Q3 Revenue of $25.4
million and Adjusted EBITDA of $2.0
million; cash balance at quarter-end was $72.1 million
KITCHENER, ON, Nov. 7, 2019 /CNW/ - Quarterhill Inc.
("Quarterhill" or the "Company") (TSX: QTRH) (NASDAQ: QTRH),
announces its financial results for the three- and nine-month
periods ended September 30, 2019. All
financial information in this press release is reported in U.S.
dollars, unless otherwise indicated.
Third Quarter 2019 Highlights
- Revenues of $25.4 million,
compared to $19.6 million in Q3 last
year
- Recurring revenues of $4.7
million, compared to $6.3
million in Q3 last year
- Adjusted EBITDA* of $2.0 million,
compared to ($2.5) million in Q3 last
year
- Net income of $9.3 million, or
$0.08 per basic and diluted common
share, compared to net loss of ($9.3)
million, or ($0.08) per basic
and diluted common share, in Q3 last year
- Cash and cash equivalents were $72.1
million at September 30, 2019,
compared to $67.3 million at
December 31, 2018
- Subsequent to quarter-end, appointed David Cortens as interim CFO
"Q3 revenue and Adjusted EBITDA increased year-over-year due to
stronger performance at IRD and VIZIYA," said John Gillberry, Chairman of Quarterhill.
"Overall, on a year-to-date basis, each business is performing
ahead of the prior year with the net result being an increase in
cash from operations and a strengthening of our balance sheet to
support our diversification strategy. Our CEO search is now firmly
underway and subsequent to quarter-end, we were very pleased to
appoint Dave Cortens as interim CFO
of Quarterhill. Dave was CFO of IRD at the time of the appointment,
so we expect a smooth transition for that role."
"With our Q2 results we announced that VIZIYA had signed two
software license contracts in July and we noted the related impact
that those contracts could have on the earn-out portion of the
VIZIYA acquisition. In terms of an update, we were able to
recognize revenue from one contract during the quarter, toward the
end of September, while the second contract was not completed. As a
result, VIZIYA's Q3 results reflect only the economics from the one
contract and based on the timing of that contract being recognized,
we have reversed the earn-out contingency in full in our Q3
financial statements. We continue to believe that these larger
multi-million-dollar opportunities reflect the operational and
economic value that VIZIYA's solutions can bring to its
customers."
Approval of Eligible Dividend
The Board of Directors
has declared an eligible quarterly dividend of CDN $0.0125 per common share payable on January 10, 2020, to shareholders of record on
December 13, 2019.
Business Strategy and Segments
Quarterhill's
acquisition strategy focuses primarily on financial metrics while
remaining cognizant of broader technology and market trends as it
builds a portfolio of businesses that are characterized as having
recurring revenue, free cash flow and profitable growth potential.
Driven by the execution of a proven and disciplined acquisition
strategy, the Company seeks to enable shareholders to benefit from
consolidation and convergence trends in today's technology
industry.
Q3 and Year-to-Date 2019 Consolidated Financial
Review
Consolidated revenues for the three months ended
September 30, 2019 ("Q3 2019") were
$25.4 million, compared to
$19.6 million in Q3 2018,
representing growth of 30%. Consolidated revenues for the nine
months ended September 30, 2019
("Year-to-Date") were $107.6 million,
compared to $52.0 million in the same
period last year, representing growth of 107%. Growth for Q3 2019
was driven by IRD and VIZIYA, while growth for the Year-to-Date
period was due to higher revenue from all three businesses – WiLAN,
IRD and VIZIYA.
Gross margin for Q3 2019 was $10.3
million, or 41%, compared to $5.1
million, or 26%, in Q3 2018. Gross margin for the nine
months ended September 30, 2019 was
$50.8 million, or 47%, compared to
$9.3 million, or 18%, in the same
period last year. The Q3 2019 improvement in gross margin was due
primarily to better margin performance at IRD and VIZIYA, and for
the Year-to-Date period, increased gross margin was due to better
margin performance from all three businesses – WiLAN, IRD and
VIZIYA.
Operating expenses include selling, general and administrative
costs, research and development costs, depreciation and
amortization of intangible assets and special charges. Q3 2019
operating expenses include a special charge recovery of the
$11.6 million contingent liability
related to the earn-out payment in the VIZIYA acquisition. This
special charge recovery is a result of VIZIYA not meeting its
requirements for the earn-out payment. All Special charges are
excluded in the calculation of Adjusted EBITDA.
Excluding the $11.6 million
special charge recovery, operating expenses for Q3 2019 were
$13.7 million, compared to
$14.4 million in Q3 2018, which
excludes a $2.3 million special
charge in that period. For the Year-to-Date period, excluding
special charges in both 2018 and 2019, operating expenses were
$40.6 million, compared to
$44.3 million in the same period last
year. Operating expenses decreased year-over-year due primarily to
the restructurings at IRD and WiLAN that took place in 2018 as well
as Quarterhill's ongoing focus on cost control.
Adjusted EBITDA for Q3 2019 was $2.0
million compared to ($2.5)
million in Q3 2018. Adjusted EBITDA for the Year-to-Date
period was $27.4 million compared to
($13.8) million in the same period
last year. Adjusted EBITDA for the three- and nine-month periods
ended September 30, 2019 reflects, in
general, improving operations at all three portfolio companies in
2019.
Net income for Q3 2019 was $9.3
million, or $0.08 per basic
and diluted Common Share, compared to net loss of ($9.3) million or ($0.08) per basic and diluted Common Share in Q3
2018. Net income for Q3 2019 includes a special charge recovery of
$11.6 million while net loss for Q3
2018 includes a special charge expense of $2.3 million. Net income for the Year-to-Date
period was $4.9 million, or
$0.04 per basic and diluted Common
Share, compared to a net loss of ($29.2)
million, or ($0.25) per basic
and diluted Common Share, in the same period last year. The
Year-to-Date period for 2019 includes a special charge expense of
$0.9 million, while the same period
in the prior year includes a special charge expense of $2.3 million. Year-over-year, the Company's
bottom-line has improved primarily due to higher revenue at all
three portfolio companies, combined with a lower cost base
following the restructurings at WiLAN and IRD in 2018.
Cash used in operations in Q3 2019 was ($9.8) million, compared to cash used in
operations of ($9.0) million in Q3
2018. Cash used in operations in Q3 2019 was due primarily to
working capital adjustments of ($11.0)
million. Cash generated from operations for the Year-to-Date
period was $11.9 million, compared to
cash used in operations of ($17.9)
million in the same period last year. Cash from operations
in 2019 has benefited from the improved financial performance at
all three businesses.
Cash and cash equivalents and short-term investments amounted to
$72.1 million at September 30, 2019, compared to $67.3 million at December
31, 2018.
The table below highlights financial performance for the
Company's Licensing, Intelligent Systems and Enterprise Software
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.
|
For the three months
ended September 30, 2019
|
|
Licensing
|
|
Intelligent
Systems
|
|
Enterprise
Software
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
3,765
|
|
$
|
12,853
|
|
$
|
8,751
|
|
$
|
-
|
|
$
|
25,369
|
Cost of revenues
(excluding depreciation and amortization)
|
|
6,584
|
|
|
8,143
|
|
|
372
|
|
|
-
|
|
|
15,099
|
|
|
(2,819)
|
|
|
4,710
|
|
|
8,379
|
|
|
-
|
|
|
10,270
|
Selling, general and
administrative expenses
|
|
481
|
|
|
2,512
|
|
|
2,114
|
|
|
2,079
|
|
|
7,186
|
Research and
development expenses
|
|
-
|
|
|
572
|
|
|
657
|
|
|
-
|
|
|
1,229
|
Depreciation of
property, plant and equipment
|
|
9
|
|
|
129
|
|
|
39
|
|
|
4
|
|
|
181
|
Amortization of
intangibles
|
|
3,424
|
|
|
953
|
|
|
757
|
|
|
-
|
|
|
5,134
|
Special
charges
|
|
7
|
|
|
-
|
|
|
-
|
|
|
(11,577)
|
|
|
(11,570)
|
Results from
operations
|
|
(6,740)
|
|
|
544
|
|
|
4,812
|
|
|
9,494
|
|
|
8,110
|
Finance
income
|
|
(147)
|
|
|
(9)
|
|
|
-
|
|
|
(222)
|
|
|
(378)
|
Finance
expense
|
|
-
|
|
|
61
|
|
|
1
|
|
|
-
|
|
|
62
|
Foreign exchange loss
(gain)
|
|
114
|
|
|
(221)
|
|
|
(13)
|
|
|
(52)
|
|
|
(172)
|
Other
income
|
|
-
|
|
|
(119)
|
|
|
-
|
|
|
-
|
|
|
(119)
|
Income (loss) before
taxes
|
|
(6,707)
|
|
|
832
|
|
|
4,824
|
|
|
9,768
|
|
|
8,717
|
Current income tax
expense
|
|
4
|
|
|
222
|
|
|
1,049
|
|
|
-
|
|
|
1,275
|
Deferred income tax
expense (recovery)
|
|
(2,058)
|
|
|
(203)
|
|
|
42
|
|
|
326
|
|
|
(1,893)
|
Income tax expense
(recovery)
|
|
(2,054)
|
|
|
19
|
|
|
1,091
|
|
|
326
|
|
|
(618)
|
Net income
(loss)
|
$
|
(4,653)
|
|
$
|
813
|
|
$
|
3,733
|
|
$
|
9,442
|
|
$
|
9,335
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
(3,291)
|
|
|
1,648
|
|
|
5,622
|
|
|
(1,930)
|
|
|
2,049
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
9
|
|
|
22
|
|
|
14
|
|
|
149
|
|
|
194
|
|
For the nine months
ended September 30, 2019
|
|
Licensing
|
|
Intelligent
Systems
|
|
Enterprise
Software
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
56,633
|
|
$
|
36,977
|
|
$
|
13,953
|
|
$
|
-
|
|
$
|
107,563
|
Cost of revenues
(excluding depreciation and amortization)
|
|
31,360
|
|
|
24,328
|
|
|
1,035
|
|
|
-
|
|
|
56,723
|
|
|
25,273
|
|
|
12,649
|
|
|
12,918
|
|
|
-
|
|
|
50,840
|
Selling, general and
administrative expenses
|
|
1,506
|
|
|
7,602
|
|
|
5,132
|
|
|
6,183
|
|
|
20,423
|
Research and
development expenses
|
|
-
|
|
|
1,780
|
|
|
1,865
|
|
|
-
|
|
|
3,645
|
Depreciation of
property, plant and equipment
|
|
80
|
|
|
723
|
|
|
106
|
|
|
12
|
|
|
921
|
Amortization of
intangibles
|
|
10,468
|
|
|
2,839
|
|
|
2,271
|
|
|
-
|
|
|
15,578
|
Special
charges
|
|
1,836
|
|
|
-
|
|
|
-
|
|
|
(929)
|
|
|
907
|
Results from
operations
|
|
11,383
|
|
|
(295)
|
|
|
3,544
|
|
|
(5,266)
|
|
|
9,366
|
Finance
income
|
|
(204)
|
|
|
(15)
|
|
|
-
|
|
|
(652)
|
|
|
(871)
|
Finance
expense
|
|
-
|
|
|
337
|
|
|
3
|
|
|
1
|
|
|
341
|
Foreign exchange loss
(gain)
|
|
(254)
|
|
|
26
|
|
|
35
|
|
|
343
|
|
|
150
|
Other
income
|
|
(3)
|
|
|
(370)
|
|
|
-
|
|
|
-
|
|
|
(373)
|
Income (loss) before
taxes
|
|
11,844
|
|
|
(273)
|
|
|
3,506
|
|
|
(4,958)
|
|
|
10,119
|
Current income tax
expense
|
|
3,951
|
|
|
307
|
|
|
1,050
|
|
|
-
|
|
|
5,308
|
Deferred income tax
expense (recovery)
|
|
1,790
|
|
|
(1,160)
|
|
|
(461)
|
|
|
(252)
|
|
|
(83)
|
Income tax expense
(recovery)
|
|
5,741
|
|
|
(853)
|
|
|
589
|
|
|
(252)
|
|
|
5,225
|
Net income
(loss)
|
$
|
6,103
|
|
$
|
580
|
|
$
|
2,917
|
|
$
|
(4,706)
|
|
$
|
4,894
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
23,766
|
|
|
3,346
|
|
|
5,964
|
|
|
(5,701)
|
|
|
27,375
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
(1)
|
|
|
79
|
|
|
43
|
|
|
482
|
|
|
603
|
|
For the three months
ended September 30, 2018
|
|
Licensing
|
|
Intelligent
Systems
|
|
Enterprise
Software
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
4,445
|
|
$
|
12,439
|
|
$
|
2,695
|
|
$
|
-
|
|
$
|
19,579
|
Cost of revenues
(excluding depreciation and amortization)
|
|
5,877
|
|
|
8,208
|
|
|
355
|
|
|
-
|
|
|
14,440
|
|
|
(1,432)
|
|
|
4,231
|
|
|
2,340
|
|
|
-
|
|
|
5,139
|
Selling, general and
administrative expenses
|
|
761
|
|
|
2,211
|
|
|
1,828
|
|
|
2,071
|
|
|
6,871
|
Research and
development expenses
|
|
-
|
|
|
534
|
|
|
368
|
|
|
-
|
|
|
902
|
Depreciation of
property, plant and equipment
|
|
62
|
|
|
275
|
|
|
32
|
|
|
3
|
|
|
372
|
Amortization of
intangibles
|
|
4,581
|
|
|
960
|
|
|
757
|
|
|
-
|
|
|
6,298
|
Special
charges
|
|
-
|
|
|
2,320
|
|
|
-
|
|
|
-
|
|
|
2,320
|
Results from
operations
|
|
(6,836)
|
|
|
(2,069)
|
|
|
(645)
|
|
|
(2,074)
|
|
|
(11,624)
|
Finance
income
|
|
(3)
|
|
|
(2)
|
|
|
-
|
|
|
(135)
|
|
|
(140)
|
Finance
expense
|
|
-
|
|
|
72
|
|
|
4
|
|
|
2
|
|
|
78
|
Foreign exchange loss
(gain)
|
|
(223)
|
|
|
108
|
|
|
32
|
|
|
174
|
|
|
91
|
Other
income
|
|
-
|
|
|
(247)
|
|
|
-
|
|
|
-
|
|
|
(247)
|
Loss before
taxes
|
|
(6,610)
|
|
|
(2,000)
|
|
|
(681)
|
|
|
(2,115)
|
|
|
(11,406)
|
Current income tax
expense (recovery)
|
|
912
|
|
|
(41)
|
|
|
(116)
|
|
|
-
|
|
|
755
|
Deferred income tax
recovery
|
|
(2,103)
|
|
|
(504)
|
|
|
(264)
|
|
|
(9)
|
|
|
(2,880)
|
Income tax
recovery
|
|
(1,191)
|
|
|
(545)
|
|
|
(380)
|
|
|
(9)
|
|
|
(2,125)
|
Net loss
|
$
|
(5,419)
|
|
$
|
(1,455)
|
|
$
|
(301)
|
|
$
|
(2,106)
|
|
$
|
(9,281)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
(2,178)
|
|
|
1,442
|
|
|
158
|
|
|
(1,934)
|
|
|
(2,512)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of deleted
deferred revenue
|
|
-
|
|
|
8
|
|
|
-
|
|
|
-
|
|
|
8
|
Stock-based
compensation
|
|
15
|
|
|
(52)
|
|
|
14
|
|
|
137
|
|
|
114
|
|
For the nine months
ended September 30, 2018
|
|
Licensing
|
|
Intelligent
Systems
|
|
Enterprise
Software
|
|
Corporate
|
|
Total
|
Revenues
|
$
|
10,188
|
|
$
|
32,510
|
|
$
|
9,287
|
|
$
|
-
|
|
$
|
51,985
|
Cost of revenues
(excluding depreciation and amortization)
|
|
19,797
|
|
|
21,789
|
|
|
1,127
|
|
|
-
|
|
|
42,713
|
|
|
(9,609)
|
|
|
10,721
|
|
|
8,160
|
|
|
-
|
|
|
9,272
|
Selling, general and
administrative expenses
|
|
1,999
|
|
|
7,497
|
|
|
5,130
|
|
|
6,334
|
|
|
20,960
|
Research and
development expenses
|
|
-
|
|
|
1,593
|
|
|
1,101
|
|
|
-
|
|
|
2,694
|
Depreciation of
property, plant and equipment
|
|
209
|
|
|
849
|
|
|
91
|
|
|
6
|
|
|
1,155
|
Amortization of
intangibles
|
|
14,297
|
|
|
2,923
|
|
|
2,271
|
|
|
-
|
|
|
19,491
|
Special
charges
|
|
-
|
|
|
2,320
|
|
|
-
|
|
|
-
|
|
|
2,320
|
Results from
operations
|
|
(26,114)
|
|
|
(4,461)
|
|
|
(433)
|
|
|
(6,340)
|
|
|
(37,348)
|
Finance
income
|
|
(3)
|
|
|
(9)
|
|
|
-
|
|
|
(510)
|
|
|
(522)
|
Finance
expense
|
|
1
|
|
|
144
|
|
|
10
|
|
|
2
|
|
|
157
|
Foreign exchange loss
(gain)
|
|
334
|
|
|
(164)
|
|
|
51
|
|
|
(295)
|
|
|
(74)
|
Other
income
|
|
-
|
|
|
(884)
|
|
|
(269)
|
|
|
-
|
|
|
(1,153)
|
Loss before
taxes
|
|
(26,446)
|
|
|
(3,548)
|
|
|
(225)
|
|
|
(5,537)
|
|
|
(35,756)
|
Current income tax
expense (recovery)
|
|
1,137
|
|
|
158
|
|
|
(645)
|
|
|
1
|
|
|
651
|
Deferred income tax
expense (recovery)
|
|
(6,928)
|
|
|
(1,138)
|
|
|
(749)
|
|
|
1,599
|
|
|
(7,216)
|
Income tax expense
(recovery)
|
|
(5,791)
|
|
|
(980)
|
|
|
(1,394)
|
|
|
1,600
|
|
|
(6,565)
|
Net income
(loss)
|
$
|
(20,655)
|
|
$
|
(2,568)
|
|
$
|
1,169
|
|
$
|
(7,137)
|
|
$
|
(29,191)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
(11,582)
|
|
|
1,891
|
|
|
2,101
|
|
|
(6,210)
|
|
|
(13,800)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Effect of deleted
deferred revenue
|
|
-
|
|
|
166
|
|
|
148
|
|
|
-
|
|
|
314
|
Stock-based
compensation
|
|
26
|
|
|
94
|
|
|
24
|
|
|
124
|
|
|
268
|
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://event.on24.com/wcc/r/2113582/40879998B72BE11500C14B8D9C9764CE
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://event.on24.com/wcc/r/2113582/40879998B72BE11500C14B8D9C9764CE
Telephone replay will be available from 1:00 p.m. Eastern Time on November 7, 2019 until 11:59 p.m. Eastern Time on November 14, 2019 at: 1.855.859.2056 (Toll Free)
or 1.416.849.0833 (International). The telephone replay
requires the passcode 8757799.
Non-GAAP Disclosure*
Quarterhill follows U.S. GAAP in preparing its interim and annual
financial statements. We use the 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 property, plant and equipment; (vi) effects of
deleted deferred revenue; (vii) the effects of fair value step up
in inventory acquired; (viii) stock based compensation; (ix)
foreign exchange (gain) loss; and * equity in income and dividends
from joint ventures. Adjusted EBITDA is used by Quarterhill
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 IS NOT A MEASURE OF FINANCIAL PERFORMANCE
UNDER U.S. GAAP. IT DOES NOT HAVE ANY STANDARDIZED MEANING
PRESCRIBED BY U.S. GAAP AND IS THEREFORE UNLIKELY TO BE COMPARABLE
TO SIMILARLY TITLED MEASURES USED BY OTHER COMPANIES. ADJUSTED
EBITDA SHOULD NOT BE INTERPRETED AS AN ALTERNATIVE TO NET INCOME
AND CASH FLOWS FROM OPERATIONS AS DETERMINED IN ACCORDANCE WITH
U.S. GAAP OR AS A MEASURE OF LIQUIDITY.
About Quarterhill
Quarterhill is focused on the
disciplined acquisition, management and growth of companies in
dedicated technology areas including, vertical market software and
solutions, intelligent industrial systems, and innovation and
licensing. Quarterhill's emphasis is on seeking out acquisition
opportunities at reasonable valuations that provide a foundation
for recurring revenues, predictable cash flows and margins,
profitable growth, intimate customer relationships and dedicated
management teams. Quarterhill is listed on the TSX and NASDAQ
under the symbol QTRH. 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 28, 2019 annual information form for the
year ended December 31, 2018 (the
"AIF"). Copies of the AIF may be obtained at www.sedar.com and as
part of Quarterhill's Form 40-F for the year ended December 31, 2018 filed with the U.S. Securities
and Exchange Commission and available at www.sec.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 Operations
|
(Unaudited)
|
(in thousands of
United States dollars, except share and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
$
|
25,369
|
|
$
|
19,579
|
|
$
|
107,563
|
|
$
|
51,985
|
Cost of revenues
(excluding depreciation and amortization)
|
|
15,099
|
|
|
14,440
|
|
|
56,723
|
|
|
42,713
|
|
|
10,270
|
|
|
5,139
|
|
|
50,840
|
|
|
9,272
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative expenses
|
|
7,186
|
|
|
6,871
|
|
|
20,423
|
|
|
20,960
|
Research and
development expenses
|
|
1,229
|
|
|
902
|
|
|
3,645
|
|
|
2,694
|
Depreciation of
property, plant and equipment
|
|
181
|
|
|
372
|
|
|
921
|
|
|
1,155
|
Amortization of
intangibles
|
|
5,134
|
|
|
6,298
|
|
|
15,578
|
|
|
19,491
|
Special
charges
|
|
(11,570)
|
|
|
2,320
|
|
|
907
|
|
|
2,320
|
|
|
2,160
|
|
|
16,763
|
|
|
41,474
|
|
|
46,620
|
Results from
operations
|
|
8,110
|
|
|
(11,624)
|
|
|
9,366
|
|
|
(37,348)
|
|
|
|
|
|
|
|
|
|
|
|
|
Finance
income
|
|
(378)
|
|
|
(140)
|
|
|
(871)
|
|
|
(522)
|
Finance
expense
|
|
62
|
|
|
78
|
|
|
341
|
|
|
157
|
Foreign exchange loss
(gain)
|
|
(172)
|
|
|
91
|
|
|
150
|
|
|
(74)
|
Other
income
|
|
(119)
|
|
|
(247)
|
|
|
(373)
|
|
|
(1,153)
|
Income (loss) before
taxes
|
|
8,717
|
|
|
(11,406)
|
|
|
10,119
|
|
|
(35,756)
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax
expense
|
|
1,275
|
|
|
755
|
|
|
5,308
|
|
|
651
|
Deferred income tax
recovery
|
|
(1,893)
|
|
|
(2,880)
|
|
|
(83)
|
|
|
(7,216)
|
Income tax expense
(recovery)
|
|
(618)
|
|
|
(2,125)
|
|
|
5,225
|
|
|
(6,565)
|
Net income
(loss)
|
$
|
9,335
|
|
$
|
(9,281)
|
|
$
|
4,894
|
|
$
|
(29,191)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted
|
$
|
0.08
|
|
$
|
(0.08)
|
|
$
|
0.04
|
|
$
|
(0.25)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
118,817,466
|
|
|
118,817,466
|
|
|
118,817,466
|
|
|
118,752,303
|
Fully
diluted
|
|
118,817,466
|
|
|
118,817,466
|
|
|
118,817,466
|
|
|
118,752,303
|
Quarterhill
Inc.
|
Supplemental
Condensed Consolidated Interim Statements of Operations
Information
|
(Unaudited)
|
(in thousands of
United States dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
License
|
$
|
10,542
|
|
$
|
4,762
|
|
$
|
64,103
|
|
$
|
12,898
|
Systems
|
|
9,532
|
|
|
7,885
|
|
|
25,626
|
|
|
19,757
|
Services
|
|
610
|
|
|
660
|
|
|
1,803
|
|
|
2,040
|
Recurring
|
|
4,685
|
|
|
6,272
|
|
|
16,031
|
|
|
17,290
|
Total
revenues
|
$
|
25,369
|
|
$
|
19,579
|
|
$
|
107,563
|
|
$
|
51,985
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
(excluding depreciation and amortization)
|
|
|
|
|
|
|
|
|
|
|
|
License
|
$
|
6,584
|
|
$
|
5,927
|
|
$
|
31,377
|
|
$
|
19,927
|
Systems
|
|
5,678
|
|
|
5,281
|
|
|
16,334
|
|
|
13,392
|
Services
|
|
372
|
|
|
305
|
|
|
1,018
|
|
|
995
|
Recurring
|
|
2,465
|
|
|
2,927
|
|
|
7,994
|
|
|
8,399
|
Total cost of
revenues
|
$
|
15,099
|
|
$
|
14,440
|
|
$
|
56,723
|
|
$
|
42,713
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterhill
Inc.
|
Condensed
Consolidated Interim Statements of Comprehensive Income
(Loss)
|
(Unaudited)
|
(in thousands of
United States dollars)
|
|
Three months ended
September 30,
|
|
|
Nine months ended
September 30,
|
|
2019
|
|
|
2018
|
|
|
2019
|
|
|
2018
|
Net income
(loss)
|
$
|
9,335
|
|
|
$
|
(9,281)
|
|
|
$
|
4,894
|
|
|
$
|
(29,191)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
(546)
|
|
|
|
424
|
|
|
|
211
|
|
|
|
(1,847)
|
Comprehensive income
(loss)
|
$
|
8,789
|
|
|
$
|
(8,857)
|
|
|
$
|
5,105
|
|
|
$
|
(31,038)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Quarterhill
Inc.
|
Condensed
Consolidated Interim Balance Sheets
|
(Unaudited)
|
(in thousands of
United States dollars)
|
|
|
|
|
|
|
|
As at
|
|
September 30,
2019
|
|
December 31,
2018
|
Current
assets
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
68,846
|
|
$
|
63,929
|
Short-term
investments
|
|
|
1,171
|
|
|
1,139
|
Restricted short-term
investments
|
|
|
2,100
|
|
|
2,200
|
Accounts
receivable
|
|
|
16,324
|
|
|
10,812
|
Other current
assets
|
|
|
72
|
|
|
91
|
Unbilled
revenue
|
|
|
7,234
|
|
|
3,990
|
Income taxes
receivable
|
|
|
19
|
|
|
198
|
Inventories
|
|
|
6,583
|
|
|
5,960
|
Prepaid expenses and
deposits
|
|
|
1,993
|
|
|
2,332
|
|
|
|
104,342
|
|
|
90,651
|
Non-current
assets
|
|
|
|
|
|
|
Accounts
receivable
|
|
|
2,926
|
|
|
415
|
Right-of-use
assets
|
|
|
3,714
|
|
|
-
|
Property, plant and
equipment
|
|
|
1,963
|
|
|
2,655
|
Intangible
assets
|
|
|
73,722
|
|
|
87,425
|
Investment in joint
venture
|
|
|
4,037
|
|
|
3,822
|
Deferred income tax
assets
|
|
|
25,600
|
|
|
27,141
|
Goodwill
|
|
|
25,303
|
|
|
25,303
|
TOTAL
ASSETS
|
|
$
|
241,607
|
|
$
|
237,412
|
|
|
|
|
|
|
|
Liabilities
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
Bank
indebtedness
|
|
$
|
3,753
|
|
$
|
2,598
|
Accounts payable and
accrued liabilities
|
|
|
16,080
|
|
|
18,103
|
Income taxes
payable
|
|
|
1,089
|
|
|
-
|
Current portion of
right-of-use lease liabilities
|
|
|
732
|
|
|
-
|
Current portion of
deferred revenue
|
|
|
5,550
|
|
|
4,670
|
Current portion of
long-term debt
|
|
|
43
|
|
|
299
|
Contingent
consideration
|
|
|
-
|
|
|
929
|
|
|
|
27,247
|
|
|
26,599
|
Non-current
liabilities
|
|
|
|
|
|
|
Deferred
revenue
|
|
|
1,128
|
|
|
1,435
|
Right-of-use lease
liabilities
|
|
|
2,897
|
|
|
-
|
Long-term
debt
|
|
|
168
|
|
|
173
|
Deferred income tax
liabilities
|
|
|
2,939
|
|
|
4,337
|
TOTAL
LIABILITIES
|
|
|
34,379
|
|
|
32,544
|
Shareholders' equity
|
|
|
|
|
|
|
Capital
stock
|
|
|
419,111
|
|
|
419,111
|
Additional paid-in
capital
|
|
|
23,560
|
|
|
22,957
|
Accumulated other
comprehensive income
|
|
|
16,454
|
|
|
16,243
|
Deficit
|
|
|
(251,897)
|
|
|
(253,443)
|
|
|
|
207,228
|
|
|
204,868
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
$
|
241,607
|
|
$
|
237,412
|
Quarterhill
Inc.
|
Condensed
Consolidated Interim Statements of Cash Flows
|
(Unaudited)
|
(in thousands of
United States dollars)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash generated from
(used in):
|
|
|
|
|
|
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
9,335
|
|
$
|
(9,281)
|
|
$
|
4,894
|
|
$
|
(29,191)
|
Non-cash
items
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
194
|
|
|
114
|
|
|
603
|
|
|
268
|
Depreciation and
amortization
|
|
5,315
|
|
|
6,671
|
|
|
16,499
|
|
|
20,647
|
Foreign exchange
(gain) loss
|
|
35
|
|
|
(51)
|
|
|
(61)
|
|
|
111
|
Equity in income from
joint venture
|
|
(119)
|
|
|
(246)
|
|
|
(370)
|
|
|
(884)
|
Loss (gain) on
disposal of assets
|
|
(20)
|
|
|
(26)
|
|
|
567
|
|
|
(25)
|
Deferred income tax
recovery
|
|
(1,893)
|
|
|
(2,880)
|
|
|
(83)
|
|
|
(7,216)
|
Embedded
derivatives
|
|
(80)
|
|
|
(2)
|
|
|
19
|
|
|
(3)
|
Contingent
consideration adjustment
|
|
(11,577)
|
|
|
-
|
|
|
(929)
|
|
|
-
|
Changes in non-cash
working capital balances
|
|
(10,976)
|
|
|
(3,273)
|
|
|
(9,290)
|
|
|
(1,650)
|
Cash generated from
(used in) operations
|
|
(9,786)
|
|
|
(8,974)
|
|
|
11,849
|
|
|
(17,943)
|
Financing
|
|
|
|
|
|
|
|
|
|
|
|
Accounts receivable -
non current (net)
|
|
(2,593)
|
|
|
-
|
|
|
(2,511)
|
|
|
-
|
Dividends
paid
|
|
(1,117)
|
|
|
(1,143)
|
|
|
(3,348)
|
|
|
(3,469)
|
Bank
indebtedness
|
|
(761)
|
|
|
993
|
|
|
1,155
|
|
|
2,106
|
Repayment of long-term
debt
|
|
(25)
|
|
|
(17)
|
|
|
(261)
|
|
|
(92)
|
Common shares issued
for cash from Employee Share Purchase Plan
|
|
-
|
|
-
|
|
|
-
|
|
|
27
|
Cash used in
financing
|
|
(4,496)
|
|
|
(167)
|
|
|
(4,965)
|
|
|
(1,428)
|
Investing
|
|
|
|
|
|
|
|
|
|
|
|
Proceeds from sale of
restricted short-term investments
|
|
100
|
|
|
-
|
|
|
100
|
|
|
-
|
Proceeds from sale of
property, plant and equipment
|
|
23
|
|
|
43
|
|
|
23
|
|
|
54
|
Purchase of property
and equipment
|
|
(264)
|
|
|
(253)
|
|
|
(730)
|
|
|
(419)
|
Repayment of patent
finance obligations
|
|
-
|
|
|
(1,389)
|
|
|
-
|
|
|
(4,167)
|
Purchase of
intangibles
|
|
(1,332)
|
|
|
(25)
|
|
|
(1,425)
|
|
|
(114)
|
Cash used in
investing
|
|
(1,473)
|
|
|
(1,624)
|
|
|
(2,032)
|
|
|
(4,646)
|
Foreign exchange gain
(loss) on cash held in foreign currency
|
|
(33)
|
|
|
48
|
|
|
65
|
|
|
(103)
|
Net increase
(decrease) in cash and cash equivalents
|
|
(15,788)
|
|
|
(10,717)
|
|
|
4,917
|
|
|
(24,120)
|
Cash and cash
equivalents, beginning of period
|
|
84,634
|
|
|
68,415
|
|
|
63,929
|
|
|
81,818
|
Cash and cash
equivalents, end of period
|
$
|
68,846
|
|
$
|
57,698
|
|
$
|
68,846
|
|
$
|
57,698
|
Quarterhill
Inc.
|
Condensed
Consolidated Interim Statements of Shareholders' Equity
|
(Unaudited)
|
(in thousands of
United States dollars)
|
|
Capital
Stock
|
|
Additional
Paid-in
Capital
|
|
Accumulated
Other
Comprehensive
Income
|
|
Deficit
|
|
Total
Equity
|
Balance - January 1,
2019
|
$
|
419,111
|
|
$
|
22,957
|
|
$
|
16,243
|
|
$
|
(253,443)
|
|
$
|
204,868
|
For the three months
ended March 31, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
29
|
|
|
29
|
Other comprehensive
income
|
|
-
|
|
|
-
|
|
|
599
|
|
|
-
|
|
|
599
|
Stock-based
compensation expense
|
|
-
|
|
|
181
|
|
|
-
|
|
|
-
|
|
|
181
|
Dividends
declared
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,130)
|
|
|
(1,130)
|
Balance - March 31,
2019
|
$
|
419,111
|
|
$
|
23,138
|
|
$
|
16,842
|
|
$
|
(254,544)
|
|
$
|
204,547
|
For the three months
ended June 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(4,470)
|
|
|
(4,470)
|
Other comprehensive
income
|
|
-
|
|
|
-
|
|
|
158
|
|
|
-
|
|
|
158
|
Stock-based
compensation expense
|
|
-
|
|
|
228
|
|
|
-
|
|
|
-
|
|
|
228
|
Dividends
declared
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,101)
|
|
|
(1,101)
|
Balance - March 31,
2019
|
$
|
419,111
|
|
$
|
23,366
|
|
$
|
17,000
|
|
$
|
(260,115)
|
|
$
|
199,362
|
For the three months
ended September 30, 2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
9,335
|
|
|
9,335
|
Other comprehensive
loss
|
|
-
|
|
|
-
|
|
|
(546)
|
|
|
-
|
|
|
(546)
|
Stock-based
compensation expense
|
|
-
|
|
|
194
|
|
|
-
|
|
|
-
|
|
|
194
|
Dividends
declared
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,117)
|
|
|
(1,117)
|
Balance - September
30, 2019
|
$
|
419,111
|
|
$
|
23,560
|
|
$
|
16,454
|
|
$
|
(251,897)
|
|
$
|
207,228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance - January 1,
2018
|
$
|
418,873
|
|
$
|
22,489
|
|
$
|
20,111
|
|
$
|
(199,718)
|
|
$
|
261,755
|
For the three months
ended March 31, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(12,045)
|
|
|
(12,045)
|
Other comprehensive
loss
|
|
-
|
|
|
-
|
|
|
(790)
|
|
|
-
|
|
|
(790)
|
Stock-based
compensation expense
|
|
-
|
|
|
156
|
|
|
-
|
|
|
-
|
|
|
156
|
Dividends
declared
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,171)
|
|
|
(1,171)
|
Balance March 31,
2018
|
|
418,873
|
|
|
22,645
|
|
|
19,321
|
|
|
(212,934)
|
|
|
247,905
|
For the three months
ended June 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(7,865)
|
|
|
(7,865)
|
Other comprehensive
loss
|
|
-
|
|
|
-
|
|
|
(1,481)
|
|
|
-
|
|
|
(1,481)
|
Stock-based
compensation expense
|
|
-
|
|
|
(2)
|
|
|
-
|
|
|
-
|
|
|
(2)
|
Conversion of
deferred stock units to common shares
|
|
211
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
211
|
Shares issued under
Employee Share Purchase Plan
|
|
27
|
|
|
-
|
|
|
-
|
|
|
-
|
|
|
27
|
Dividends
declared
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,155)
|
|
|
(1,155)
|
Balance - September
30, 2018
|
$
|
419,111
|
|
$
|
22,643
|
|
$
|
17,840
|
|
$
|
(221,954)
|
|
$
|
237,640
|
For the three months
ended September 30, 2018
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(9,281)
|
|
|
(9,281)
|
Other comprehensive
income
|
|
-
|
|
|
-
|
|
|
424
|
|
|
-
|
|
|
424
|
Stock-based
compensation expense
|
|
-
|
|
|
114
|
|
|
-
|
|
|
-
|
|
|
114
|
Dividends
declared
|
|
-
|
|
|
-
|
|
|
-
|
|
|
(1,143)
|
|
|
(1,143)
|
Balance - September
30, 2018
|
$
|
419,111
|
|
$
|
22,757
|
|
$
|
18,264
|
|
$
|
(232,378)
|
|
$
|
227,754
|
Quarterhill
Inc.
|
Reconciliations of
GAAP Net Income (Loss) to Adjusted EBITDA
|
(Unaudited)
|
(in thousands of
United States dollars, except share and per share
amounts)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
Adjusted
EBITDA
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
(loss)
|
$
|
9,335
|
|
$
|
(9,281)
|
|
$
|
4,894
|
|
$
|
(29,191)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery)
|
|
(618)
|
|
|
(2,125)
|
|
|
5,225
|
|
|
(6,565)
|
Foreign exchange loss
(gain)
|
|
(172)
|
|
|
91
|
|
|
150
|
|
|
(74)
|
Finance
expense
|
|
62
|
|
|
78
|
|
|
341
|
|
|
157
|
Finance
income
|
|
(378)
|
|
|
(140)
|
|
|
(871)
|
|
|
(522)
|
Special
charges
|
|
(11,570)
|
|
|
2,320
|
|
|
907
|
|
|
2,320
|
Amortization of
intangibles
|
|
5,134
|
|
|
6,298
|
|
|
15,578
|
|
|
19,491
|
Depreciation of
property, plant and equipment
|
|
181
|
|
|
372
|
|
|
921
|
|
|
1,155
|
Effect of deleted
deferred revenue
|
|
-
|
|
|
8
|
|
|
-
|
|
|
314
|
Stock-based
compensation
|
|
194
|
|
|
114
|
|
|
603
|
|
|
268
|
Other
income
|
|
(119)
|
|
|
(247)
|
|
|
(373)
|
|
|
(1,153)
|
Adjusted
EBITDA
|
$
|
2,049
|
|
$
|
(2,512)
|
|
$
|
27,375
|
|
$
|
(13,800)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA
per share
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
0.08
|
|
$
|
(0.08)
|
|
$
|
0.04
|
|
$
|
(0.25)
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
Income tax expense
(recovery)
|
|
(0.01)
|
|
|
(0.02)
|
|
|
0.03
|
|
|
(0.06)
|
Foreign exchange loss
(gain)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Finance
expense
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Finance
income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Special
charges
|
|
(0.10)
|
|
|
0.02
|
|
|
-
|
|
|
0.02
|
Amortization of
intangibles
|
|
0.04
|
|
|
0.05
|
|
|
0.12
|
|
|
0.16
|
Depreciation of
property, plant and equipment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Effect of deleted
deferred revenue
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Stock-based
compensation
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Other
income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Adjusted EBITDA
per share
|
$
|
0.01
|
|
$
|
(0.03)
|
|
$
|
0.19
|
|
$
|
(0.13)
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
118,817,466
|
|
|
118,817,466
|
|
|
118,817,466
|
|
|
118,752,303
|
View original
content:http://www.prnewswire.com/news-releases/quarterhill-announces-third-quarter-2019-financial-results-300953513.html
SOURCE Quarterhill Inc.