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News

21 May, 20

QUARTERHILL ANNOUNCES FIRST QUARTER 2020 FINANCIAL RESULTS

KITCHENER, ON, May 21, 2020 /PRNewswire/ - Quarterhill Inc. ("Quarterhill" or the "Company") (TSX: QTRH) (OTCQX: QTRHF), announces its financial results for the three-month period ended March 31, 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.

First Quarter 2020 Highlights

  • Revenue was $26.0 million, including recurring revenue of $6.2 million
  • Adjusted EBITDA* was $0.8 million
  • Net loss was ($5.1) million, or ($0.04) per basic and diluted common share
  • Cash generated from operations was $9.1 million
  • Cash and equivalents were $103.1 million at March 31, 2020
  • Jury awarded US$85.2 million in damages to WiLAN in its patent suit re-trial against Apple
  • Appointed Paul Hill as President and Chief Executive Officer of Quarterhill, effective June 1st
  • Announced on May 19th that it had completed the sale of its total investment in VIZIYA, which represents its Enterprise Software segment, for total cash proceeds of $49.4 million
  • Announced today its intention to undertake a Substantial Issuer Bid ("SIB") and Normal Course Issuer Bid ("NCIB"), which follows the Company's review of alternatives to return capital to shareholders
  • Effective today, Mr. Paul Hill and Dr. Michel Fattouche have been appointed to Quarterhill's Board of Directors

"In Q1, we made operational progress on several initiatives to strengthen the business and drive shareholder value," said John Gillberry, Chair of Quarterhill. "These included WiLAN winning its second jury trial verdict versus Apple, the Company making significant progress on its CEO search and the Board launching an initiative to return capital to shareholders. Both the CEO search and the initiative to return capital to shareholders were concluded subsequent to quarter-end. Regarding our financial performance, Q1 results reflect some of the variability inherent in the revenue model of our licensing business, as well as the favorable impact from some of the cost-cutting initiatives we have undertaken throughout the organization in recent years."

"Q1's operational and financial results were achieved against the backdrop of the COVID-19 pandemic, a factor which led us to pause our M&A strategy in March to focus on our team and on our existing operations. We have taken safety precautions to protect our employees and the communities we serve, and all of our businesses remain in operation, doing their best to serve clients, identify new opportunities and close new business. The enhanced precautions we have taken combined with the current economic environment means that in certain circumstances there is some delay in activity related to providing ongoing services or initiating new engagements; however, overall, the operational prospects for all of our businesses remain sound and are backed by the strong financial position of Quarterhill. We will revisit our M&A strategy as the broader situation evolves and with our new CEO coming onboard in June."

"Subsequent to quarter-end, we announced that Paul Hill will be joining Quarterhill as President and CEO and will start on June 1st. Paul is the ideal leader for our business today. He has extensive experience driving growth in the technology industry and has both run organizations as well as led M&A transactions. Paul will initially focus on enhancing operations with our existing portfolio companies, engaging with employees, customers and the investment community, and updating our growth strategy."

Subsequent Event - VIZIYA Sale
On May 19, 2020, Quarterhill announced that that it had completed the sale of its total investment in VIZIYA, which represents its Enterprise Software segment, for total cash proceeds of $49.4 million.  Proceeds from the transaction will be used to support the Company's growth initiatives. The sale of this business segment and all IFRS 5 - Non-current assets held for sale and discontinued operations disclosure requirements will be reported in the second quarter financial statements. 

Originally acquired in May 2017, VIZIYA is a software and services provider that helps companies optimize their asset performance and uptime. VIZIYA has been a solid performer and the Company was not proactively looking to sell this investment; however, this opportunistic transaction provides several strategic benefits to Quarterhill. This sale generated significant cash proceeds and delivered a strong internal rate of return on our initial investment. In addition, it enables us to drive our future growth and return some capital to shareholders as further discussed below.

Subsequent Event - Substantial Issuer Bid
Quarterhill is announcing today its intention to make a Substantial Issuer Bid ("SIB") pursuant to which the Company will offer to purchase for cancellation up to $20.0 million of its outstanding common shares ("Shares") from shareholders for cash (the "Proposed Bid"). Subject to market and other conditions, the Company expects that the Proposed Bid, by way of modified-Dutch auction with a price range of not less than $1.95 per Share and not more than $2.15 per Share (in increments of $0.05 per share within that range), will commence in early June 2020 and is scheduled to be completed in early July 2020. The Company intends to fund the Proposed Bid with cash on its balance sheet. Upon completion of the SIB, the Company intends to apply to the Toronto Stock Exchange ("TSX") for a Normal Course Issuer Bid ("NCIB"), subject to regulatory approval.

Mr. Gillberry added: "With the search for our new CEO complete, we can now turn our undivided attention to Quarterhill's portfolio companies and capital allocation strategy announced in March. In light of the cash-flow generating potential of our portfolio companies and the pause in our M&A strategy, our Board of Directors has approved the launch of a Substantial Issuer Bid. This decision reflects our solid financial position, further enhanced by the recently announced divestiture of VIZIYA, strong ongoing earnings potential and confidence in Quarterhill's underlying value. Commencing a Substantial Issuer Bid followed by a Normal Course Issuer Bid are part of our return of capital to shareholders."

In the view of management and the Board of Directors, the recent trading price of the Shares is not fully reflective of the value of the Company's business and future prospects and therefore, the purchase of Shares under the Proposed Bid represents an attractive investment and an equitable and efficient means of providing value to its shareholders. Quarterhill's management and its Board of Directors have agreed not to tender any Shares to the Proposed Bid.

Quarterhill has engaged CIBC Capital Markets as its financial advisor and dealer manager in connection with the Proposed Bid.

Subsequent Event - Board of Directors Appointments
Effective today, Mr. Paul Hill and Dr. Michel Fattouche have been appointed to Quarterhill's Board of Directors. "We are very pleased to add these two to our Board," said Mr. Gillberry. "Each is an accomplished technology-industry veteran with Board and leadership experience, and we look forward to leveraging their expertise in areas such as operations, licensing, governance and M&A."

Mr. Hill, as previously announced, will be joining Quarterhill on June 1st as its President and CEO. Dr. Fattouche, who co-founded Wi-LAN Inc. in 1993, is currently a professor in the department of electrical and computer engineering at the University of Calgary where his work has focused on 5G cellular standards. Dr. Fattouche previously served on the Quarterhill board from 2006 to 2018. 

Mr. Gillberry continued: "We are very excited to have Michel back on our Board. He is an entrepreneur and true innovator whose inventions on 3G and 4G cellular standards led to some of the most commonly used wireless technology today. Michel remains one of Quarterhill's largest shareholders, and we look forward to once again being in a position to benefit from his insightful and trusted counsel as we execute on our growth opportunities."

Approval of Eligible Dividend
The Board of Directors has declared an eligible quarterly dividend of $0.0125 per common share payable on July 3, 2020, to shareholders of record on June 12, 2020.

Q1 2020 Consolidated Financial Review
Consolidated revenues for the three months ended March 31, 2020 ("Q1 2020") were $26.0 million, compared to $53.0 million in Q1 2019. Virtually all of WiLAN's licenses are one-time in nature and accordingly 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 year-over-year due primarily to the closure of larger licensing contracts in Q1 2019 in comparison to Q1 2020 wherein WiLAN completed smaller sized contracts. This was offset, in part, by an increase in revenue at VIZIYA.

Recurring revenue was $6.2 million in Q1 2020 compared to $7.5 million in Q1 2019. 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 Q1 2020 is primarily a timing-based issue and does not reflect lower renewal or retention rates.

Gross margin for Q1 2020 was $11.0 million, or 42%, compared to $26.6 million, or 50%, in Q1 2019. Gross margin was lower year-over-year due primarily to lower revenue at WiLAN as described above.

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. Operating expenses for Q1 2020 were $16.6 million, compared to $19.5 million in Q1 2019. Operating expenses in Q1 2020 were lower year-over-year due primarily to lower SG&A, amortization of intangibles and special charges, offset, in part, by higher R&D at IRD and VIZIYA.

Adjusted EBITDA for Q1 2020 was $0.8 million compared to $17.1 million in Q1 2019. The decrease in Adjusted EBITDA reflects the lower revenue at WiLAN and IRD, offset in part, by higher revenue at VIZIYA and lower corporate expenses.

Net loss for Q1 2020 was ($5.1) million, or ($0.04) per basic and diluted common share, compared to net loss of ($0.05) million, or ($0.00) per basic and diluted common share, in Q1 2019. The year-over-year change was due primarily to the factors described above that impacted Adjusted EBITDA.

Cash generated from operations for Q1 2020 was $9.1 million, compared to ($16.0) million of cash used in operations in Q1 2019. Cash and cash equivalents and short-term investments increased to $103.1 million at March 31, 2020, compared to $89.4 million at December 31, 2019. The Company had debt of $2.7 million at March 31, 2020, compared to $4.4 million at December 31, 2020.

Conference Call and Webcast
Quarterhill will host a conference call to discuss its financial results today at 10:00 AM Eastern Time.

Webcast Information  
Live webcast: https://produceredition.webcasts.com/starthere.jsp?ei=1311913&tp_key=42224f724d     

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=1311913&tp_key=42224f724d    

Telephone replay will be available from 1:00 p.m. Eastern Time on May 21, 2020 until 11:59 p.m. Eastern Time on June 4, 2020 at: 1.855.859.2056 (Toll Free) or 1.416.849.0833 (International). The telephone replay requires the passcode 5071549.

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 March 31, 2020

 

Licensing

 

Intelligent

Systems

 

Enterprise

Software

 

Corporate

 

Total

Revenues

$

10,183

   

$

11,406

   

$

4,433

   

$

   

$

26,022

 

Direct cost of revenues

5,767

   

8,416

   

871

   

   

15,054

 

Gross profit

4,416

   

2,990

   

3,562

   

   

10,968

 

Depreciation of right-of-use assets

61

   

168

   

31

   

15

   

275

 

Depreciation of property, plant and equipment

16

   

203

   

43

   

5

   

267

 

Amortization of intangibles

3,484

   

1,259

   

1,015

   

   

5,758

 

Selling, general and administrative expenses

979

   

3,482

   

1,910

   

1,832

   

8,203

 

Research and development

   

870

   

1,026

   

   

1,896

 

Special charges

   

   

   

213

   

213

 

Results from operations

(124)

   

(2,992)

   

(463)

   

(2,065)

   

(5,644)

 

Finance income

(100)

   

(1)

   

   

(121)

   

(222)

 

Finance expense

39

   

52

   

10

   

5

   

106

 

Foreign exchange loss (gain)

1,244

   

(689)

   

79

   

(1,133)

   

(499)

 

Other income

   

(378)

   

   

   

(378)

 

Loss before taxes

(1,307)

   

(1,976)

   

(552)

   

(816)

   

(4,651)

 

Current income tax expense (recovery)

1,186

   

80

   

(29)

   

   

1,237

 

Deferred income tax (recovery) expense

(1,402)

   

(783)

   

(343)

   

1,752

   

(776)

 

Income tax (recovery) expense

(216)

   

(703)

   

(372)

   

1,752

   

461

 

Net loss

$

(1,091)

   

$

(1,273)

   

$

(180)

   

$

(2,568)

   

$

(5,112)

 
                   

Adjusted EBITDA

3,467

   

(1,336)

   

596

   

(1,914)

   

813

 
                   

Other reconciling items:

                 

Stock-based compensation

30

   

26

   

(30)

   

(82)

   

(56)

 

 

 

For the three months ended March 31,2019

 

Licensing

 

Intelligent

Systems

 

Enterprise

Software

 

Corporate

 

Total

Revenues

$

37,391

   

$

12,415

   

$

3,158

   

$

   

$

52,964

 

Direct cost of revenues

17,004

   

8,904

   

408

   

   

26,316

 

Gross profit

20,387

   

3,511

   

2,750

   

   

26,648

 

Depreciation of right-of-use assets

300

   

173

   

29

   

15

   

517

 

Depreciation of property, plant and equipment

55

   

402

   

41

   

5

   

503

 

Amortization of intangibles

4,691

   

1,258

   

1,006

   

   

6,955

 

Selling, general and administrative expenses

532

   

3,140

   

2,062

   

2,573

   

8,307

 

Research and development

   

738

   

782

   

   

1,520

 

Special charges

1,724

   

   

   

   

1,724

 

Results from operations

13,085

   

(2,200)

   

(1,170)

   

(2,593)

   

7,122

 

Finance income

(24)

   

(3)

   

   

(242)

   

(269)

 

Finance expense

4

   

94

   

5

   

4

   

107

 

Foreign exchange (gain) loss

(255)

   

255

   

44

   

278

   

322

 

Other income

   

(98)

   

   

   

(98)

 

Income (loss) before taxes

13,360

   

(2,448)

   

(1,219)

   

(2,633)

   

7,060

 

Current income tax expense

5,194

   

226

   

   

   

5,420

 

Deferred income tax expense (recovery)

2,565

   

(796)

   

(437)

   

355

   

1,687

 

Income tax expense (recovery)

7,759

   

(570)

   

(437)

   

355

   

7,107

 

Net income (loss)

$

5,601

   

$

(1,878)

   

$

(782)

   

$

(2,988)

   

$

(47)

 
                   

Adjusted EBITDA

19,827

   

(327)

   

(75)

   

(2,363)

   

17,062

 
                   

Other reconciling items:

                 

Stock-based compensation

(28)

   

40

   

19

   

210

   

241

 

 

 

 

 

For the three months ended March 31,2019

 

Licensing

 

Intelligent

Systems

 

Enterprise

Software

 

Corporate

 

Total

Revenues

$

37,391

   

$

12,415

   

$

3,158

   

$

   

$

52,964

 

Direct cost of revenues

17,004

   

8,904

   

408

   

   

26,316

 

Gross profit

20,387

   

3,511

   

2,750

   

   

26,648

 

Depreciation of right-of-use assets

300

   

173

   

29

   

15

   

517

 

Depreciation of property, plant and equipment

55

   

402

   

41

   

5

   

503

 

Amortization of intangibles

4,691

   

1,258

   

1,006

   

   

6,955

 

Selling, general and administrative expenses

532

   

3,140

   

2,062

   

2,573

   

8,307

 

Research and development

   

738

   

782

   

   

1,520

 

Special charges

1,724

   

   

   

   

1,724

 

Results from operations

13,085

   

(2,200)

   

(1,170)

   

(2,593)

   

7,122

 

Finance income

(24)

   

(3)

   

   

(242)

   

(269)

 

Finance expense

4

   

94

   

5

   

4

   

107

 

Foreign exchange (gain) loss

(255)

   

255

   

44

   

278

   

322

 

Other income

   

(98)

   

   

   

(98)

 

Income (loss) before taxes

13,360

   

(2,448)

   

(1,219)

   

(2,633)

   

7,060

 

Current income tax expense

5,194

   

226

   

   

   

5,420

 

Deferred income tax expense (recovery)

2,565

   

(796)

   

(437)

   

355

   

1,687

 

Income tax expense (recovery)

7,759

   

(570)

   

(437)

   

355

   

7,107

 

Net income (loss)

$

5,601

   

$

(1,878)

   

$

(782)

   

$

(2,988)

   

$

(47)

 
                   

Adjusted EBITDA

19,827

   

(327)

   

(75)

   

(2,363)

   

17,062

 
                   

Other reconciling items:

                 

Stock-based compensation

(28)

   

40

   

19

   

210

   

241

 

 

*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 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 gross margin, profitable growth, intimate customer relationships and dedicated management teams. 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 Loss

(Unaudited)

       

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

         
   

Three months ended March 31,

   

2020

 

2019

Revenues

       

License

 

$

10,729

   

$

37,199

 

Systems

 

8,003

   

7,448

 

Services

 

1,043

   

859

 

Recurring

 

6,247

   

7,458

 
   

26,022

   

52,964

 

Direct cost of revenues

       

License

 

5,740

   

17,026

 

Systems

 

5,980

   

5,043

 

Services

 

867

   

386

 

Recurring

 

2,467

   

3,861

 
   

15,054

   

26,316

 

Gross profit

 

10,968

   

26,648

 

Operating expenses

       

Depreciation of right-of-use assets

 

275

   

517

 

Depreciation of property, plant and equipment

 

267

   

503

 

Amortization of intangibles

 

5,758

   

6,955

 

Selling, general and administrative expenses

 

8,203

   

8,307

 

Research and development expenses

 

1,896

   

1,520

 

Special charges

 

213

   

1,724

 
   

16,612

   

19,526

 

Results from operations

 

(5,644)

   

7,122

 
         

Finance income

 

(222)

   

(269)

 

Finance expense

 

106

   

107

 

Foreign exchange (gain) loss

 

(499)

   

322

 

Other income

 

(378)

   

(98)

 

(Loss) income before taxes

 

(4,651)

   

7,060

 
         

Current income tax expense

 

1,237

   

5,420

 

Deferred income tax (recovery) expense

 

(776)

   

1,687

 

Income tax expense

 

461

   

7,107

 
         

Net loss

 

$

(5,112)

   

$

(47)

 
         

Net loss per share

       

Basic

 

$(0.04)

   

$(0.00)

 

Diluted

 

$(0.04)

   

$(0.00)

 
         
 

Quarterhill Inc.

Condensed Consolidated Interim  Statements of Comprehensive Income

(Unaudited)

       

(in thousands of Canadian dollars)

         
   

Three months ended March 31,

   

2020

 

2019

         

Net loss

 

$

(5,112)

   

$

(47)

 

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

       

Foreign currency translation adjustment

 

21,094

   

(4,599)

 

Comprehensive income (loss)

 

$

15,982

   

$

(4,646)

 

 

Quarterhill Inc.

           

Condensed Consolidated Interim Statements of Financial Position

       

(Unaudited)

           

(in thousands of Canadian dollars)

           
             

As at

 

March 31, 2020

 

December 31, 2019

 

January 1, 2019

Current assets

           

Cash and cash equivalents

 

$

101,596

   

$

87,870

   

$

87,029

 

Short-term investments

 

1,550

   

1,550

   

1,551

 

Restricted short-term investments

 

   

   

2,995

 

Accounts receivable (net of allowance for doubtful accounts)

 

24,535

   

42,925

   

14,719

 

Other current assets

 

351

   

108

   

124

 

Unbilled revenue

 

8,883

   

8,965

   

5,432

 

Income taxes receivable

 

99

   

137

   

270

 

Inventories (net of obsolescence)

 

8,653

   

8,570

   

8,114

 

Prepaid expenses and deposits

 

2,349

   

2,242

   

2,927

 
   

148,016

   

152,367

   

123,161

 

Non-current assets

           

Accounts receivable

 

4,076

   

3,846

   

565

 

Right-of-use assets

 

4,404

   

4,502

   

3,972

 

Property, plant and equipment

 

2,975

   

2,826

   

3,614

 

Intangible assets

 

89,833

   

89,534

   

119,015

 

Investment in joint venture

 

5,952

   

5,233

   

5,203

 

Deferred income tax assets

 

36,538

   

33,270

   

36,948

 

Goodwill

 

35,911

   

32,977

   

34,446

 
   

179,689

   

172,188

   

203,763

 

TOTAL ASSETS

 

$

327,705

   

$

324,555

   

$

326,924

 
             

Liabilities

           

Current liabilities

           

Bank indebtedness

 

$

2,379

   

$

4,026

   

$

3,537

 

Accounts payable and accrued liabilities

 

15,047

   

25,755

   

24,644

 

Income taxes payable

 

254

   

203

   

 

Current portion of lease liabilities

 

1,022

   

998

   

1,120

 

Contingent liabilties

 

   

   

1,265

 

Current portion of deferred revenue

 

9,834

   

8,638

   

6,357

 

Current portion of long-term debt

 

65

   

59

   

407

 
   

28,601

   

39,679

   

37,330

 

Non-current liabilities

           

Deferred revenue

 

1,617

   

1,513

   

1,954

 

Long-term lease liabilities

 

3,364

   

3,550

   

2,604

 

Long-term debt

 

288

   

271

   

236

 

Deferred income tax liabilities

 

3,121

   

3,297

   

5,905

 
   

8,390

   

8,631

   

10,699

 

TOTAL LIABILITIES

 

$

36,991

   

$

48,310

   

$

48,029

 
             

Shareholders' equity

           

Capital stock

 

$

570,577

   

$

570,553

   

$

570,553

 

Contributed surplus

 

31,955

   

32,011

   

31,252

 

Accumulated other comprehensive income

 

32,030

   

10,936

   

22,112

 

Deficit

 

(343,848)

   

(337,255)

   

(345,022)

 
   

290,714

   

276,245

   

278,895

 

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

 

$

327,705

   

$

324,555

   

$

326,924

 
           
   

Quarterhill Inc.

 

Condensed Consolidated Interim Statements of Cash Flows

 

(Unaudited)

         

(in thousands of Canadian dollars)

 
           
   

Three months ended March 31,

 
   

2020

 

2019

 

Cash generated from (used in) Operations

         

Net loss

 

$

(5,112)

   

$

(47)

   

Non-cash items

         

Stock-based compensation (recovery) expense

 

(56)

   

241

   

Depreciation of right-of-use assets

 

275

   

517

   

Interest expense on lease liabilities

 

56

   

49

   

Depreciation and amortization

 

6,025

   

7,457

   

Foreign exchange loss (gain)

 

266

   

(82)

   

Equity in earnings from joint venture

 

(378)

   

(98)

   

Gain on disposal of assets

 

(4)

   

   

Deferred income tax (recovery) expense

 

(776)

   

1,687

   

Accrued investment income

 

110

   

   

Embedded derivatives

 

(222)

   

93

   

Changes in non-cash working capital balances

 

8,907

   

(25,756)

   

Cash from (used in) operations

 

9,091

   

(15,939)

   

Financing

         

Dividends paid

 

(1,481)

   

(1,502)

   

Bank indebtedness

 

(1,812)

   

96

   

Payment of lease liabilities

 

(317)

   

(451)

   

Repayment of long-term debt

 

(107)

   

(32)

   

Common shares issued from Performance Stock Units

 

24

   

   

Cash used in financing

 

(3,693)

   

(1,889)

   

Investing

         

Proceeds from sale of property, plant and equipment

 

4

   

   

Purchase of property and equipment

 

(371)

   

(210)

   

Purchase of intangibles

 

(17)

   

(27)

   

Cash used in investing

 

(384)

   

(237)

   

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

 

8,712

   

(1,670)

   

Net increase (decrease) in cash and cash equivalents

 

13,726

   

(19,735)

   

Cash and cash equivalents, beginning of period

 

87,870

   

87,029

   

Cash and cash equivalents, end of period

 

$

101,596

   

$

67,294

   
                                       

 

Quarterhill Inc.

                 

Condensed Consolidated Interim Statements of Changes in Shareholders' Equity

     

(Unaudited)

                 

(in thousands of Canadian dollars)

           
                   
 

Capital

Stock

 

Contributed

Surplus

 

Accumulated
Other
Comprehensive
Income

 

Deficit

 

Total Equity

US$, US GAAP - January 1, 2019

$

419,111

   

$

22,957

   

$

16,243

   

$

(253,443)

   

$

204,868

 

Balance - January 1, 2019

$

570,553

   

$

31,252

   

$

22,112

   

$

(345,022)

   

$

278,895

 
                   

Net loss

   

   

   

(47)

   

(47)

 

Other comprehensive loss

   

   

(4,599)

   

   

(4,599)

 

Stock-based compensation expense

   

241

   

   

   

241

 

Dividends declared

   

   

   

(1,502)

   

(1,502)

 

Balance - March 31,2019

$

570,553

   

$

31,493

   

$

17,513

   

$

(346,571)

   

$

272,988

 
                   

US$, US GAAP - January 1, 2020

$

419,111

   

$

23,527

   

$

16,797

   

$

(247,391)

   

$

212,044

 

US$, IFRS adjustments

           

$

(85)

   

$

(85)

 

US$, IFRS - January 1, 2020

$

419,111

   

$

23,527

   

$

16,797

   

$

(247,476)

   

$

211,959

 

Balance - January 1, 2020

$

570,553

   

$

32,011

   

$

10,936

   

$

(337,255)

   

$

276,245

 
                   

Net loss

   

   

   

(5,112)

   

(5,112)

 

Other comprehensive income

   

   

21,094

   

   

21,094

 

Stock-based compensation expense

   

(56)

   

   

   

(56)

 

Common shares issued from performance stock units

24

   

   

   

   

24

 

Dividends declared

   

   

   

(1,481)

   

(1,481)

 

Balance - March 31,2020

$

570,577

   

$

31,955

   

$

32,030

   

$

(343,848)

   

$

290,714

 

 

Quarterhill Inc.

           

Reconciliations of Net Loss to Adjusted EBITDA

(Unaudited)

           

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

             
   

Three months ended March 31,

Adjusted EBITDA

 

2020

 

2019

   

S

Per Share

 

S

Per Share

Net loss

 

$

(5,112)

 

$

(0.04)

   

$

(47)

 

$

 
             

Adjusted for:

           

Income tax expense

 

461

 

   

7,107

 

0.06

 

Foreign exchange (gain) loss

 

(499)

 

   

322

 

 

Finance expense

 

106

 

   

107

 

 

Finance income

 

(222)

 

   

(269)

 

 

Special charges

 

213

 

   

1,724

 

0.01

 

Amortization of intangibles

 

5,758

 

0.05

   

6,955

 

0.06

 

Depreciation of property, plant and equipment

 

267

 

   

503

 

 

Depreciation of right-of-use assets

 

275

 

   

517

 

0.01

 

Stock based compensation (recovery) expense

 

(56)

 

   

241

 

 

Other income

 

(378)

 

   

(98)

 

 

Adjusted EBITDA

 

$

813

 

$

0.01

   

$

17,062

 

$

0.14

 
             

Weighted average number of Common Shares

           

Basic

   

118,857,433

     

11,817,466

 

 

Cision View original content:http://www.prnewswire.com/news-releases/quarterhill-announces-first-quarter-2020-financial-results-301063350.html

SOURCE Quarterhill Inc.

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