Sierra Wireless Inc. (NASDAQ:SWIR) Q4 2019 Earnings Conference Call - Final Transcript

Feb 13, 2020 • 05:30 pm ET

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Sierra Wireless Inc. (NASDAQ:SWIR) Q4 2019 Earnings Conference Call - Final Transcript

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Presentation
Operator
Operator

Ladies and gentlemen, thank you for standing by, and welcome to the Sierra Wireless Q4 and Year-end Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]

I would now like to turn the conference over to your speaker today, David Climie, VP of Investor Relations. Thank you. Please go ahead, sir.

Executive
David Climie

Thanks, and good afternoon, everybody. Thank you for joining today's conference call and webcast. On the call today is Kent Thexton, President and CEO; and Dave McLennan, our Chief Financial Officer. As a reminder, today's presentation is being webcast and will be available on our website following the call.

Today's agenda is as follows. Dave will provide a detailed overview of our year-ended 2019 results. Kent will provide his corporate update, and then Dave will review our full-year guidance for 2020.

Before we get started, I will reference the Company's cautionary note regarding forward-looking statements. A summary of our cautionary note can be found on Page 2 of the webcast and is now being displayed. Today's presentation contains certain statements and information that are not based on historical facts and constitute forward-looking statements within the meaning of applicable security laws. These statements include our financial guidance, statements about our strategy, goals, objectives and expectations, and commentary regarding the outlook for our business.

Our forward-looking statements are based on a number of material assumptions, including those listed on Page 2 of the webcast presentation, which could prove to be significantly incorrect. Additionally, forward-looking statements are based on our management's current expectations and we caution investors that forward-looking statements particularly those that relate to longer periods of time are subject to substantial known and unknown material risks and uncertainties that could cause actual events or results to differ significantly from those expressed or implied by our forward-looking statements.

I draw your attention to a longer discussion of our risk factors in our AIF and Management's Discussion and Analysis which can be found on SEDAR and EDGAR as well as our other regulatory filings. This presentation should also be viewed in conjunction with our quarterly earnings release.

With that, I will now turn the call over to Dave McLennan for his review of the year-end 2019 results.

Executive
David McLennan

Thank you, David, and good afternoon, everyone. Note that we report our financial results in U.S. dollars and on a U.S. GAAP basis. We also present non-GAAP results to provide a better understanding of our operating performance. A full reconciliation between our GAAP and non-GAAP results is available on our website.

Q4 revenue was $174.3 million, slightly above expectations and consensus estimates of $171.1 million. Non-GAAP gross margin in Q4 was 29.5%; below our expectations, primarily due to two factors. Firstly, the impact of product mix, which resulted in lower sales of higher margin enterprise gateways offset by higher sales of lower margin automotive modules compared to expectations. And secondly, the impact of unusual warranty and inventory expenses in the