Mr. Jason Cohenour reports

SIERRA WIRELESS REPORTS FOURTH QUARTER AND FULL YEAR 2015 RESULTS; RECEIVES TSX APPROVAL FOR NORMAL COURSE ISSUER BID

Sierra Wireless Inc. has released results for its fourth quarter and full year ended Dec. 31, 2015. All results are reported in U.S. dollars and are prepared in accordance with U.S. generally accepted accounting principles, except as otherwise indicated.

Fourth quarter 2015 highlights

• Revenue of $144.8-million and non-GAAP earnings per share of eight cents in the quarter
• Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) of $6.3-million, compared with $12.7-million in the fourth quarter of 2014.

Full-year 2015 highlights

• Record revenue of $607.8-million and non-GAAP earnings per share of 80 cents for the year;
• Adjusted EBITDA of $42.9-million, compared with $35.4-million in 2014.

"In 2015, we delivered year-over-year revenue growth of 10.8 per cent to a record $607.8-million and our non-GAAP operating profit increased 42 per cent to $32.4-million. We also completed three strategic managed connectivity acquisitions during the year, adding the technology, scale and talent to enable us to deliver fully integrated device-to-cloud solutions for our customers," said Jason Cohenour, president and chief executive officer. "In the fourth quarter of 2015, our revenue was slightly below our expectations, as we experienced softer demand at select OEM [original equipment manufacturing] customers. We believe this reflects increased caution on the part of some customers in the face of an uncertain macroeconomic environment. Notwithstanding the current environment, we expect our business to gain strength over the course of the year as we enter commercial production on a number of new customer programs, and continue to bring new industry-leading products and solutions to market."

In 2015, the company significantly expanded its cloud and connectivity services business by successfully completing three managed connectivity acquisitions. As a result of these acquisitions and organizational changes designed to provide dedicated leadership and focus to the company's enterprise gateway and cloud and connectivity lines of businesses, Sierra Wireless commenced operating the company under three reportable segments, effective Oct. 1, 2015. The company's three reportable segments are: (i) OEM solutions; (ii) enterprise solutions; and (iii) cloud and connectivity services. Prior to Oct. 1, the company's enterprise solutions segment included the business operations of both its enterprise gateway segment and its new cloud and connectivity services segment. Comparative information for the cloud and connectivity services segment is not disclosed as the related business prior to 2015 was not material.

Fourth quarter of 2015

Revenue for the fourth quarter of 2015 was $144.8-million, a decrease of 2.8 per cent compared with $149-million in the fourth quarter of 2014. Revenue from OEM solutions was $121.5-million in the fourth quarter of 2015, down 6.2 per cent compared with $129.5-million in the fourth quarter of 2014. Revenue from enterprise solutions was $16.5-million in the fourth quarter of 2015, down 15.3 per cent compared with $19.5-million in the fourth quarter of 2014. Revenue from cloud and connectivity services was $6.8-million.

GAAP results

• Gross margin was $45.1-million, or 31.1 per cent of revenue, in the fourth quarter of 2015, compared with $50-million, or 33.5 per cent of revenue, in the fourth quarter of 2014.
• Operating expenses were $45.7-million and loss from operations was $700,000 in the fourth quarter of 2015, compared with operating expenses of $46.6-million and earnings from operations of $3.4-million in the fourth quarter of 2014.
• Net loss was $400,000, or one cent per diluted share, in the fourth quarter of 2015, compared with a net loss of $1.7-million, or five cents per diluted share, in the fourth quarter of 2014.

Non-GAAP results

• Gross margin was 31.2 per cent in the fourth quarter of 2015, compared with 33.6 per cent in the fourth quarter of 2014.
• Operating expenses were $41.9-million and earnings from operations were $3.3-million in the fourth quarter of 2015, compared with operating expenses of $40.1-million and earnings from operations of $10-million in the fourth quarter of 2014.
• Net earnings were $2.5-million, or eight cents per diluted share, in the fourth quarter of 2015, compared with net earnings of $9.1-million, or 29 cents per diluted share, in the fourth quarter of 2014. The non-GAAP tax rate in the fourth quarter of 2015 was 23.1 per cent.
• Adjusted EBITDA was $6.3-million in the fourth quarter of 2015, compared with $12.7-million in the fourth quarter of 2014.

Cash and cash equivalents at the end of 2015 were $93.9-million, representing an increase of $5.5-million compared with the end of the third quarter of 2015. Cash generated from operations during the fourth quarter was $13.1-million.

Full-year 2015

Revenue for 2015 was $607.8-million, an increase of 10.8 per cent compared with $548.5-million in 2014. Revenue from OEM solutions was $523.4-million in 2015, up 9.8 per cent compared with $476.6-million in 2014. Revenue from enterprise solutions was $63-million in 2015, down 12.2 per cent compared with $71.9-million in 2014. Revenue from cloud and connectivity services was $21.4-million in 2015.

GAAP results

• Gross margin was $193.8-million, or 31.9 per cent of revenue, in 2015, compared with $179-million, or 32.6 per cent of revenue, in 2014.
• Operating expenses were $183.7-million and earnings from operations were $10.1-million in 2015, compared with operating expenses of $185.6-million and a loss from operations of $6.6-million in 2014.
• Net loss was $2.7-million, or eight cents per diluted share, in 2015, compared with a net loss of $16.9-million, or 53 cents per diluted share, in 2014.

Non-GAAP results

• Gross margin was 32 per cent in 2015, compared with 32.7 per cent in 2014.
• Operating expenses were $162.1-million and earnings from operations were $32.4-million in 2015, compared with operating expenses of $156.7-million and earnings from operations of $22.8-million in 2014.
• Net earnings were $25.8-million, or 80 cents per diluted share, in 2015, compared with net earnings of $19.8-million, or 63 cents per diluted share, in 2014.
• Adjusted EBITDA was $42.9-million in 2015, compared with $35.4-million in 2014.

Cash and cash equivalents decreased $113.1-million during 2015, reflecting the use of funds for the acquisitions of Wireless Maingate AB, Accel Networks LLC and MobiquiThings SAS in 2015, as well as the purchase of an end-of-life 2G component in sufficient volume to support future sales of certain legacy products.

Financial guidance

For full-year 2016, the company expects revenue to be in the range of $630-million to $670-million and non-GAAP earnings per share to be in the range of 60 cents to 90 cents. In the first quarter of 2016, the company expects revenue to be in the range of $135-million to $145-million and non-GAAP earnings per share to be slightly negative to slightly positive.

TSX approval for normal course issuer bid

Sierra Wireless has received approval from the Toronto Stock Exchange of its notice of intention to make a normal course issuer bid.

Pursuant to the bid, Sierra Wireless may purchase for cancellation up to 3,149,199 of its common shares, or approximately 9.7 per cent of the common shares outstanding as of the date of this announcement (representing 10 per cent of the public float). As of Jan. 31, 2016, there were 32,340,186 common shares of Sierra Wireless issued and outstanding, and the public float consisted of 31,491,993 common shares.

The purchases will be made by Sierra Wireless through the facilities and in accordance with the rules of the TSX and Rule 10b-18 under the U.S. Securities Exchange Act of 1934, and the price which Sierra Wireless will pay for any such common shares will be the market price at the time of acquisition. Sierra Wireless will make no purchases of common shares other than open-market purchases or other means approved by the TSX. Other than block purchases allowable under the TSX rules, purchases will be subject to a daily restriction of 22,269 common shares, being 25 per cent of the average daily trading volume for the preceding six months. In addition, purchases of common shares through the facilities of the Nasdaq Stock Market will be made in compliance with Rule 10b-18, which contains similar restrictions on the number of shares that may be repurchased based on the average daily trading volumes of the common shares on Nasdaq, subject to certain exceptions for block purchases. In addition, purchases may also be made through other Canadian and U.S. marketplaces.

The actual number of common shares of the company that are purchased for cancellation under the bid, if any, and the timing of such purchases will be determined by the company. The board of directors of Sierra Wireless believes that the proposed purchases are in the best interests of Sierra Wireless and are a desirable use of corporate funds.

To the knowledge of the company, no director, senior officer or other insider of Sierra Wireless currently intends to sell any common shares under this bid. However, sales by such persons through the facilities of the TSX or Nasdaq may occur if the personal circumstances of any such person changes or any such person makes a decision unrelated to these normal course purchases. The benefits to any such person whose shares are purchased would be the same as the benefits available to all other holders whose shares are purchased.

The bid will commence on Feb. 9, 2016, and will terminate on the earlier of: (i) Feb. 8, 2017, (ii) the date Sierra Wireless completes its purchases pursuant to the notice of intention filed with the TSX, or (iii) the date of notice by Sierra Wireless of termination of the bid. The company has not made any purchases of common shares pursuant to a normal course issuer bid within the previous 12 months.

Board and board committee changes

The board of directors of the company has appointed Kent Thexton as chair of the board of directors to succeed Charles Levine, who will continue to serve as an independent director. "On behalf of all board members, i would like to thank Charles for his dedicated leadership during his 10 years of service as chair of the board of directors," said Mr. Thexton. In conjunction with the appointment of Mr. Thexton as board chair and as part of an overall initiative to enhance board effectiveness, the following board committee chair appointments are being announced: Greg Aasen will become chair of the human resources committee, succeeding Mr. Thexton; Robin Abrams will become chair of the governance and nominating committee, succeeding Paul Cataford; and Mr. Cataford will become chair of the audit committee succeeding Ms. Abrams. Mr. Thexton's appointment is effective Feb. 5, 2016, with the committee chairs transitioning their roles as the various scheduled board committee meetings occur during the month of February.

Conference call and webcast details

Sierra Wireless's president and chief executive officer, Jason Cohenour, and the company's chief financial officer, David McLennan, will host a conference call and webcast with analysts and investors to review the results on Thursday, Feb. 4, 2016, at 5:30 p.m. Eastern Time (2:30 p.m. PT). A live slide presentation will be available for viewing during the call.

To participate in this conference call, please dial the following numbers approximately 10 minutes prior to the start of the call.

Toll-free (Canada and United States):  1-877-201-0168

Alternative number:  1-647-788-4901

Conference ID:  84399698

The webcast will remain available for one year following the call.

             CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE EARNINGS (LOSS)
                 (in thousands of U.S. dollars, except where otherwise stated)
   
                                          Three months ended Dec. 31,         12 months ended Dec. 31, 
                                              2015              2014           2015              2014

Revenue                                 $  144,846        $  149,078     $  607,798        $  548,523
Cost of goods sold                          99,783            99,072        413,943           369,544
Gross margin                                45,063            50,006        193,855           178,979
Expenses
Sales and marketing                         14,315            12,682         54,144            50,476
Research and development                    18,539            21,012         74,020            80,937
Administration                               9,393             9,008         40,321            37,027
Acquisition-related and integration           (616)            1,273          1,945             2,670
Restructuring                                  201               540            951             1,598
Impairment                                       -                 -              -             3,756
Amortization                                 3,905             2,092         12,360             9,109
                                            45,737            46,607        183,741           185,573
Earnings (loss) from operations               (674)            3,399         10,114            (6,594)
Foreign exchange (loss)                     (1,398)           (3,852)       (11,843)          (12,390)
Other income (expense)                         (16)              246            115               854
(Loss) before income taxes                  (2,088)             (207)        (1,614)          (18,130)
Income tax expense (recovery)               (1,705)            1,494          1,060            (1,277)
Net (loss)                              $     (383)       $   (1,701)    $   (2,674)       $  (16,853)
Other comprehensive income (loss)
Foreign currency translation
adjustments, net of taxes of nil            (1,823)              554         (2,013)              893
Comprehensive (loss)                    $   (2,206)       $   (1,147)    $   (4,687)       $  (15,960)
Net (loss) per share (in dollars)
Basic and diluted                       $    (0.01)       $    (0.05)    $    (0.08)       $    (0.53)

We seek Safe Harbor.