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Quarterhill Announces Second Quarter 2020 Financial Results

08 06 20

KITCHENER, ON, Aug. 6, 2020 /PRNewswire/ - Quarterhill Inc. ("Quarterhill" or the "Company") (TSX: QTRH) (OTCQX: QTRHF), announces its financial results for the three- and six-month periods ended June 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.

Second Quarter 2020 Financial Highlights

  • Revenue was $16.8 million, including recurring revenue of $5.6 million
  • Adjusted EBITDA* was ($2.0) million
  • Net income was $9.5 million, or $0.08 per basic and diluted common share, which included a $17.7 million gain on the sale of VIZIYA
  • Cash used in continuing operations was ($4.3) million
  • Cash and equivalents were $143.1 million at June 30, 2020

Second Quarter 2020 Operational Highlights

  • Appointed Mr. Paul Hill as President and CEO of Quarterhill, effective June 1st
  • Completed the sale of VIZIYA for total cash proceeds of $49.4 million
  • A Final Judgment was issued in WiLAN's case against Apple for US$108.98 million
  • Announced a Substantial Issuer Bid and subsequently completed it on July 7th, returning $5.8 million to shareholders via the purchase of 2.7 million common shares
  • Appointed Mr. Paul Hill and Dr. Michel Fattouche to Quarterhill's Board of Directors
  • Appointed Mr. Rish Malhotra as President and CEO of International Road Dynamics ("IRD"), effective June 1st
  • Announced today a Normal Course Issuer Bid to acquire up to 10%, or 11.3 million, of the Company's common shares in the public float for a twelve-month period ending August 9, 2021

"Q2 had several positive operational developments including the previously announced sale of VIZIYA for a significant gain, the Final Judgment in WiLAN's case versus Apple for US$108.98 million, and the return of $5.8 million to shareholders via the Substantial Issuer Bid that was completed in mid-July," said Paul Hill, President & CEO of Quarterhill. "Today we announced the next step in our 'return of capital' commitment to shareholders with the launch of a Normal Course Issuer Bid to purchase up to 11.3 million of our shares over the next twelve months."

"Financial results in the quarter reflect both the steady performance at IRD and the variability in the business model at WiLAN, as well as the impact of COVID-19 on both businesses. At WiLAN, the COVID-19 impact was related to certain court closures in the U.S. as well as the inability to hold face-to-face meetings to conclude agreements. WiLAN's fundamentals remain in place and it continues to advance its pipeline despite the pandemic, although some deals may be delayed as was the case with certain opportunities we had expected to close in Q2 that were pushed out. These are not lost opportunities and they remain in our plan for completion. As we've said in the past, at WiLAN, performance over a longer time frame is a more accurate gauge of its potential compared to its quarterly business results. Case in point, while WiLAN had negative Adjusted EBITDA in Q2, it has had positive Adjusted EBITDA in five of the past seven quarters."

"At IRD, some impact from COVID-19 was felt in the quarter, but overall, the business continues to generate solid margins and results, and its prospects remain strong with both order backlog and order intake high and near record levels. On June 1, we announced Rish Malholtra would be taking over as CEO at IRD in a planned succession. Rish has deep knowledge of the Intelligent Transportation Systems, or ITS, industry and he has led many of the key functions at IRD during his tenure. These are exciting times at IRD and it is expected to play a significant role in our strategy going forward." 

"While not a radical departure from Quarterhill's strategy of recent years, our go-forward strategy has a sharper focus. Foremost, the strategy involves executing on a M&A plan. While the M&A strategy was previously on hold, when I joined in June, we began discussions around how we could leverage the strong cash position of the business and the cash flow generating potential of our portfolio companies to drive long-term shareholder value. Ultimately that discussion coalesced around a strategy intended to drive organic growth from our existing businesses and M&A-related growth focused on the IRD business and the opportunities in the ITS market."

"The ITS market has attractive growth and market dynamics with reasonable valuations and IRD is an established and well-respected player in this market, which helps differentiate us as an acquirer. IRD serves as a well-run growth-oriented platform that acquisitions can be integrated into, which also opens up the prospect of greater revenue and cost synergies. As the broader ITS industry becomes more connected, we also believe there is an opportunity to leverage WiLAN's deep technological expertise; in particular in 5G, which may become a critical enabling technology for ITS in the future."

Mr. Hill concluded: "I will discuss our strategy in more detail on our conference call this morning at 10:00 a.m. EDT. The discussion will include accompanying slides that can be viewed via the webcast." 

Subsequent Event - Normal Course Issuer Bid
In a separate press release issued today, Quarterhill announced that the Toronto Stock Exchange has accepted a notice filed by the Company of its intention to make a new Normal Course Issuer Bid. The notice provides that Quarterhill may, during the 12-month period commencing August 10, 2020 and ending August 9, 2021, purchase on the Toronto Stock Exchange up to 11.3 million common shares in total, being approximately 10% of the outstanding common shares in the public float. For full details regarding the Normal Course Issuer Bid, please see Quarterhill's related press release also issued today.

Approval of Eligible Dividend
The Board of Directors has declared an eligible quarterly dividend of $0.0125 per common share payable on October 9, 2020, to shareholders of record on September 11, 2020.

Q2 2020 and Year-to-date Consolidated Financial Review
Financial statements for the three- and six-month periods ended June 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 current quarter and 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 months ended June 30, 2020 ("Q2 2020") were $16.8 million, compared to $52.9 million in Q2 2019. Consolidated revenues for the six-month period ended June 30, 2020 ("YTD 2020") were $38.4 million, compared to $102.7 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 lower in the Q2 2020 and YTD 2020 periods due primarily to the closure of a greater volume, and value, of licensing contracts in the prior year periods.

Recurring revenue for the Q2 2020 and YTD 2020 periods was $5.6 million and $9.5 million, compared to $6.0 million and $11.7 million in the same periods last year. 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 in 2020 is primarily a timing-based issue and does not reflect lower renewal or retention rates.

Gross margin for the Q2 2020 and YTD 2020 periods was 25% and 30%, compared to 46% and 47% in the same periods last year. Gross margin was lower in the Q2 2020 and YTD 2020 periods due primarily to lower revenue at WiLAN as described above, offset in part by higher gross margin at IRD. IRD and WiLAN's cost of sales benefited by $0.6 million and $0.3 million, respectively, via the Government of Canada's Canadian Emergency Wage Subsidy ("CEWS") program.

Operating expenses include selling, general and administrative costs ("SG&A"), research and development costs ("R&D"), depreciation and amortization of intangible assets and special charges. For Q2 2020, Quarterhill had special charges of $0.7 million compared to $15.0 million in Q2 2019. YTD 2020, special charges were $0.9 million compared to $16.7 million in the same period last year. 

Excluding special charges, operating expenses for the Q2 2020 and YTD 2020 periods were $11.9 million and $24.3 million, compared to $14.0 million and $27.9 million in the same periods last year. Operating expenses were lower in 2020 due primarily to lower SG&A and R&D and a CEWS benefit at IRD of $0.7 million.

Adjusted EBITDA for the Q2 2020 and YTD 2020 periods was ($2.0) million and ($1.8) million, compared to $17.1 million and $34.2 million in the same periods last year. The decrease in Adjusted EBITDA reflects the lower revenue at WiLAN, offset in part, by higher Adjusted EBITDA at IRD and lower corporate expenses.

Net income for Q2 2020 was $9.5 million, or $0.08 per basic and diluted common share, compared to net loss of ($5.9) million, or ($0.05) per basic and diluted common share, in Q2 2019. Net income for the YTD 2020 period was $4.4 million, or $0.04 per basic and diluted common share, compared to net loss of ($6.0) million, or ($0.05) per basic and diluted common share, in the same period last year. Net income in the Q2 2020 and YTD 2020 periods was driven primarily by net income from discontinued operations of $14.5 million and $14.3 million, respectively, which included a $17.7 million gain on the sale of VIZIYA in Q2 2020. 

Cash generated from (used in) continuing operations for the Q2 2020 and YTD 2020 periods was ($4.3) million and $5.4 million, compared to $45.0 million and $29.2 million in the same periods last year. Cash and cash equivalents and short-term investments increased to $143.1 million at June 30, 2020, compared to $89.4 million at December 31, 2019. The Company had debt of $7.4 million at June 30, 2020, compared to $4.4 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. Management slides that accompany the conference call can be viewed via the webcast.

Webcast Information
Live webcast: https://produceredition.webcasts.com/starthere.jsp?ei=1348487&tp_key=00592de315       

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 90 days at: https://produceredition.webcasts.com/starthere.jsp?ei=1348487&tp_key=00592de315    

Telephone replay will be available from 1:00 p.m. Eastern Time on August 6, 2020 until 11:59 p.m. Eastern Time on August 20, 2020 at: 1.855.859.2056 (Toll Free) or 1.416.849.0833 (International). The telephone replay requires the passcode 4283448.

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 (loss) income for the three- and six-month periods ended June 30, 2020 and 2019 are included below: 


For the Three months ended June 30, 2020

CONTINUING OPERATIONS

Licensing


Intelligent
Systems


Corporate


Total

Revenues





License

$

68


$


$


$

68

Systems


11,138



11,138

Recurring

252


5,366



5,618


320


16,504



16,824

Direct cost of revenues

3,062


9,594



12,656

Gross profit

(2,742)


6,910



4,168

Depreciation of right-of-use assets

63


159


15


237

Depreciation of property, plant and equipment

16


225


6


247

Amortization of intangibles

3,588


1,260



4,848

Selling, general and administrative expenses

746


2,333


2,747


5,826

Research and development expenses


555



555

Impairment losses of intangible assets

233




233

Special charges


659



659

Results from operations

(7,388)


1,719


(2,768)


(8,437)

Finance income

(22)


(6)


(132)


(160)

Finance expense

38


74


6


118

Foreign exchange loss (gain)

342


(235)


(110)


(3)

Other income


(431)



(431)

(Loss) income before taxes

(7,746)


2,317


(2,532)


(7,961)

Current income tax expense

56


22



78

Deferred income tax (recovery) expense

(4,582)


167


1,363


(3,052)

Income tax (recovery) expense

(4,526)


189


1,363


(2,974)

Net (loss) income from continuing operations

$

(3,220)


$

2,128


$

(3,895)


$

(4,987)






Adjusted EBITDA

$

(3,419)


$

4,041


$

(2,614)


$

(1,992)






For the Six months ended June 30, 2020

CONTINUING OPERATIONS

Licensing


Intelligent
Systems


Corporate


Total

Revenues





License

$

9,817


$


$


$

9,817

Systems


19,141



19,141

Recurring

703


8,776



9,479


10,520


27,917



38,437

Direct cost of revenues

8,831


18,012



26,843

Gross profit

1,689


9,905



11,594

Depreciation of right-of-use assets

124


327


30


481

Depreciation of property, plant and equipment

32


428


11


471

Amortization of intangibles

7,071


2,519



9,590

Selling, general and administrative expenses

1,724


5,817


4,580


12,121

Research and development expenses


1,424



1,424

Impairment losses of intangible assets

233




233

Special charges


659


213


872

Results from operations

(7,495)


(1,269)


(4,834)


(13,598)

Finance income

(122)


(7)


(253)


(382)

Finance expense

78


125


11


214

Foreign exchange loss (gain)

1,596


(929)


(1,252)


(585)

Other income


(809)



(809)

(Loss) income before taxes

(9,047)


351


(3,340)


(12,036)

Current income tax expense

1,242


102



1,344

Deferred income tax (recovery) expense

(5,971)


(608)


3,098


(3,481)

Income tax (recovery) expense

(4,729)


(506)


3,098


(2,137)

Net (loss) income from continuing operations

$

(4,318)


$

857


$

(6,438)


$

(9,899)






Adjusted EBITDA

$

64


$

2,709


$

(4,528)


$

(1,755)






For the Three months ended June 30, 2019

CONTINUING OPERATIONS

Licensing


Intelligent
Systems


Corporate


Total

Revenues





License

$

32,807


$


$


$

32,807

Systems


14,035



14,035

Recurring

292


5,744



6,036


$

33,099


$

19,779


$


$

52,878

Direct cost of revenues

16,035


12,692



28,727

Gross profit

17,064


7,087



24,151

Depreciation of right-of-use assets

82


182


15


279

Depreciation of property, plant and equipment

40


391


5


436

Amortization of intangibles

4,703


1,257



5,960

Selling, general and administrative expenses

451


3,255


2,869


6,575

Research and development expenses


779



779

Special charges

711



14,244


14,955

Results from operations

11,077


1,223


(17,133)


(4,833)

Finance income

(52)


(5)


(332)


(389)

Finance expense

10


349


5


364

Foreign exchange (gain) loss

(236)


74


249


87

Other income

(4)


(237)



(241)

Income (loss) before taxes

11,359


1,042


(17,055)


(4,654)

Current income tax expense (recovery)

54


(19)



35

Deferred income tax expense (recovery)

2,564


(489)


(1,132)


943

Income tax expense (recovery)

2,618


(508)


(1,132)


978

Net income (loss) from continuing operations

$

8,741


$

1,550


$

(15,923)


$

(5,632)






Adjusted EBITDA

16,628


3,089


(2,635)


17,082






For the Six months ended June 30, 2019

CONTINUING OPERATIONS

Licensing


Intelligent
Systems


Corporate


Total

Revenues





License

$

69,527


$


$


$

69,527

Systems


21,483



21,483

Recurring

963


10,711



11,674


$

70,490


$

32,194


$


$

102,684

Direct cost of revenues

33,038


21,596



54,634

Gross profit

37,452


10,598



48,050

Depreciation of right-of-use assets

381


355


30


766

Depreciation of property, plant and equipment

95


793


10


898

Amortization of intangibles

9,394


2,515



11,909

Selling, general and administrative expenses

983


6,395


5,441


12,819

Research and development expenses


1,517



1,517

Special charges

2,435



14,244


16,679

Results from operations

24,164


(977)


(19,725)


3,462

Finance income

(76)


(8)


(574)


(658)

Finance expense

14


443


8


465

Foreign exchange (gain) loss

(491)


329


527


365

Other income

(4)


(335)



(339)

Income (loss) before taxes

24,721


(1,406)


(19,686)


3,629

Current income tax expense

5,248


207



5,455

Deferred income tax expense (recovery)

5,129


(1,285)


(777)


3,067

Income tax expense (recovery)

10,377


(1,078)


(777)


8,522

Net income (loss) from continuing operations

$

14,344


$

(328)


$

(18,909)


$

(4,893)






Adjusted EBITDA

$

36,456


$

2,761


$

(4,996)


$

34,221

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 and forward-looking information within the meaning of the U.S. Private Securities Litigation Reform Act of 1995 and other United States and Canadian securities laws. Forward-looking statements and forward-looking information 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. Many factors could cause Quarterhill's actual performance or achievements to differ materially from those expressed or implied by the forward-looking statements or forward-looking information. Such 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 or forward-looking information, whether as a result of new information, future events or otherwise, except as required by law.

All trademarks and brands mentioned in this release are the property of their respective owners.

Quarterhill Inc.

Condensed Consolidated Interim Statements of Income (Loss) and Comprehensive Income and (Loss)

(Unaudited)

(in thousands of Canadian dollars, except share and per share amounts)



Three months ended June 30,


Six months ended June 30,


2020


2019


2020


2019

Revenues




License

$

68


$

32,807


$

9,817


$

69,527

Systems

11,138


14,035


19,141


21,483

Recurring

5,618


6,036


9,479


11,674


16,824


52,878


38,437


102,684

Direct cost of revenues





License

3,063


16,035


8,803


33,038

Systems

6,594


9,181


12,574


14,224

Recurring

2,999


3,511


5,466


7,372


12,656


28,727


26,843


54,634

Gross profit

4,168


24,151


11,594


48,050

Operating expenses





Depreciation of right-of-use assets

237


279


481


766

Depreciation of property, plant and equipment

247


436


471


898

Amortization of intangibles

4,848


5,960


9,590


11,909

Selling, general and administrative expenses

5,826


6,575


12,121


12,819

Research and development expenses

555


779


1,424


1,517

Impairment losses on intangibles

233



233


Special charges

659


14,955


872


16,679


12,605


28,984


25,192


44,588

Results from operations

(8,437)


(4,833)


(13,598)


3,462

Finance income

(160)


(389)


(382)


(658)

Finance expense

118


364


214


465

Foreign exchange (gain) loss

(3)


87


(585)


365

Other income

(431)


(241)


(809)


(339)

(Loss) income before taxes

(7,961)


(4,654)


(12,036)


3,629

Current income tax expense

78


35


1,344


5,455

Deferred income tax (recovery) expense

(3,052)


943


(3,481)


3,067

Income tax (recovery) expense

(2,974)


978


(2,137)


8,522



Net loss from continuing operations

$

(4,987)


$

(5,632)


(9,899)


(4,893)

Net income (loss) from discontinued operations

$

14,455


$

(306)


14,255


(1,092)

Net income (loss)

$

9,468


$

(5,938)


4,356


(5,985)

Other comprehensive income (loss) that may be reclassified subsequently to net income (loss):

 Foreign currency translation adjustment

$(11,188)


$(4,290)


9,875


(8,869)

 Comprehensive (loss) income

$(1,720)


$(10,228)


14,231


(14,854)








Net income (loss) per share







From continuing operations

$(0.04)


$(0.05)


(0.08)


(0.04)

From discontinued operations

$0.12


$0.00


0.12


(0.01)

Net income (loss) per share - Basic

$0.08


$(0.05)


0.04


(0.05)








From continuing operations

$(0.04)


$(0.05)


(0.08)


(0.04)

From discontinued operations

$0.12


$0.00


0.12


(0.01)

Net income (loss) per share - Diluted

$0.08


$(0.05)


0.04


(0.05)

 

Quarterhill Inc.

Condensed Consolidated Interim Statements of Financial Position

(Unaudited)

(in thousands of Canadian dollars)





As at

June 30, 2020

December 31, 2019

January 1, 2019

Current assets




Cash and cash equivalents

$

141,515


$

87,870


$

87,029

Short-term investments

1,551


1,550


1,551

Restricted short-term investments



2,995

Accounts receivable (net of allowance for doubtful accounts)

11,858


42,925


14,719

Other current assets

218


108


124

Unbilled revenue

11,260


8,965


5,432

Income taxes receivable

353


137


270

Inventories (net of obsolescence)

10,242


8,570


8,114

Prepaid expenses and deposits

3,287


2,242


2,927


180,284


152,367


123,161

Non-current assets




Accounts receivable

682


3,846


565

Right-of-use assets

3,906


4,502


3,972

Property, plant and equipment

2,941


2,826


3,614

Intangible assets

70,760


89,534


119,015

Investment in joint venture

6,210


5,233


5,203

Deferred income tax assets

36,877


33,270


36,948

Goodwill

17,274


32,977


34,446


138,650


172,188


203,763

TOTAL ASSETS

$

318,934


$

324,555


$

326,924





Liabilities




Current liabilities




Bank indebtedness

$

7,036


$

4,026


$

3,537

Accounts payable and accrued liabilities

12,106


25,755


24,644

Dividends payable

1,462



Income taxes payable

285


203


Current portion of lease liabilities

884


998


1,120

Contingent liabilities



1,265

Current portion of deferred revenue

4,544


8,638


6,357

Current portion of long-term debt

41


59


407


26,358


39,679


37,330

Non-current liabilities




Deferred revenue

1,522


1,513


1,954

Long-term lease liabilities

3,002


3,550


2,604

Long-term debt

285


271


236

Deferred income tax liabilities


3,297


5,905


4,809


8,631


10,699

TOTAL LIABILITIES

$

31,167


$

48,310


$

48,029





Shareholders' equity




Capital stock

$

570,591


$

570,553


$

570,553

Contributed surplus

32,207


32,011


31,252

Accumulated other comprehensive income

20,811


10,936


22,112

Deficit

(335,842)


(337,255)


(345,022)


287,767


276,245


278,895

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

318,934


$

324,555


$

326,924

 

Quarterhill Inc.

Condensed Consolidated Interim Statements of Cash Flows

(Unaudited)

(in thousands of Canadian dollars)



Three months ended June 30,


Six months ended June 30,


2020


2019


2020


2019

Cash generated from (used in) Operations






Net loss from continuing operations

$

(4,987)


$

(5,632)


$

(9,899)


$

(4,893)

Non-cash items





Stock-based compensation expense

221


285


196


507

Depreciation of right-of-use assets

237


279


481


766

Interest expense on lease liabilities

56


54


112


103

Depreciation and amortization

5,095


6,396


10,061


12,807

Foreign exchange (gain) loss

(478)


(45)


(194)


(127)

Equity in earnings from joint venture

(431)


(241)


(809)


(339)

Impairment losses on intangibles

233



233


(Gain) loss on disposal of assets

(6)


785


(10)


785

Deferred income tax (recovery) expense

(3,052)


943


(3,481)


3,067

Long-term accounts receivable




(85)

Embedded derivatives

121


39


(101)


132

Contingent consideration adjustment


14,244



14,244

Changes in non-cash working capital balances





Accounts receivable

5,949


36,744


26,559


1,697

Unbilled revenue

(2,762)


(3,027)


(2,026)


(3,504)

Income taxes receivable

(252)


(72)


(209)


195

Inventories

(1,952)


(213)


(1,340)


(185)

Prepaid expenses and deposits

(1,474)


(278)


(1,296)


(4)

Deferred revenue

(539)


(771)


(52)


(331)

Accounts payable and accrued liabilities

(282)


(4,423)


(12,911)


4,269

Income taxes payable

45


(35)


92


49

Cash (used in) generated from continuing operations

(4,258)


45,032


5,406


29,153

Net cash flows attributable to discontinuing operations

(2,478)


928


(3,075)


869

Net cash (used in) generated from operating activities

(6,736)


45,960


2,331


30,022

Financing





Dividends paid


(1,473)


(1,481)


(2,975)

Bank indebtedness

4,796


2,467


2,984


2,566

Payment of lease liabilities

(271)


(420)


(586)


(871)

Repayment of long-term debt

(13)


(276)


(120)


(300)

Exercise of stock options

14



14


Common shares issued from Performance Stock Units



24


Cash generated from (used in) continuing operations

4,526


298


835


(1,580)

Net cash flows attributable to discontinuing operations


(8)



(19)

Net cash generated from (used in) financing activities

4,526


290


835


(1,599)

Investing





Proceeds from disposition of a subsidiary

49,400



49,400


Cash sold on disposition of a subsidiary

(1,825)



(1,825)


Proceeds from sale of property, plant and equipment

12



16


Purchase of property and equipment

(586)


(381)


(887)


(499)

Purchase of intangibles

(8)


(98)


(25)


(125)

Cash generated from (used in) continuing operations

46,993


(479)


46,679


(624)

Net cash flows attributable to discontinuing operations

(11)


(31)


(81)


(123)

Net cash generated from (used in) investing activities

46,982


(510)


46,598


(747)

Foreign exchange gain (loss) on cash held in foreign currency

(4,853)


(1,951)


3,881


(3,622)

Net increase in cash and cash equivalents

39,919


43,789


53,645


24,054

Cash and cash equivalents, beginning of period

101,596


67,294


87,870


87,029

Cash and cash equivalents, end of period

$

141,515


$

111,083


141,515


111,083

 

Quarterhill Inc.

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity

For the six months ended June 30, 2020 and 2019

(In thousands of Canadian dollars)


Capital Stock


Contributed
Surplus


Accumulated
Other
Comprehensive
Income


Deficit


Total Equity

January 1, 2019

$

570,553


$

31,252


$

22,112


$

(345,022)


$

278,895







Net loss




(5,985)


(5,985)

Other comprehensive loss



(8,869)



(8,869)

Stock-based compensation expense


507




507

Dividends declared




(2,975)


(2,975)

June 30, 2019

570,553


31,759


13,243


(353,982)


261,573



















January 1, 2020

$

570,553


$

32,011


$

10,936


$

(337,255)


$

276,245







Net income




$

4,356


$

4,356

Other comprehensive income



$

9,875



$

9,875

Stock-based compensation expense


196




196

Exercise of options

14





14

Common shares issued from performance stock units

24





24

Dividends declared




(2,943)


(2,943)

June 30, 2020

570,591


32,207


20,811


(335,842)


287,767

 

Quarterhill Inc.

Reconciliations of Net loss to Adjusted EBITDA

(Unaudited)

(in thousands of Canadian dollars, except share and per share amounts)




Three months ended June 30,


2020


2019


$


Per Share


$


Per Share

Net loss from continuing operations

$

(4,987)


$

(0.04)


$

(5,632)


$

(0.05)











Adjusted for:









Income tax (recovery) expense

(2,974)


(0.03)


978


0.01

Foreign exchange (gain) loss

(3)



87


Finance expense

118



364


Finance income

(160)



(389)


Special charges

659


0.01


14,955


0.13

Impairment losses on intangible assets

233




Amortization of intangibles

4,848


0.04


5,960


0.05

Depreciation of property, plant and equipment

247



436


Depreciation of right-of-use assets

237



279


Stock based compensation expense

221



285


Other income

(431)



(241)


Adjusted EBITDA

$

(1,992)


$

(0.02)


$

17,082


$

0.14










Weighted average number of Common Shares









Basic


118,861,166



11,817,466

 

Quarterhill Inc.

Reconciliations of Net loss to Adjusted EBITDA

(Unaudited)

(in thousands of Canadian dollars, except share and per share amounts)



Six months ended June 30,


2020


2019


$


Per Share


$


Per Share

Net loss from continuing operations

$

(9,899)


$

(0.08)


$

(4,893)


$

(0.04)






Adjusted for:





Income tax (recovery) expense

(2,137)


(0.02)


8,522


0.07

Foreign exchange (gain) loss

(585)



365


Finance expense

214



465


Finance income

(382)



(658)


(0.01)

Special charges

872


0.01


16,679


0.14

Impairment losses on intangible assets

233




Amortization of intangibles

9,590


0.08


11,909


0.10

Depreciation of property, plant and equipment

471



898


0.01

Depreciation of right-of-use assets

481



766


0.01

Stock based compensation expense

196



507


Other income

(809)


(0.01)


(339)


Adjusted EBITDA

$

(1,755)


$

(0.02)


$

34,221


$

0.28






Weighted average number of Common Shares





Basic


118,861,166



11,817,466


 

Cision View original content:http://www.prnewswire.com/news-releases/quarterhill-announces-second-quarter-2020-financial-results-301107385.html

SOURCE Quarterhill Inc.

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