PARIS, France – April 28, 2011 – Sequans Communications S.A. (NYSE: SQNS), a 4G chipmaker, supplying LTE and WiMAX chips to original equipment manufacturers worldwide, today announced its financial results for the first quarter ended March 31, 2011.
First Quarter 2011 Highlights:
All figures are unaudited and reported in U.S. dollars in accordance with International Financial Reporting Standards, or IFRS, as issued by the International Accounting Standards Board. Condensed and consolidated financial tables are provided at the end of this release.
Revenue: Revenue of $25.4 million increased 11% compared to the fourth quarter of 2010 and 149% compared to the first quarter of 2010.
Operating income (loss): Operating income of $2.3 million increased 302% compared to the fourth quarter of 2010, and represented 8.9% of revenue, compared to an operating loss of $2.2 million in the first quarter of 2010.
Net profit (loss): Net profit was $1.9 million, or $0.07 per diluted share/ADS, compared to a net loss of $2.8 million, or $(0.10) per diluted share/ADS in the fourth quarter of 2010 and a net loss of $1.4 million, or $(0.06) per diluted share/ADS in the first quarter of 2010.
|
In millions of $US except percentages, shares and per share amounts |
Key Metrics | ||||||||||||||||||||||||
| Q1 2011 | %* | Q4 2010 | %* | Q1 2010 | %* | ||||||||||||||||||||
| Revenue | $25.4 | $22.9 | $10.2 | ||||||||||||||||||||||
| Gross profit | 13.0 | 51.2% | 11.5 | 50.4% | 6.0 | 58.7% | |||||||||||||||||||
| Operating income (loss) | 2.3 | 8.9% | 0.6 | 2.5% | (2.2) | (21.5%) | |||||||||||||||||||
| Net profit (loss) | 1.9 | 7.5% | (2.8) | (12.1%) | (1.4) | (13.3%) | |||||||||||||||||||
| Diluted EPS/ADS | $0.07 | $(0.10) | $(0.06) | ||||||||||||||||||||||
| Number of diluted shares/ADS | 29,164,738 | 26,721,605 | 23,696,452 | ||||||||||||||||||||||
| Cash flow from (used in) operations | 0.3 | 7.9 | (1.7) | ||||||||||||||||||||||
| Additional information: | |||||||||||||||||||||||||
| Stock-based compensation included in operating result | 0.5 | 0.3 | 0.3 | ||||||||||||||||||||||
| Non-IFRS diluted EPS (excludes stock-based compensation) | $0.08 | $(0.09) | $(0.05) | ||||||||||||||||||||||
|
* Percentage of revenue |
|||||||||||||||||||||||||
“Our first quarter results reflect continued strong demand for 4G devices to support bandwidth-intensive mobile data applications,” said Georges Karam, Sequans CEO. “In particular, we are benefitting from our position as the 4G chip supplier to HTC’s EVO 4G and EVO Shift smartphones. Our growth is also being fueled by our customers serving emerging markets with devices that enable basic broadband connectivity to the home or enterprise. We are pursuing additional design wins that would further diversify our customer base, and we are involved in LTE trials in key markets such as China and India. Meanwhile, we are able to generate substantial operating leverage by carefully managing the growth in operating expenses and capitalizing on our depth of experience in 4G by shifting resources as the technologies evolve.”
Conference Call and Webcast
Sequans plans to conduct a teleconference and live webcast to discuss the financial results for the first quarter of 2011 today, April 28, 2011 at 8:00 a.m. EDT / 14:00 CEST. To participate in the live call, analysts and investors should dial 800-288-8961 (or +1 612-332-0637 if outside the U.S.). A live and archived webcast of the call will be available from the Investors section of the Sequans website at www.sequans.com/investors/. A replay of the conference call will be available until May 28, 2011, by dialing toll free 800-475-6701 in the U.S., or +1 320-365-3844 from outside the U.S., using the following access code: 202031.
Use of Non-IFRS Financial Measures
To supplement our unaudited consolidated financial statements prepared in accordance with IFRS, we disclose certain non-IFRS financial measures. These measures exclude non-cash charges. We believe that these measures can be useful to facilitate comparisons among different companies. These non-IFRS measures have limitations in that the non-IFRS measures we use may not be directly comparable to those reported by other companies. We seek to compensate for this limitation by providing a detailed reconciliation of the non-IFRS financial measures to the most directly comparable IFRS measures in the table attached to this press release.
About Sequans Communications
Sequans Communications is a 4G chipmaker, supplying LTE and WiMAX chips to equipment manufacturers worldwide. Founded in 2003 to address the WiMAX market, the company expanded in early 2009 to address the LTE market. The company is based in Paris, France with additional offices throughout the world, including United States, United Kingdom, Israel, Hong Kong, Singapore, Taiwan, and China.
Forward-Looking Statements
This press release may contain projections or other forward-looking statements regarding future events or our future financial performance. All statements other than present and historical facts and conditions contained in this release, including any statements regarding our future results of operations and financial positions, business strategy, plans and our objectives for future operations, are forward-looking statements (within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended). These statements are only predictions and reflect our current beliefs and expectations with respect to future events and are based on assumptions and subject to risk and uncertainties and subject to change at any time. We operate in a very competitive and rapidly changing environment. New risks emerge from time to time. Given these risks and uncertainties, you should not place undue reliance on these forward-looking statements. Actual events or results may differ materially from those contained in the projections or forward-looking statements. Some of the factors that could cause actual results to differ materially from the forward-looking statements contained herein include, without limitation: (i) the contraction or lack of growth of markets in which we compete and in which our products are sold, including WiMAX and LTE markets, (ii) unexpected increases in our expenses, including manufacturing expenses, (iii) inability to adjust spending quickly enough to offset any unexpected revenue shortfall, (iv) delays or cancellations in spending by our customers, (v) unexpected average selling price reductions, (vi) the significant fluctuation to which our quarterly revenue and operating results are subject due to cyclicality in the wireless communications industry and transitions to new process technologies, (vii) our inability to anticipate the future market demands and future needs of our customers, (viii) our inability to achieve new design wins, and (xii) other factors detailed in documents we file from time to time with the Securities and Exchange Commission. Forward-looking statements in this release are made pursuant to the safe harbor provisions contained in the Private Securities Litigation Reform Act of 1995.
| SEQUANS COMMUNICATIONS S.A. | ||||||||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| Three months ended | ||||||||||||||||||||
| (in thousands of US$, except share and per share amounts) | March 31, | December 31, | March 31, | |||||||||||||||||
| 2011 | 2010 | 2010 | ||||||||||||||||||
| Revenue : | ||||||||||||||||||||
| Product revenue | 24,845 | 22,140 | 8,855 | |||||||||||||||||
| Other revenue | 545 | 724 | 1,323 | |||||||||||||||||
| Total revenue | 25,390 | 22,864 | 10,178 | |||||||||||||||||
| Cost of revenue | ||||||||||||||||||||
| Cost of product revenue | 12,300 | 11,247 | 4,114 | |||||||||||||||||
| Cost of other revenue | 85 | 85 | 85 | |||||||||||||||||
| Total cost of revenue | 12,385 | 11,332 | 4,199 | |||||||||||||||||
| Gross profit | 13,005 | 11,532 | 5,979 | |||||||||||||||||
| Operating expenses : | ||||||||||||||||||||
| Research and development | 6,014 | 5,402 | 4,514 | |||||||||||||||||
| Sales and marketing | 3,144 | 4,143 | 2,855 | |||||||||||||||||
| General and administrative | 1,588 | 1,425 | 796 | |||||||||||||||||
| Total operating expenses | 10,746 | 10,970 | 8,165 | |||||||||||||||||
| Operating income (loss) | 2,259 | 562 | (2,186 | ) | ||||||||||||||||
| Financial income (expense): | ||||||||||||||||||||
| Interest income (expense), net | (184 | ) | (332 | ) | (204 | ) | ||||||||||||||
| Foreign exchange gain (loss) | (149 | ) | (557 | ) | 1,017 | |||||||||||||||
| Change in the fair value of Category E convertible notes option component | – | (2,282 | ) | 18 | ||||||||||||||||
| Profit (Loss) before income taxes | 1,926 | (2,609 | ) | (1,355 | ) | |||||||||||||||
| Income tax expense (benefit) | 30 | 150 | – | |||||||||||||||||
| Profit (Loss) | 1,896 | (2,759 | ) | (1,355 | ) | |||||||||||||||
| Attributable to : | ||||||||||||||||||||
| Shareholders of the parent | 1,896 | (2,759 | ) | (1,355 | ) | |||||||||||||||
| Minority interests | – | – | – | |||||||||||||||||
| Basic earnings (loss) per share | $0.07 | ($0.10 | ) | ($0.06 | ) | |||||||||||||||
| Diluted earnings (loss) per share | $0.07 | ($0.10 | ) | ($0.06 | ) | |||||||||||||||
| Number of shares used for computing: | ||||||||||||||||||||
| — Basic | 27,723,199 | 26,721,605 | 23,696,452 | |||||||||||||||||
| — Diluted | 29,164,738 | 26,721,605 | 23,696,452 | |||||||||||||||||
| SEQUANS COMMUNICATIONS S.A. | ||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL POSITION | ||||||||||||
| At March 31, | At December 31, | |||||||||||
| (in thousands of US$) | 2011 | 2010 | ||||||||||
| ASSETS | ||||||||||||
| Non-current assets | ||||||||||||
| Property, plant and equipment | 6,473 | 5,291 | ||||||||||
| Intangible assets | 3,670 | 3,144 | ||||||||||
| Loan and other receivables | 1,577 | 1,485 | ||||||||||
| Available for sales assets | 460 | 432 | ||||||||||
| Total non-current assets | 12,180 | 10,352 | ||||||||||
| Current assets | ||||||||||||
| Inventories | 11,773 | 8,768 | ||||||||||
| Trade receivables | 11,882 | 14,163 | ||||||||||
| Prepaid expenses and other receivables | 3,370 | 3,333 | ||||||||||
| Recoverable value added tax | 833 | 1,361 | ||||||||||
| Research tax credit receivable | 2,701 | 2,001 | ||||||||||
| Cash and cash equivalents | 9,865 | 9,739 | ||||||||||
| Total current assets | 40,424 | 39,365 | ||||||||||
| Total assets | 52,604 | 49,717 | ||||||||||
| EQUITY AND LIABILITIES | ||||||||||||
| Equity | ||||||||||||
| Issued capital | 714 | 710 | ||||||||||
| Share premium | 68,657 | 68,972 | ||||||||||
| Other capital reserves | 5,657 | 5,194 | ||||||||||
| Accumulated deficit | (52,366) | (54,262) | ||||||||||
| Accumulated other comprehensive income (loss) | 500 | 85 | ||||||||||
| Total equity | 23,162 | 20,699 | ||||||||||
| Non-current liabilities | ||||||||||||
| Government grant advances and interest-free loans | 1,010 | 1,278 | ||||||||||
| Provisions | 204 | 184 | ||||||||||
| Total non-current liabilities | 1,214 | 1,462 | ||||||||||
| Current liabilities | ||||||||||||
| Trade payables | 12,999 | 15,508 | ||||||||||
| Interest-bearing loans and borrowings | 7,560 | 3,564 | ||||||||||
| Government grant advances and interest-free loans | 1,264 | 1,889 | ||||||||||
| Other current liabilities | 5,200 | 5,270 | ||||||||||
| Deferred revenue | 886 | 893 | ||||||||||
| Provisions | 319 | 432 | ||||||||||
| Total current liabilities | 28,228 | 27,556 | ||||||||||
| Total equity and liabilities | 52,604 | 49,717 | ||||||||||
| SEQUANS COMMUNICATIONS S.A. | ||||||||||||||
| UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||||
| Three months ended March 31, | ||||||||||||||
| (in thousands of US$) | 2011 | 2010 | ||||||||||||
|
Operating activities |
||||||||||||||
| Profit (Loss) before income taxes | 1,926 | (1,355 | ) | |||||||||||
| Non-cash adjustment to reconcile income (loss) before tax to net cash from (used in) operating activities | ||||||||||||||
| Depreciation and impairment of property, plant and equipment | 848 | 545 | ||||||||||||
| Amortization and impairment of intangible assets | 457 | 253 | ||||||||||||
| Share-based payment expense | 463 | 282 | ||||||||||||
| Increase (Decrease) in provisions | (93 | ) | (58 | ) | ||||||||||
| Change in fair value of Category E convertible notes option component | – | (18 | ) | |||||||||||
| Financial expense | 55 | 176 | ||||||||||||
| Foreign exchange loss (gain) | 467 | (1,165 | ) | |||||||||||
| Interest free financing benefit | 10 | (216 | ) | |||||||||||
| Working capital adjustments | ||||||||||||||
| Decrease (Increase) in trade receivables and other receivables | 2,885 | (2,076 | ) | |||||||||||
| Decrease (Increase) in inventories | (3,005 | ) | (1,903 | ) | ||||||||||
| Decrease (Increase) in research tax credit receivable | (700 | ) | (249 | ) | ||||||||||
| Increase (Decrease) in trade payables and other liabilities | (2,526 | ) | 3,809 | |||||||||||
| Increase (Decrease) in deferred revenue | (7 | ) | 96 | |||||||||||
| Increase (Decrease) in government grant advances | (358 | ) | 310 | |||||||||||
| Income tax paid | (84 | ) | (61 | ) | ||||||||||
| Net cash flow from (used in) operating activities | 338 | (1,630 | ) | |||||||||||
| Investing activities | ||||||||||||||
| Purchase of intangible assets and property, plant and equipment | (2,967 | ) | (1,048 | ) | ||||||||||
| Purchase of financial assets | (120 | ) | (57 | ) | ||||||||||
| Net cash flow used in investments activities | (3,087 | ) | (1,105 | ) | ||||||||||
| Financing activities | ||||||||||||||
| Proceeds from issue of shares and warrants, net of transaction costs | 252 | 83 | ||||||||||||
| Proceeds from borrowings | 3,910 | – | ||||||||||||
| Initial Public Offer costs paid | (563 | ) | – | |||||||||||
| Interest paid | (184 | ) | (153 | ) | ||||||||||
| Proceeds from interest-free loan | – | 789 | ||||||||||||
| Repayment of interest-free loans | (546 | ) | (357 | ) | ||||||||||
| Net cash flows from (used in) financing activities | 2,869 | 362 | ||||||||||||
| Net increase (decrease) in cash and cash equivalents | 120 | (2,373 | ) | |||||||||||
| Net foreign exchange difference | 6 | 0 | ||||||||||||
| Cash and cash equivalent at January 1 | 9,739 | 7,792 | ||||||||||||
| Cash and cash equivalents at year end | 9,865 | 5,419 | ||||||||||||
| SEQUANS COMMUNICATIONS S.A. | ||||||||||||||||||||||||||
| UNAUDITED RECONCILIATION OF NON-IFRS FINANCIAL RESULTS | ||||||||||||||||||||||||||
| Three months ended | ||||||||||||||||||||||||||
| (in thousands of US$, except share and per share amounts) | March 31, 2011 | December 31, | March 31, | |||||||||||||||||||||||
| 2010 | 2010 | |||||||||||||||||||||||||
| GAAP (as reported) |
Adjustments (*) |
Non-IFRS | Non-IFRS | Non-IFRS | ||||||||||||||||||||||
| Revenue : | ||||||||||||||||||||||||||
| Product revenue | 24,845 | 24,845 | 22,140 | 8,855 | ||||||||||||||||||||||
| Other revenue | 545 | 545 | 724 | 1,323 | ||||||||||||||||||||||
| Total revenue | 25,390 | – | 25,390 | 22,864 | 10,178 | |||||||||||||||||||||
| Cost of revenue | ||||||||||||||||||||||||||
| Cost of product revenue | 12,300 | 12 | 12,288 | 11,236 | 4,109 | |||||||||||||||||||||
| Cost of other revenue | 85 | 85 | 85 | 85 | ||||||||||||||||||||||
| Total cost of revenue | 12,385 | 12 | 12,373 | 11,321 | 4,194 | |||||||||||||||||||||
| Gross profit | 13,005 | (12 | ) | 13,017 | 11,543 | 5,984 | ||||||||||||||||||||
| Operating expenses : | ||||||||||||||||||||||||||
| Research and development | 6,014 | 136 | 5,878 | 5,218 | 4,385 | |||||||||||||||||||||
| Sales and marketing | 3,144 | 181 | 2,963 | 4,054 | 2,730 | |||||||||||||||||||||
| General and administrative | 1,588 | 134 | 1,454 | 1,383 | 772 | |||||||||||||||||||||
| Total operating expenses | 10,746 | 451 | 10,295 | 10,655 | 7,887 | |||||||||||||||||||||
| Operating income (loss) | 2,259 | (463 | ) | 2,722 | 888 | (1,903 | ) | |||||||||||||||||||
| Financial income (expense): | ||||||||||||||||||||||||||
| Interest income (expense), net | (184 | ) | (184 | ) | (332 | ) | (204 | ) | ||||||||||||||||||
| Foreign exchange gain (loss) | (149 | ) | (149 | ) | (557 | ) | 1,017 | |||||||||||||||||||
| Change in the fair value of Category E convertible notes option component | – | – | (2,282 | ) | 18 | |||||||||||||||||||||
| Profit (Loss) before income taxes | 1,926 | (463 | ) | 2,389 | (2,283 | ) | (1,072 | ) | ||||||||||||||||||
| Income tax expense (benefit) | 30 | 30 | 150 | – | ||||||||||||||||||||||
| Profit (Loss) | 1,896 | (463 | ) | 2,359 | (2,433 | ) | (1,072 | ) | ||||||||||||||||||
| Attributable to : | ||||||||||||||||||||||||||
| Shareholders of the parent | 1,896 | 2,359 | (2,433 | ) | (1,072 | ) | ||||||||||||||||||||
| Minority interests | – | – | – | |||||||||||||||||||||||
| Basic earnings (loss) per share | $0.07 | $0.09 | ($0.09 | ) | ($0.05 | ) | ||||||||||||||||||||
| Diluted earnings (loss) per share | $0.07 | $0.08 | ($0.09 | ) | ($0.05 | ) | ||||||||||||||||||||
| Number of shares used for computing: | ||||||||||||||||||||||||||
| — Basic | 27,723,199 | 27,723,199 | 26,721,605 | 23,696,452 | ||||||||||||||||||||||
| — Diluted | 29,164,738 | 29,164,738 | 26,721,605 | 23,696,452 | ||||||||||||||||||||||
|
(*) Adjustments related to stock based compensation expenses according to IFRS 2 |
||||||||||||||||||||||||||
