SWIR: A Mystery Solved!

SWIR: A Mystery Solved

2012: -9 -11 04 15 = -1
2013: -2 03 11 10 = 22
2014: 02 08 24 29 = 63
2015: 22

Then Drake indicated that he had also gone to their website and he came up with

2012: 16 30 29 33 = 108
2013: 09 03 14 10 = 37

Well those were some big differences in 2012 from my figures of a loss of a penny to his of positive \$1.08, so I went back to investigate. I looked again at their press releases on their website. Everything in 2015 and 2014 tallied exactly with what I had written, and with what Drake had found.

Then as I went through the first three quarters of 2013, here’s what I found

Sierra Wireless Reports First Quarter 2013 Results
Non-GAAP net loss from continuing operations of \$0.7 million and loss per share of \$0.02, compared to non-GAAP net loss of \$2.8 million a year ago and loss per share of \$0.09

Sierra Wireless Reports Second Quarter 2013 Results
Q2 highlights from continuing operations
• Non-GAAP diluted earnings per share of \$0.03, compared to a loss per share of \$0.11 in Q2 2012

Sierra Wireless Reports Third Quarter 2013 Results
Q3 highlights from continuing operations
• Non-GAAP diluted net earnings per share of \$0.11, compared to diluted net earnings per share of \$0.04 in Q3 2012

These were the same figures that I got the first time, for both 2013, and for 2012 (in the year before figures). However, If you go back to what they gave originally in 2012, their original figures coincided with those larger numbers that Drake got. I wondered if they had had to restate earnings for some reason, and there was something fudged in the original figures that they had had to correct. But then I read the full year 2013 earnings release and the mystery was solved!

Full Year 2013
Net earnings in 2012 included an income tax recovery that was the result of the recognition of certain tax assets that were realizable as a result of the sale of the AirCard business.

NON-GAAP
• Net earnings from continuing operations were \$6.9 million, or \$0.23 per diluted share, for the year ended December 31, 2013, compared to a net loss of \$0.4 million, or \$0.01 per diluted share, for the year ended December 31, 2012.

My figures were correct but the key was that they had sold their legacy “Air Card” business that had been a cash cow, the source of most of their profits in 2012, but a stable, very slow growing business. They had done this so that they could focus their attention and their resources on their growing IoT business. Their figures were now given for “continuing operations”, which means that the earnings from their continuing Internet of Things business did indeed go from a loss of a penny in 2012, to 22 cents in 2013, and 63 cents in 2014. They seem to be right on plan!

Saul

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Thank you Saul!

Besides the tax recovery adjustment I just learned something else new today - a company willing to divest itself of its past (and a good one at that) to concentrate solely on its future. Plus, a nice little track record on how that future is working out.

I had a small position in SWIR from over a year ago. I just doubled it today. Thanks again for providing these gems and insights, Saul.

Best,
–Kevin

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Excellent find Saul. Thank you.

Drake54

“a company willing to divest itself of its past (and a good one at that) to concentrate solely on its future.”

For those with a SA sub, be sure to check out David Gardner’s original recs on SWIR. I believe part of his investing thesis was to get in a business about to turn from negative to positive earnings, a situation that was masked by the (then) recent sale of it’s cashcow AirCard business.

He seems to have called it correctly…

Hopefully there is more growth to come…

-Brandon

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