KITCHENER, ON, Nov. 5, 2020 /PRNewswire/ - Quarterhill Inc. ("Quarterhill" or the "Company") (TSX: QTRH) (OTCQX: QTRHF), announces its financial results for the three- and nine-month periods ended September 30, 2020. The Company historically prepared its consolidated financial statements in accordance with U.S. GAAP and in U.S. dollars. Effective January 1, 2020, the Company has adopted IFRS and the Canadian dollar as its reporting currency. The Company has consistently applied the same accounting policies in its opening IFRS statement of financial position at January 1, 2019, and throughout all periods presented as if these policies had always been in effect. All financial information in this press release is reported in Canadian dollars, unless otherwise indicated.
Third Quarter 2020 Financial Highlights
-
Revenue was $88.0 million, exceeding the high-end of the expected $80.0-$87.0 million range previously provided
-
Adjusted EBITDA1 was $39.0 million, exceeding the high-end of the expected $32.0-$36.0 million range previously provided
-
Net income was $24.5 million, or $0.21 per basic and diluted common share
-
Cash generated from operations was $4.5 million
-
Cash, cash equivalents, and short-term investments were $129.7 million at September 30, 2020. Cash and equivalents declined in Q3 due primarily to working capital adjustments and the timing of collections for certain license agreements completed near quarter-end. Payment on these agreements was received subsequent to quarter-end
-
Working capital was $180.3 million at September 30, 2020
Third Quarter 2020 Operational Highlights
-
Appointed John Rim as Chief Financial Officer
-
Completed a Substantial Issuer Bid, returning $5.8 million to shareholders via the purchase of 2.7 million common shares at a purchase price of $2.15 per share
-
Launched a Normal Course Issuer Bid to acquire up to 10%, or 11.3 million, of the Company's common shares in the public float. Acquired 1.6 million Common Shares at an average price of $1.89 per share, totaling approximately $3.0 million, in the quarter
-
Strong licensing activity at WiLAN included new agreements with Intel and Kingston Technology Corporation
-
New orders at IRD included the State of New York and, internationally, in Ukraine and Paraguay
"Q3 was a busy and successful period for Quarterhill and its portfolio companies. On October 8, we announced preliminary Q3 revenue of $80-87 million and Adjusted EBITDA of $32-36 million and we are pleased to have come in above the high-end of the range for both metrics," said Paul Hill, President and CEO of Quarterhill. "These strong results were driven by a record quarter at IRD and by substantial licensing activity at WiLAN, which had its best quarter in three years. At the same time, Quarterhill delivered on its promise to return additional capital to shareholders via completion of our substantial issuer bid and the commencement of our normal course issuer bid. Q3 results, combined with our already strong balance sheet, are enabling us to consider a broad set of M&A opportunities."
Approval of Eligible Dividend
The Board of Directors has declared an eligible quarterly dividend of $0.0125 per common share payable on January 11, 2021, to shareholders of record on December 11, 2020.
Q3 2020 and Year-to-date Consolidated Financial Review
Financial statements for the three- and nine-month periods ended September 30, 2020 and for the respective comparison periods, have been prepared to reflect continuing operations and therefore exclude results during those periods from VIZIYA, which was sold by Quarterhill on May 15, 2020. The year-to-date operating results from VIZIYA, up to the date of sale on May 15, 2020, are reported as net income (loss) from discontinued operations in accordance with IFRS 5.
Consolidated revenues for the three-month period ended September 30, 2020 ("Q3 2020") were $88.0 million, compared to $21.9 million in Q3 2019. Consolidated revenues for the nine-month period ended September 30, 2020 ("YTD 2020") were $126.4 million, compared to $124.6 million in the same period last year. The majority of WiLAN's licenses are one-time in nature and significant fluctuations in revenue, gross margin, and Adjusted EBITDA can result when the volume or dollar value of licenses changes from one period to the next. Revenue was higher in the Q3 2020 and YTD 2020 periods due primarily to the closure of a greater volume, and value, of licensing contracts in 2020 than in the prior year periods.
Recurring revenue for the Q3 2020 and YTD 2020 periods was $5.4 million and $14.9 million, compared to $4.5 million and $16.2 million in the same periods last year. The vast majority of recurring revenue is generated by IRD. Certain revenues characterized as recurring have a timing component to them and are recognized when the related work is completed. As such, the decrease in recurring revenue for the YTD 2020 period is primarily a timing-based issue and does not reflect lower renewal or retention rates.
Gross margin for the Q3 2020 and YTD 2020 periods was 51.8% and 45.2%, compared to 11.4% and 40.6% in the same periods last year. Gross margin was higher in Q3 2020 and on a year-to-date 2020 basis primarily due to lower cost of revenue on licenses entered into by WiLAN as well as higher profitability on certain projects entered into by IRD in Q3 2020.
Operating expenses include selling, general and administrative costs ("SG&A"), research and development costs ("R&D"), depreciation and amortization of intangible assets, impairment loss on intangibles and special charges. For Q3 2020, Quarterhill had no special charges compared to a special charge recovery of $15.3 million in Q3 2019. YTD 2020, special charges were $0.9 million compared to $1.4 million in the same period last year. Excluding special charges, operating expenses for the Q3 2020 and YTD 2020 periods decreased by 9.5% and 11.8%, respectively. This reflects lower amortization of intangibles as well as lower SG&A and R&D costs, which was primarily due to reduced operating costs.
Adjusted EBITDA for the Q3 2020 and YTD 2020 periods was $39.0 million and $37.3 million, compared to ($4.4) million and $29.8 million in the same periods last year. The increase in Adjusted EBITDA was driven by strong revenue from both businesses, lower cost of revenues and ongoing cost containment.
Net income for Q3 2020 was $24.5 million, or $0.21 per basic and diluted common share, compared to net income of $12.3 million, or $0.10 per basic and diluted common share, in Q3 2019. Net income for the YTD 2020 period was $28.9 million, or $0.25 per basic common share and $0.24 per diluted common share, compared to net income of $6.3 million, or $0.05 per basic and diluted common share, in the same period last year. Net income in Q3 2020 increased due to operational strength with both portfolio companies; for the YTD 2020 period, net income increased due to higher revenue, lower costs and the gain on the sale of VIZIYA in Q2 2020.
Cash generated from (used in) continuing operations for the Q3 2020 and YTD 2020 periods was $4.5 million and $9.9 million, compared to ($15.6) million and $13.5 million in the same periods last year. Cash and cash equivalents and short-term investments was $129.7 million at September 30, 2020, compared to $89.4 million at December 31, 2019. Working capital at September 30, 2020, was $180.3 million compared to $112.7 million at December 31, 2019.
Conference Call and Webcast
Quarterhill will host a conference call to discuss its financial results today at 10:00 AM Eastern Time.
Webcast Information
The live audio webcast will be available at:
https://produceredition.webcasts.com/starthere.jsp?ei=1388512&tp_key=4c7abf2b0a
Dial-in Information
To access the call from Canada and U.S., dial 1.888.231.8191 (Toll Free)
To access the call from other locations, dial 1.647.427.7450 (International)
Replay Information
Webcast replay will be available for 365 days at: https://produceredition.webcasts.com/starthere.jsp?ei=1388512&tp_key=4c7abf2b0a
Telephone replay will be available from 1:00 p.m. Eastern Daylight Time on November 5, 2020 until 11:59 p.m. Eastern Daylight Time on November 19, 2020 at: 1.855.859.2056 (Toll Free North America) or 1.416.849.0833 (International).The telephone replay requires the passcode 8577096.
The table below highlights financial performance for the Company's Licensing and Intelligent Systems segments. For detailed results and discussion related to these segments, please refer to the Management's Discussion and Analysis document, which will be filed on SEDAR and at www.quarterhill.com in the investor section.
Segmented statements of income (loss) for the three- and nine-month periods ended September 30, 2020 and 2019 are included below:
|
For the three months ended September 30, 2020 |
||||||||
|
CONTINUING OPERATIONS |
Licensing |
Intelligent |
Corporate |
Total |
||||
|
Revenues |
||||||||
|
License |
$ |
67,192 |
$ |
— |
$ |
— |
$ |
67,192 |
|
Systems |
— |
15,380 |
— |
15,380 |
||||
|
Recurring |
71 |
5,354 |
— |
5,425 |
||||
|
67,263 |
20,734 |
— |
87,997 |
|||||
|
Direct cost of revenues |
32,118 |
10,278 |
— |
42,396 |
||||
|
Gross profit |
35,145 |
10,456 |
— |
45,601 |
||||
|
Depreciation of right-of-use assets |
61 |
181 |
15 |
257 |
||||
|
Depreciation and amortization |
3,449 |
1,522 |
5 |
4,976 |
||||
|
Selling, general and administrative expenses |
862 |
2,607 |
2,955 |
6,424 |
||||
|
Research and development expenses |
— |
390 |
— |
390 |
||||
|
Impairment losses of intangible assets |
62 |
— |
— |
62 |
||||
|
Results from operations |
30,711 |
5,756 |
(2,975) |
33,492 |
||||
|
Finance (income) expense, net |
(18) |
110 |
(85) |
7 |
||||
|
Foreign exchange (gain) loss |
(280) |
305 |
47 |
72 |
||||
|
Other income |
— |
(383) |
— |
(383) |
||||
|
Income (loss) before taxes |
31,009 |
5,724 |
(2,937) |
33,796 |
||||
|
Income tax expense |
7,608 |
1,236 |
424 |
9,268 |
||||
|
Net income (loss) from continuing operations |
$ |
23,401 |
$ |
4,488 |
$ |
(3,361) |
$ |
24,528 |
|
Adjusted EBITDA |
$ |
34,353 |
$ |
7,477 |
$ |
(2,795) |
$ |
39,035 |
|
For the Nine months ended September 30, 2020 |
||||||||
|
CONTINUING OPERATIONS |
Licensing |
Intelligent |
Corporate |
Total |
||||
|
Revenues |
||||||||
|
License |
$ |
77,009 |
$ |
— |
$ |
— |
$ |
77,009 |
|
Systems |
— |
34,521 |
— |
34,521 |
||||
|
Recurring |
774 |
14,130 |
— |
14,904 |
||||
|
77,783 |
48,651 |
— |
126,434 |
|||||
|
Direct cost of revenues |
40,949 |
28,290 |
— |
69,239 |
||||
|
Gross profit |
36,834 |
20,361 |
— |
57,195 |
||||
|
Depreciation of right-of-use assets |
185 |
508 |
45 |
738 |
||||
|
Depreciation and amortization |
10,552 |
4,469 |
16 |
15,037 |
||||
|
Selling, general and administrative expenses |
2,586 |
8,424 |
7,535 |
18,545 |
||||
|
Research and development expenses |
— |
1,814 |
— |
1,814 |
||||
|
Impairment losses of intangible assets |
295 |
— |
— |
295 |
||||
|
Special charges |
— |
659 |
213 |
872 |
||||
|
Results from operations |
23,216 |
4,487 |
(7,809) |
19,894 |
||||
|
Finance (income) expense, net |
(62) |
228 |
(327) |
(161) |
||||
|
Foreign exchange loss (gain) |
1,316 |
(624) |
(1,205) |
(513) |
||||
|
Other income |
— |
(1,192) |
— |
(1,192) |
||||
|
Income (loss) before taxes |
21,962 |
6,075 |
(6,277) |
21,760 |
||||
|
Income tax expense |
2,879 |
730 |
3,522 |
7,131 |
||||
|
Net income (loss) from continuing operations |
$ |
19,083 |
$ |
5,345 |
$ |
(9,799) |
$ |
14,629 |
|
Adjusted EBITDA |
$ |
34,417 |
$ |
10,186 |
$ |
(7,323) |
$ |
37,280 |
|
For the three months ended September 30, 2019 |
||||||||
|
CONTINUING OPERATIONS |
Licensing |
Intelligent |
Corporate |
Total |
||||
|
Revenues |
||||||||
|
License |
$ |
4,833 |
$ |
— |
$ |
— |
$ |
4,833 |
|
Systems |
— |
12,586 |
— |
12,586 |
||||
|
Recurring |
139 |
4,385 |
— |
4,524 |
||||
|
$ |
4,972 |
$ |
16,971 |
$ |
— |
$ |
21,943 |
|
|
Direct cost of revenues |
8,694 |
10,752 |
— |
19,446 |
||||
|
Gross profit |
(3,722) |
6,219 |
— |
2,497 |
||||
|
Depreciation of right-of-use assets |
98 |
177 |
15 |
290 |
||||
|
Depreciation and amortization |
4,533 |
1,429 |
5 |
5,967 |
||||
|
Selling, general and administrative expenses |
559 |
3,121 |
2,729 |
6,409 |
||||
|
Research and development expenses |
— |
712 |
— |
712 |
||||
|
Special charges |
9 |
— |
(15,286) |
(15,277) |
||||
|
Results from operations |
(8,921) |
780 |
12,537 |
4,396 |
||||
|
Finance (income) expense, net |
(166) |
101 |
(290) |
(355) |
||||
|
Foreign exchange loss (gain) |
151 |
(292) |
(69) |
(210) |
||||
|
Other income |
— |
(157) |
— |
(157) |
||||
|
(Loss) income before taxes |
(8,906) |
1,128 |
12,896 |
5,118 |
||||
|
Income tax (recovery) expense |
(2,725) |
65 |
430 |
(2,230) |
||||
|
Net (loss) income from continuing operations |
$ |
(6,181) |
$ |
1,063 |
$ |
12,466 |
$ |
7,348 |
|
Adjusted EBITDA |
(4,269) |
2,415 |
(2,532) |
(4,386) |
||||
|
For the Nine months ended September 30, 2019 |
||||||||
|
CONTINUING OPERATIONS |
Licensing |
Intelligent |
Corporate |
Total |
||||
|
Revenues |
||||||||
|
License |
$ |
74,360 |
$ |
— |
$ |
— |
$ |
74,360 |
|
Systems |
— |
34,069 |
— |
34,069 |
||||
|
Recurring |
1,102 |
15,096 |
— |
16,198 |
||||
|
$ |
75,462 |
$ |
49,165 |
$ |
— |
$ |
124,627 |
|
|
Direct cost of revenues |
41,732 |
32,348 |
— |
74,080 |
||||
|
Gross profit |
33,730 |
16,817 |
— |
50,547 |
||||
|
Depreciation of right-of-use assets |
479 |
532 |
45 |
1,056 |
||||
|
Depreciation and amortization |
14,022 |
4,737 |
15 |
18,774 |
||||
|
Selling, general and administrative expenses |
1,542 |
9,516 |
8,170 |
19,228 |
||||
|
Research and development expenses |
— |
2,229 |
— |
2,229 |
||||
|
Special charges |
2,444 |
— |
(1,042) |
1,402 |
||||
|
Results from operations |
15,243 |
(197) |
(7,188) |
7,858 |
||||
|
Finance (income) expense, net |
(228) |
536 |
(856) |
(548) |
||||
|
Foreign exchange (gain) loss |
(340) |
37 |
458 |
155 |
||||
|
Other income |
(4) |
(492) |
— |
(496) |
||||
|
Income (loss) before taxes |
15,815 |
(278) |
(6,790) |
8,747 |
||||
|
Income tax expense (recovery) |
7,652 |
(1,013) |
(347) |
6,292 |
||||
|
Net income (loss) from continuing operations |
$ |
8,163 |
$ |
735 |
$ |
(6,443) |
$ |
2,455 |
|
Adjusted EBITDA |
$ |
32,187 |
$ |
5,176 |
$ |
(7,529) |
$ |
29,834 |
1 Non-IFRS Disclosure
Quarterhill has historically used a set of metrics when evaluating our operational and financial performance. We continually monitor, evaluate and update these metrics as required to ensure they provide information considered most useful, in the opinion of our management, to any decision-making based on Quarterhill's performance. This section defines, quantifies and analyzes the key performance indicators used by our management and referred to elsewhere in this press release, which are not recognized under IFRS and have no standardized meaning prescribed by IFRS. These indicators and measures are therefore unlikely to be comparable to similar measures presented by other issuers.
In this press release, we use the Non-IFRS term "Adjusted EBITDA" to mean net income (loss) from continuing operations before: (i) income taxes; (ii) finance expense or income; (iii) amortization and impairment of intangibles; (iv) special charges and other one-time items; (v) depreciation of right-of-use assets and property, plant and equipment; (vi) effects of deleted deferred revenue; (vii) stock-based compensation; (viii) foreign exchange (gain) loss; and (ix) equity in earnings and dividends from joint ventures. Adjusted EBITDA is used by our management to assess our normalized cash generated on a consolidated basis and in our operating segments. Adjusted EBITDA is also a performance measure that may be used by investors to analyze the cash generated by Quarterhill and our operating segments. Adjusted EBITDA should not be interpreted as an alternative to net income and cash flows from operations as determined in accordance with IFRS or as a measure of liquidity.
About Quarterhill
Quarterhill is a growth-oriented company in the Intellectual Property and Intelligent Transportation System (ITS) industries. Our goal is to pursue an investment strategy that capitalizes on attractive market trends in both ITS and its adjacent markets. Quarterhill is listed on the TSX under the symbol QTRH and on the OTCQX Best Market under the symbol QTRHF. For more information: www.quarterhill.com
Forward-looking Information
This news release contains forward-looking statements regarding Quarterhill and its business. Forward-looking statements are based on estimates and assumptions made by Quarterhill in light of its experience and its perception of historical trends, current conditions, expected future developments and the expected effects of new business strategies, as well as other factors that Quarterhill believes are appropriate in the circumstances. The forward-looking events and circumstances discussed herein may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Quarterhill, including: potential risks and uncertainties relating to the ultimate geographic spread of the novel coronavirus ("COVID-19"); the severity of the disease; the duration of the COVID-19 outbreak; actions that may be taken by governmental authorities to contain the COVID-19 outbreak or to treat its impact; the potential negative impacts of COVID-19 on the global economy and financial markets and any resulting impact on Quarterhill and/or its business. Other factors include, without limitation, the risks described in Quarterhill's February 27, 2020 annual information form for the year ended December 31, 2019 (the "AIF"). Copies of the AIF may be obtained at www.sedar.com. Quarterhill recommends that readers review and consider all of these risk factors and notes that readers should not place undue reliance on any of Quarterhill's forward-looking statements. Quarterhill has no intention, and undertakes no obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
Quarterhill Inc.
Interim Condensed Consolidated Statements of Income and Comprehensive Income and (Loss)
(Unaudited)
(in thousands of Canadian dollars, except share and per share amounts)
|
Three months ended |
Nine months ended |
||||||||||
|
2020 |
2019 |
2020 |
2019 |
||||||||
|
Revenues |
|||||||||||
|
License |
$ |
67,192 |
$ |
4,833 |
$ |
77,009 |
$ |
74,360 |
|||
|
Systems |
15,380 |
12,586 |
34,521 |
34,069 |
|||||||
|
Recurring |
5,425 |
4,524 |
14,904 |
16,198 |
|||||||
|
87,997 |
21,943 |
126,434 |
124,627 |
||||||||
|
Direct cost of revenues |
|||||||||||
|
License |
32,064 |
8,694 |
40,867 |
41,732 |
|||||||
|
Systems |
8,202 |
7,497 |
20,776 |
21,721 |
|||||||
|
Recurring |
2,130 |
3,255 |
7,596 |
10,627 |
|||||||
|
42,396 |
19,446 |
69,239 |
74,080 |
||||||||
|
Gross profit |
45,601 |
2,497 |
57,195 |
50,547 |
|||||||
|
Operating expenses |
|||||||||||
|
Depreciation of right-of-use assets |
257 |
290 |
738 |
1,056 |
|||||||
|
Depreciation of property, plant and equipment |
250 |
188 |
721 |
1,086 |
|||||||
|
Amortization of intangibles |
4,726 |
5,779 |
14,316 |
17,688 |
|||||||
|
Selling, general and administrative expenses |
6,424 |
6,409 |
18,545 |
19,228 |
|||||||
|
Research and development expenses |
390 |
712 |
1,814 |
2,229 |
|||||||
|
Impairment losses on intangibles |
62 |
— |
295 |
— |
|||||||
|
Special charges |
— |
(15,277) |
872 |
1,402 |
|||||||
|
12,109 |
(1,899) |
37,301 |
42,689 |
||||||||
|
Results from operations |
33,492 |
4,396 |
19,894 |
7,858 |
|||||||
|
Finance income |
(146) |
(499) |
(528) |
(1,157) |
|||||||
|
Finance expense |
153 |
144 |
367 |
609 |
|||||||
|
Foreign exchange loss (gain) |
72 |
(210) |
(513) |
155 |
|||||||
|
Other income |
(383) |
(157) |
(1,192) |
(496) |
|||||||
|
Income before taxes |
33,796 |
5,118 |
21,760 |
8,747 |
|||||||
|
Current income tax expense |
325 |
342 |
1,669 |
5,797 |
|||||||
|
Deferred income tax expense (recovery) |
8,943 |
(2,572) |
5,462 |
495 |
|||||||
|
Income tax expense (recovery) |
9,268 |
(2,230) |
7,131 |
6,292 |
|||||||
|
Net income from continuing operations |
$ |
24,528 |
$ |
7,348 |
$ |
14,629 |
$ |
2,455 |
|||
|
Net income from discontinued operations |
— |
4,927 |
14,255 |
3,835 |
|||||||
|
Net income |
$ |
24,528 |
$ |
12,275 |
$ |
28,884 |
$ |
6,290 |
|||
|
Other comprehensive income (loss) that may be reclassified subsequently to net income: |
|||||||||||
|
Foreign currency translation adjustment |
(4,693) |
1,661 |
5,182 |
(7,208) |
|||||||
|
Comprehensive income (loss) |
$19,835 |
$13,936 |
$34,066 |
$(918) |
|||||||
|
Net income per share |
|||||||||||
|
From continuing operations |
$0.21 |
$0.06 |
0.13 |
0.02 |
|||||||
|
From discontinued operations |
$ — |
$0.04 |
0.12 |
0.03 |
|||||||
|
Net income per share - Basic |
$0.21 |
$0.10 |
0.25 |
0.05 |
|||||||
|
From continuing operations |
$0.21 |
$0.06 |
0.12 |
0.02 |
|||||||
|
From discontinued operations |
$ — |
$0.04 |
0.12 |
0.03 |
|||||||
|
Net income per share - Diluted |
$0.21 |
$0.10 |
0.24 |
0.05 |
|||||||
Quarterhill Inc.
Interim Condensed Consolidated Statements of Financial Position
(Unaudited)
(in thousands of Canadian dollars)
|
As at |
September 30, 2020 |
December 31, 2019 |
January 1, 2019 |
|||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
$ |
124,130 |
$ |
87,870 |
$ |
87,029 |
||
|
Short-term investments |
5,549 |
1,550 |
1,551 |
|||||
|
Restricted short-term investments |
— |
— |
2,995 |
|||||
|
Accounts receivable (net of allowance for doubtful accounts) |
72,043 |
42,925 |
14,719 |
|||||
|
Other current assets |
145 |
108 |
124 |
|||||
|
Unbilled revenue |
16,059 |
8,965 |
5,432 |
|||||
|
Income taxes receivable |
220 |
137 |
270 |
|||||
|
Inventories (net of obsolescence) |
10,241 |
8,570 |
8,114 |
|||||
|
Prepaid expenses and deposits |
3,412 |
2,242 |
2,927 |
|||||
|
231,799 |
152,367 |
123,161 |
||||||
|
Non-current assets |
||||||||
|
Accounts receivable |
667 |
3,846 |
565 |
|||||
|
Right-of-use assets |
3,622 |
4,502 |
3,972 |
|||||
|
Property, plant and equipment |
2,977 |
2,826 |
3,614 |
|||||
|
Intangible assets |
64,867 |
89,534 |
119,015 |
|||||
|
Investment in joint venture |
6,701 |
5,233 |
5,203 |
|||||
|
Deferred income tax assets |
27,494 |
33,270 |
36,948 |
|||||
|
Goodwill |
16,910 |
32,977 |
34,446 |
|||||
|
123,238 |
172,188 |
203,763 |
||||||
|
TOTAL ASSETS |
$ |
355,037 |
$ |
324,555 |
$ |
326,924 |
||
|
Liabilities |
||||||||
|
Current liabilities |
||||||||
|
Bank indebtedness |
$ |
3,214 |
$ |
4,026 |
$ |
3,537 |
||
|
Accounts payable and accrued liabilities |
40,198 |
25,755 |
24,644 |
|||||
|
Dividends payable |
1,498 |
— |
— |
|||||
|
Income taxes payable |
344 |
203 |
— |
|||||
|
Current portion of lease liabilities |
886 |
998 |
1,120 |
|||||
|
Contingent liabilities |
— |
— |
1,265 |
|||||
|
Current portion of deferred revenue |
5,339 |
8,638 |
6,357 |
|||||
|
Current portion of long-term debt |
43 |
59 |
407 |
|||||
|
51,522 |
39,679 |
37,330 |
||||||
|
Non-current liabilities |
||||||||
|
Deferred revenue |
3,103 |
1,513 |
1,954 |
|||||
|
Long-term lease liabilities |
2,746 |
3,550 |
2,604 |
|||||
|
Long-term debt |
268 |
271 |
236 |
|||||
|
Deferred income tax liabilities |
368 |
3,297 |
5,905 |
|||||
|
6,485 |
8,631 |
10,699 |
||||||
|
TOTAL LIABILITIES |
$ |
58,007 |
$ |
48,310 |
$ |
48,029 |
||
|
Shareholders' equity |
||||||||
|
Capital stock |
$ |
561,269 |
$ |
570,553 |
$ |
570,553 |
||
|
Contributed surplus |
32,455 |
32,011 |
31,252 |
|||||
|
Accumulated other comprehensive income |
16,118 |
10,936 |
22,112 |
|||||
|
Deficit |
(312,812) |
(337,255) |
(345,022) |
|||||
|
297,030 |
276,245 |
278,895 |
||||||
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
355,037 |
$ |
324,555 |
$ |
326,924 |
||
Quarterhill Inc.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
(in thousands of Canadian dollars)
|
Three months ended |
Nine months ended |
||||||||||
|
2020 |
2019 |
2020 |
2019 |
||||||||
|
Cash generated from (used in) Operations |
|||||||||||
|
Net income from continuing operations |
$ |
24,528 |
$ |
7,348 |
$ |
14,629 |
$ |
2,455 |
|||
|
Non-cash items |
|||||||||||
|
Stock-based compensation expense |
248 |
238 |
444 |
744 |
|||||||
|
Depreciation of right-of-use assets |
257 |
290 |
738 |
1,056 |
|||||||
|
Interest expense on lease liabilities |
59 |
67 |
171 |
170 |
|||||||
|
Depreciation and amortization |
4,976 |
5,967 |
15,037 |
18,774 |
|||||||
|
Foreign exchange (gain) loss |
(38) |
46 |
(232) |
(81) |
|||||||
|
Equity in earnings from joint venture |
(383) |
(157) |
(1,192) |
(496) |
|||||||
|
Impairment losses on intangibles |
62 |
— |
295 |
— |
|||||||
|
Loss (gain) on disposal of assets |
14 |
(26) |
4 |
759 |
|||||||
|
Deferred income tax expense (recovery) |
8,943 |
(2,572) |
5,462 |
495 |
|||||||
|
Long-term accounts receivable |
— |
— |
— |
(85) |
|||||||
|
Embedded derivatives |
69 |
(106) |
(32) |
26 |
|||||||
|
Contingent consideration adjustment |
— |
(15,286) |
— |
(1,042) |
|||||||
|
Changes in non-cash working capital balances |
(34,231) |
(11,425) |
(25,414) |
(9,239) |
|||||||
|
Cash generated from (used in) continuing operations |
4,504 |
(15,616) |
9,910 |
13,536 |
|||||||
|
Net cash flows attributable to discontinuing operations |
— |
(439) |
(4,349) |
430 |
|||||||
|
Net cash generated from (used in) operating activities |
4,504 |
(16,055) |
5,561 |
13,966 |
|||||||
|
Financing |
|||||||||||
|
Dividends paid |
(1,443) |
(1,475) |
(2,924) |
(4,450) |
|||||||
|
Bank indebtedness |
(3,596) |
(1,005) |
(612) |
1,561 |
|||||||
|
Payment of lease liabilities |
(274) |
(318) |
(860) |
(1,189) |
|||||||
|
Repayment of long-term debt |
(8) |
(25) |
(128) |
(325) |
|||||||
|
Exercise of stock options |
— |
— |
14 |
— |
|||||||
|
Repurchase of shares for cancellation |
(9,322) |
— |
(9,322) |
— |
|||||||
|
Common shares issued from Performance Stock Units |
— |
— |
24 |
— |
|||||||
|
Cash used in continuing operations |
(14,643) |
(2,823) |
(13,808) |
(4,403) |
|||||||
|
Net cash flows attributable to discontinuing operations |
— |
(8) |
— |
(27) |
|||||||
|
Net cash used in financing activities |
(14,643) |
(2,831) |
(13,808) |
(4,430) |
|||||||
|
Investing |
|||||||||||
|
Proceeds from disposition of a subsidiary |
— |
— |
49,400 |
— |
|||||||
|
Cash sold on disposition of a subsidiary |
— |
— |
(1,825) |
— |
|||||||
|
Purchase of short-term investments |
(4,054) |
— |
(4,054) |
— |
|||||||
|
Proceeds from sale of restricted short-term investments |
— |
132 |
— |
132 |
|||||||
|
Proceeds from sale of property, plant and equipment |
16 |
30 |
32 |
30 |
|||||||
|
Purchase of property and equipment |
(309) |
(312) |
(1,196) |
(811) |
|||||||
|
Purchase of intangibles |
(30) |
(1,759) |
(55) |
(1,884) |
|||||||
|
Cash (used in) generated from continuing operations |
(4,377) |
(1,909) |
42,302 |
(2,533) |
|||||||
|
Net cash flows attributable to discontinuing operations |
— |
(37) |
(81) |
(160) |
|||||||
|
Net cash (used in) generated from investing activities |
(4,377) |
(1,946) |
42,221 |
(2,693) |
|||||||
|
Foreign exchange (loss) gain on cash held in foreign currency |
(2,869) |
900 |
2,286 |
(2,721) |
|||||||
|
Net (decrease) increase in cash and cash equivalents |
(17,385) |
(19,932) |
36,260 |
4,122 |
|||||||
|
Cash and cash equivalents, beginning of period |
141,515 |
111,083 |
87,870 |
87,029 |
|||||||
|
Cash and cash equivalents, end of period |
$ |
124,130 |
$ |
91,151 |
124,130 |
91,151 |
|||||
Quarterhill Inc.
Interim Condensed Consolidated Statements of Changes in Shareholders' Equity
For the nine months ended September 30, 2020 and 2019
(In thousands of Canadian dollars)
|
Capital |
Contributed |
Accumulated |
Deficit |
Total |
||||||||||
|
January 1, 2019 |
$ |
570,553 |
$ |
31,252 |
$ |
22,112 |
$ |
(345,022) |
$ |
278,895 |
||||
|
Net income |
— |
— |
— |
6,290 |
6,290 |
|||||||||
|
Other comprehensive loss |
— |
— |
(7,208) |
— |
(7,208) |
|||||||||
|
Stock-based compensation expense |
— |
744 |
— |
— |
744 |
|||||||||
|
Dividends declared |
— |
— |
— |
(4,450) |
(4,450) |
|||||||||
|
September 30, 2019 |
570,553 |
31,996 |
14,904 |
(343,182) |
274,271 |
|||||||||
|
January 1, 2020 |
$ |
570,553 |
$ |
32,011 |
$ |
10,936 |
$ |
(337,255) |
$ |
276,245 |
||||
|
Net income |
— |
— |
— |
28,884 |
28,884 |
|||||||||
|
Repurchase of shares for cancellation |
(9,322) |
— |
— |
— |
(9,322) |
|||||||||
|
Other comprehensive income |
— |
— |
5,182 |
— |
5,182 |
|||||||||
|
Stock-based compensation expense |
— |
444 |
— |
— |
444 |
|||||||||
|
Exercise of options |
14 |
— |
— |
— |
14 |
|||||||||
|
Common shares issued from performance stock units |
24 |
— |
— |
— |
24 |
|||||||||
|
Dividends declared |
— |
— |
— |
(4,441) |
(4,441) |
|||||||||
|
September 30, 2020 |
561,269 |
32,455 |
16,118 |
(312,812) |
297,030 |
|||||||||
Quarterhill Inc.
Reconciliations of Net income to Adjusted EBITDA
(Unaudited)
(in thousands of Canadian dollars, except share and per share amounts)
|
Three months ended September 30, |
|||||||||
|
2020 |
2019 |
||||||||
|
$ |
Per Share |
$ |
Per Share |
||||||
|
Net income from continuing operations |
$ |
24,528 |
$ |
0.21 |
$ |
7,348 |
$ |
0.06 |
|
|
Adjusted for: |
|||||||||
|
Income tax expense (recovery) |
9,268 |
0.08 |
(2,230) |
(0.02) |
|||||
|
Foreign exchange loss (gain) |
72 |
— |
(210) |
— |
|||||
|
Finance expense |
153 |
— |
144 |
— |
|||||
|
Finance income |
(146) |
— |
(499) |
— |
|||||
|
Special charges |
— |
— |
(15,277) |
(0.13) |
|||||
|
Impairment losses on intangible assets |
62 |
— |
— |
— |
|||||
|
Amortization of intangibles |
4,726 |
0.05 |
5,779 |
0.05 |
|||||
|
Depreciation of property, plant and equipment |
250 |
— |
188 |
— |
|||||
|
Depreciation of right-of-use assets |
257 |
— |
290 |
— |
|||||
|
Stock based compensation expense |
248 |
— |
238 |
— |
|||||
|
Other income |
(383) |
— |
(157) |
— |
|||||
|
Adjusted EBITDA |
$ |
39,035 |
$ |
0.34 |
$ |
(4,386) |
$ |
(0.04) |
|
|
Weighted average number of Common Shares |
|||||||||
|
Basic |
115,990,313 |
118,817,466 |
|||||||
Quarterhill Inc.
Reconciliations of Net income to Adjusted EBITDA
(Unaudited)
(in thousands of Canadian dollars, except share and per share amounts)
|
Nine months ended September 30, 2020 |
|||||||||
|
2020 |
2019 |
||||||||
|
$ |
Per Share |
$ |
Per Share |
||||||
|
Net income from continuing operations |
$ |
14,629 |
$ |
0.13 |
$ |
2,455 |
$ |
0.02 |
|
|
Adjusted for: |
|||||||||
|
Income tax expense |
7,131 |
0.06 |
6,292 |
0.05 |
|||||
|
Foreign exchange (gain) loss |
(513) |
— |
155 |
— |
|||||
|
Finance expense |
367 |
— |
609 |
0.01 |
|||||
|
Finance income |
(528) |
— |
(1,157) |
(0.01) |
|||||
|
Special charges |
872 |
0.01 |
1,402 |
0.01 |
|||||
|
Impairment losses on intangible assets |
295 |
— |
— |
— |
|||||
|
Amortization of intangibles |
14,316 |
0.12 |
17,688 |
0.15 |
|||||
|
Depreciation of property, plant and equipment |
721 |
— |
1,086 |
0.01 |
|||||
|
Depreciation of right-of-use assets |
738 |
0.01 |
1,056 |
0.01 |
|||||
|
Stock based compensation expense |
444 |
— |
744 |
0.01 |
|||||
|
Other income |
(1,192) |
(0.01) |
(496) |
(0.01) |
|||||
|
Adjusted EBITDA |
$ |
37,280 |
$ |
0.32 |
$ |
29,834 |
$ |
0.25 |
|
|
Weighted average number of Common Shares |
|||||||||
|
Basic |
117,884,124 |
118,817,466 |
|||||||