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Sierra Wireless (SWIR)
Q1 2006 Earnings Conference Call
April 20, 2006, 5:30 p.m. EST
Jason Cohenour - President and CEO
David McLennan - CFO
» Sierra Wireless Q4 2005 Earnings Conference Call Transcript (SWIR)
» Premiere Global Services, Inc. Q3 2009 Earnings Call Transcript
John Bucher - Harris Nesbitt
Andrew Lee - TD Newcrest
Mike Abramsky - RBC Capital Markets
Jeff Kaval - Lehman Brothers
Dev Bhangui - Haywood Securities
Sarah Kim - Raymond James
(Operator instructions) Thursday, April 20, 2006, at 5:30 p.m. eastern time. I’ll now turn the conference over to Jason Cohenour, President and CEO. Mr. Cohenour, please go ahead.
Thanks, John, and good afternoon, everyone. Thank you for joining the Sierra Wireless Q1 2006 earnings call. Joining me today on the call is Dave McLennan, our CFO.
The agenda for today’s call is as follows: following the reading of our safe harbour statement, I will provide an update on our business, and then Dave will provide a detailed review of our Q1 financial results, as well as Q2 guidance. I’ll then provide a brief summary and open the line up for questions. Over to Dave for the reading of the safe harbour statement.
Thanks, Jason, and good afternoon everyone. Our forward looking statement disclaimer is as follows: certain statements in this conference call that are not based on historical facts constitute forward-looking statements or forward-looking information within the meaning of applicable securities laws. These forward-looking statements are not promises or guarantees of future performance, but are only predictions that relate to future events, conditions or circumstances, or our future results, performance, achievements, or developments, and are subject to substantial known and unknown risks, assumptions, uncertainties, and other factors that could cause our actual results, performance, achievements or developments in our business or in our industry to differ materially from those expressed, anticipated, or implied by such forward-looking statements.
Forward-looking statements include all financial guidance for the second quarter of 2006, disclosure regarding possible events, conditions, circumstances, or results of operations that are based on assumptions about our future economic conditions, courses of action, and other future events. We caution you not to place undue reliance upon any such forward-looking statement which speak only as of the date they are made.
These forward-looking statements appear in a number of different places in this conference call, and can be identified by words such as may, estimates, projects, expects, intends, believes, plans, anticipates, or their negatives or other comparable words.
Forward-looking statements include statements regarding the outlook for our future operations, plans and timing for the introduction or enhancement of our services and products, statements concerning strategies or developments, statements about future market conditions, supply conditions, and customer demand conditions, channel inventory and sell-through revenue gross margin, operating expenses, profits, forecasts of future costs and expenditures, the outcome of legal proceedings and other expectations, intentions and plans that are not historical fact.
The risk factors and uncertainties that may affect our actual results, performance, achievements or developments are many, and include among other things our ability to develop, manufacture, supply and market new products that we do not produce today but meet the needs of customers and gain commercial acceptance, our reliance on the deployment of next generation networks by major wireless operators, the continuous commitment of our customers and increased competition.
These risk factors and others are discussed in our annual information form, which may be found on CDAR, and in our regulatory filings with the Securities and Exchange Commission in the United States and the Provincial Securities Commissions in Canada.
Many of these factors and uncertainties are beyond the control of the company. Consequently, all forward looking statements in this conference call are qualified by this cautionary statement, and there can be no assurance that actual results, performance, achievements or development anticipated by the company will be realized.
Forward-looking statements are based on management’s current plans, estimates, projections, beliefs and opinions, and the company does not undertake any obligation to update forward-looking statements. Should the assumptions related to these plans, estimates, projections, beliefs and opinions change.
Now, with that, over to you, Jason, for a business update.
Thank you, Dave. The first quarter of 2006 represented our third consecutive quarter of strong operational execution and improving financial metrics following the restructuring of our business in mid-2005. Our business recovery continues to gain momentum.
During the first quarter, we ran production in shipments of our new HSDPA AirCards to customers in North America and Europe. We continued strong shipments of our AirCard 580 for EV DO networks. We significantly expanded our embedded modules business with several new design wins and growing shipments.
We grew revenue by more than 20% over the fourth quarter of 2005, resulting in record first quarter revenue.
We also had strong gross margins driven by growing volume, product mix, some cost reduction, and ASP management.
Finally, we achieved higher-than-expected net profit.
Intense focus on our core business of wide area wireless for mobile computing is driving this recovery and is strengthening our competitive position in a market which we believe has significant growth opportunities.
While we’re very pleased with our Q1 results and the strength of our business recovery, we also recognize that continued hard work and strong execution is required before we achieve the goals we have set for ourselves in terms of product line strength, market position, and financial results.
Moving to business highlights, I’ll start with activities in our AirCard business. A significant part of our overall sequential revenue growth in the quarter was driven by increasing sales of our AirCard products. Our increased sales of AirCard products was driven mainly by growing sales of our HSDPA AirCards, specifically the AirCard 860 for North America and the AirCard 850 for Europe.