annual ranking of the top 50 fastest growing technology companies in Canada. Rankings are based on the percentage growth in revenues over the five-year period from 1994 to 1998. The Company's growth in revenues amounted to 7,644% over this period.

Sierra Wireless is a leading wireless data communications equipment company. The leader in cellular packed data subscriber products, Sierra Wireless delivers a broad range of products including PC Cards for portable computers, ruggedized vehicle-mounted modems, OEM modules for embedded applications, telemetry modems, and software tools and utilities. The Company's common shares are listed on the Toronto Stock Exchange and trade under the symbol "SW".