Sierra Wireless, Inc.

Good day and thank you for standing by. Welcome to the Sierra Wireless Second Quarter Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. If you require any further assistance, please press star 0. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mr. David Clymie, Vice President of Investor Relations. Please go ahead.

Thanks, and good afternoon, everybody. Thank you for joining today's conference call and webcast. On the call today are Phil Brace, President and CEO, and Sam Cochran, our CFO. 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. Phil will provide his introductory comments, and Sam will provide a detailed review of our second quarter results today. followed by Q&A. 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 two 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 securities laws. These statements include our strategy, goals, objectives, 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 two of the webcast presentation, which could prove to be significantly incorrect. Additionally, forward-looking statements are based on 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 our longer discussion of our risk factors in the AIF and MD&A, which can be found on CDAR and EDGAR, as well as 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 Phil for his corporate update.

Thanks, David, and thank you for everyone for joining us on the call today. We are pleased to report results for the second quarter of 2021. Total revenue in Q2 was 132.8 million, an increase of 19% compared to the same period of 2020. Revenue from IoT solutions increased by 16% year-over-year to 90.3 million, and revenue from enterprise solutions grew by 25% to 42.5 million. Revenue from connectivity, software, and services increased 31% to 35.2 million, reflecting our continued success with generating recurring revenue. Non-GAAP pop-backs was flat sequentially from Q1 and down 13.6% from Q2 2020. Our adjusted EBITDA improved from negative 8.7 million in Q2 last year to positive 4.3 million in the second quarter. Before I hand the call over to Sam to review the Q2 financials in more detail, I thought it would be helpful to provide some background on why I joined Sierra Wireless and to discuss some of the actions that I'm driving in the short term. For more than 25 years, I've been working in high tech across all areas of hardware, software, and services. Most recently, I was the EVP of field operations at Veritas, a Carlisle-owned private equity company. While at Veritas, I made significant changes, streamlining and improving operations in the integrated appliance business, software-defined storage, and finally, all of the go-to-market activities, leading to significant profitability improvements. Across multiple companies, including Intel, LSI, Seagate, and Veritas, I have an established track record of business performance improvement across a range of industries. When the opportunity of Sierra Wireless was presented to me, it was quickly apparent that there is much potential to be unlocked. The macro trends of IoT and 5G are accelerating, and Sierra is well positioned to capitalize on these trends. Sierra has a broad portfolio of leading wireless modules, gateways routers, and a rapidly growing connectivity and solutions business that leads to strong recurring revenue growth. The worldwide global pandemic has also accelerated the needs for our customers to be able to remotely connect and manage a wide range of devices in the field. And Sierra, as the trusted Western IoT supplier, is seen as a preferred partner with its global reach and coverage. As the new president and CEO, I see myself as the steward of shareholder capital, and I take that responsibility seriously. I recognize that investors have other places they can invest their money. You'll find me to be direct, results-oriented, and with a clear focus on building a profitably growing business. In the past two weeks, I've been spending time meeting with as many customers, suppliers, partners, and employees as possible in both Vancouver and Atlanta. And while I expect to continue to do more of that going forward, my immediate short-term focus is on the operating performance of the business. We are currently facing an unprecedented operating environment with the global impact of COVID-19 and a tight component supply chain. Our Tier 1 contract manufacturer, who builds a significant majority of our cellular modules and gateways, has our facility located in Vietnam, which has been impacted by an increase in COVID-19 cases in the last two months. This has led to widespread disruptions across the country, significantly impacting our ability to manufacture and ship our products. We are taking five immediate actions to mitigate this situation, including, one, Working with our contract manufacturers to subsidize the cost of isolation hotels for their workers with the goal of resuming full production as fast as possible. Number two, ramping up two additional manufacturing sites, including one in Mexico, to diversify our geographic production and increase our manufacturing resiliency. Number three, investing in parts and components to enable us to fulfill our customers' orders as soon as possible. We are using our strong balance sheet to play often. Number four, we are implementing strategic pricing increases to help offset some of the additional costs and investments while balancing the need to remain competitive in the market. And number five, we are controlling our OpEx and CapEx spend in the second half of this year to ensure we are controlling what we can control. I already have Sam and the team working on those initiatives. We do believe that the significant challenges we are experiencing in Q3 are temporary and Our demand remains very strong, and I believe we are taking the right actions and initiatives to navigate through them. Orders that don't ship in Q3, we expect to ship in the fourth quarter, and in some cases in the Q1 of 2022, resulting in a solid recovery, subject to COVID-19 externalities. Going forward, I will be focused on strategy, alignment, and execution, along with prudent allocation of capital. I'm excited and humbled to be working with such a highly qualified and experienced board of directors to unlock the potential of Sierra Wireless. Finally, I would like to thank our employees, our customers, and our suppliers as we collectively work through the COVID-19 interruptions and tightness in the supply chain. Together, we will thrive. With that, I will turn the call over to Sam for his review of the second quarter results.