COVID-19 – Continuing to Care for Our Global Family of Customers, Vendors and Partners CLICK HERE for information

Contact Us

News

27 Feb, 20

QUARTERHILL ANNOUNCES FOURTH QUARTER AND FISCAL 2019 FINANCIAL RESULTS

  • Fiscal 2019 Revenue increases 90% to $146.7 million
  • Fiscal 2019 Adjusted EBITDA of $40.0 million represents a year-over-year improvement of more than $50.0 million
  • Subsequent to year-end, in a damages-only re-trial, a jury awarded WiLAN $85.23 million in damages owed to WiLAN by Apple

KITCHENER, ON, Feb. 27, 2020 /PRNewswire/ - Quarterhill Inc. ("Quarterhill" or the "Company") (TSX: QTRH) (OTCQX: QTRHF), announces its financial results for the three- and twelve-month periods ended December 31, 2019. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.

Fiscal 2019 Highlights

  • Revenues of $146.7 million, compared to $77.4 million in 2018
  • Recurring revenue of $21.1 million, compared to $22.0 million in 2018
  • Adjusted EBITDA* of $40.0 million, compared to ($10.6) million in 2018
  • Net income of $10.5 million, or $0.09 per basic and diluted common share, compared to net loss of ($49.1) million, or ($0.41) per basic and diluted common share, in 2018
  • Cash generated (used) in operations of $7.5 million, compared to ($8.8) million in 2018
  • Cash and equivalents at December 31, 2019 were $68.6 million, compared to $67.3 million at December 31, 2018
  • Working capital at December 31, 2019 was $86.5 million, compared to $64.1 million at December 31, 2018
  • Wi-LAN Inc. ("WiLAN") completed patent license agreements with NVIDIA, LG, SK hynix Inc and three Canadian telcos, among others
  • IRD achieved record revenue and adjusted EBITDA
  • VIZIYA completed a large enterprise software agreement with a global integrated energy and chemical company, which led to significant revenue growth and margin expansion in 2019
  • Subsequent to year-end, in a damages-only re-trial, a jury awarded WiLAN $85.2 million in damages owed to WiLAN by Apple Inc.

 

Fourth Quarter 2019 Highlights

  • Revenues of $39.2 million, compared to $25.4 million in Q4 2018
  • Recurring revenue of $5.0 million, compared to $4.7 million in Q4 2018
  • Adjusted EBITDA* of $12.6 million, compared to $3.2 million in Q4 2018
  • Net income of $5.6 million, or $0.05 per basic and diluted common share, compared to net loss of ($19.9) million, or ($0.17) per basic and diluted common share, in Q4 2018
  • Cash used in operations was ($1.8) million, compared to $9.1 million generated from operations in Q4 2018

 

"2019 saw revenue and adjusted EBITDA growth on both a consolidated basis for Quarterhill as well as with each of our portfolio companies," said John Gillberry, Chairman of Quarterhill. "Adjusted EBITDA in 2019 included a contribution of more than $10 million combined from IRD and VIZIYA, which reflects the potential of our diversification strategy to generate incremental value for the business. Strong results in 2019 resulted in $86.5 million of working capital at year-end (up $22.4 million from the prior year-end) giving us a solid financial foundation from which to pursue our growth activities in 2020 and beyond.

"Our CEO search remains well underway and is proceeding in-line with our expectations. We have reviewed and met with a number of promising candidates and we have another round of meetings set up in early March. Should these interviews proceed as expected, we believe we will then be in a position to short-list our candidate pool and begin discussions that could lead to an announcement in early spring. While timing is important, the absolute most important consideration is finding the right person with the right blend of skills and experience for the role. In the interim, each of our portfolio companies is in good hands and is being run by a talented and experienced CEO who has played a part in generating the positive results we've released today."

"Subsequent to quarter-end, on January 24, we announced that WiLAN won a second jury verdict against Apple in the damages trial held in the United States District Court for the Southern District of California. This was a re-trial for damages only, resulting from the previous related trial verdict rendered in August 2018. In the jury's verdict, WiLAN was awarded $85.2 million in damages. It is important to note that in both jury trials the jury awarded WiLAN the full amount that it argued as being owed by Apple. We are pleased with the jury's decision and believe it is a reflection of our team's advocacy, the strength of our patent portfolio and the systematic and reasonable approach we take in our licensing and litigation activities The trial is now in the customary post-trial process and we will provide updates on any material developments as they occur."

Approval of Eligible Dividend
The Board of Directors has declared an eligible quarterly dividend of CDN $0.0125 per common share payable on April 3, 2020, to shareholders of record on March 20, 2020.

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.

Q4 and Fiscal 2019 Consolidated Financial Review
Consolidated revenues for the three months ended December 31, 2019 ("Q4 2019") were $39.2 million, compared to $25.4 million in Q4 2018, representing growth of 54%. Consolidated revenues for the twelve months ended December 31, 2019 ("FY2019") were $146.7 million, compared to $77.4 million in FY2018, representing growth of 90%. Growth for Q4 2019 and FY2019 was driven by higher revenue from all three businesses – WiLAN, IRD and VIZIYA.

Gross margin for Q4 2019 was $22.0 million, or 56%, compared to $9.6 million, or 38%, in Q4 2018. Gross margin for FY2019 was $72.9 million, or 50%, compared to $18.8 million, or 24%, in FY2018. The Q4 2019 quarter-over-quarter improvement in gross margin was due primarily to better margin performance at WiLAN and IRD, and for FY2019, the year-over-year improvement in gross margin was due to better margin performance from all three businesses – WiLAN, IRD and VIZIYA.

Operating expenses include selling, general and administrative costs ("SG&A"), research and development ("R&D") costs, depreciation, amortization and impairment losses of intangible assets and special charges. Operating expenses for Q4 2019 were $16.3 million, compared to $30.7 million in Q4 2018. Operating expenses in Q4 2018 included a $16.1 million non-cash impairment loss on goodwill. Excluding impairment loss on goodwill, the year-over-year increase in operating expenses was primarily due to higher SG&A and R&D, offset in part by lower depreciation and amortization of intangible assets. For FY2019, operating expenses were $57.8 million, compared to $77.3 million in FY2018. Excluding the impairment loss on goodwill in Q4 2018, operating expenses decreased year-over-year primarily due to lower depreciation, amortization of intangible assets and special charge expense, offset in part by higher SG&A and R&D.

Adjusted EBITDA for Q4 2019 was $12.6 million compared to $3.2 million in Q4 2018. Adjusted EBITDA for FY2019 was $40.0 million compared to ($10.6) million in FY2018. The increase in adjusted EBITDA for Q4 2019 reflects the better performance at WiLAN and IRD.  FY2019 reflects improved operations at all three portfolio companies in 2019, and in particular, at WiLAN.

Net income for Q4 2019 was $5.6 million, or $0.05 per basic and diluted Common Share, compared to net loss of ($19.9) million or ($0.17) per basic and diluted Common Share in Q4 2018. Net income for FY2019 was $10.5 million, or $0.09 per basic and diluted Common Share, compared to a net loss of ($49.1) million, or ($0.41) per basic and diluted Common Share, in FY2018. Of note, net loss for Q4 2018 and FY2018 included a $16.1 million non-cash impairment loss on goodwill. For FY2019, the Company's bottom-line improved primarily due to higher revenues and gross margins at all three portfolio companies.

Cash used in operations in Q4 2019 was ($1.8) million, compared to cash generated from operations of $9.1 million in Q4 2018. Cash used in operations in Q4 2019 reflects working capital adjustments of ($12.4) million primarily related to the timing of collections for certain patent license agreements that were completed in the quarter. A majority of these payments have subsequently been collected in Q1 2020. Cash generated from operations for FY2019 was $7.5 million, compared to cash used in operations of ($8.8) million in FY2018. Cash from operations for FY2019 benefited from the improved financial performance at all three portfolio businesses.

Cash and cash equivalents and short-term investments amounted to $68.6 million at December 31, 2019, compared to $67.3 million at December 31, 2018. Working capital at December 31, 2019 was $86.5 million, compared to $64.1 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 December 31, 2019

 

Licensing

 

Intelligent
Systems

 

Enterprise
Software

 

Corporate

 

Total

Revenues

$

23,175

 

$

13,415

 

$

2,567

 

$

-

 

$

39,157

Cost of revenues (excluding depreciation and amortization)

 

8,635

   

7,984

   

491

   

-

   

17,110

   

14,540

   

5,431

   

2,076

   

-

   

22,047

Selling, general and administrative expenses

 

1,041

   

3,151

   

2,410

   

1,697

   

8,299

Research and development expenses

 

-

   

528

   

960

   

-

   

1,488

Depreciation of property, plant and equipment

 

12

   

143

   

32

   

4

   

191

Amortization of intangibles

 

3,304

   

952

   

758

   

-

   

5,014

Impairment losses on intangibles

 

87

   

-

   

-

   

-

   

87

Special charges

 

15

   

-

   

859

   

392

   

1,266

Results from operations

 

10,081

   

657

   

(2,943)

   

(2,093)

   

5,702

Finance income

 

(124)

   

(2)

   

-

   

(259)

   

(385)

Finance expense

 

(1)

#

 

53

   

1

   

-

   

53

Foreign exchange (gain) loss

 

(476)

   

181

   

(12)

   

423

   

116

Other expense (income)

 

6

#

 

(289)

   

(2)

   

-

   

(285)

Income (loss) before taxes

 

10,676

   

714

   

(2,930)

   

(2,257)

   

6,203

Current income tax expense (recovery)

 

1,823

#

 

(105)

   

(1,035)

   

-

   

683

Deferred income tax (recovery) expense

 

(23)

#

 

(52)

   

(178)

   

139

   

(114)

Income tax expense (recovery)

 

1,800

   

(157)

   

(1,213)

   

139

   

569

Net income (loss)

$

8,876

 

$

871

 

$

(1,717)

 

$

(2,396)

 

$

5,634

                             

Adjusted EBITDA

 

13,509

   

2,161

   

(1,288)

   

(1,766)

   

12,616

                             

Other reconciling items:

                           

Stock-based compensation

 

10

   

20

   

6

   

(69)

   

(33)

Dividends from joint venture

 

-

   

389

   

-

   

-

   

389

 

 

For the twelve months ended December 31, 2019

 

Licensing

 

Intelligent
Systems

 

Enterprise
Software

 

Corporate

 

Total

Revenues

$

79,808

 

$

50,392

 

$

16,520

 

$

-

 

$

146,720

Cost of revenues (excluding depreciation and amortization)

 

39,995

   

32,312

   

1,526

   

-

   

73,833

   

39,813

   

18,080

   

14,994

   

-

   

72,887

Selling, general and administrative expenses

 

2,547

   

10,753

   

7,542

   

7,880

   

28,722

Research and development expenses

 

-

   

2,308

   

2,825

   

-

   

5,133

Depreciation of property, plant and equipment

 

92

   

866

   

138

   

16

   

1,112

Amortization of intangibles

 

13,772

   

3,791

   

3,029

   

-

   

20,592

Impairment losses on intangibles

 

87

   

-

   

-

   

-

   

87

Special charges

 

1,851

   

-

   

859

   

(537)

   

2,173

Results from operations

 

21,464

   

362

   

601

   

(7,359)

   

15,068

Finance income

 

(328)

   

(17)

   

-

   

(911)

   

(1,256)

Finance expense

 

(1)

   

390

   

4

   

1

   

394

Foreign exchange (gain) loss

 

(730)

   

207

   

23

   

766

   

266

Other expense (income)

 

3

   

(659)

   

(2)

   

-

   

(658)

Income (loss) before taxes

 

22,520

   

441

   

576

   

(7,215)

   

16,322

Current income tax expense

 

5,774

   

202

   

15

   

-

   

5,991

Deferred income tax expense (recovery)

 

1,767

   

(1,212)

   

(639)

   

(113)

   

(197)

Income tax expense (recovery)

 

7,541

   

(1,010)

   

(624)

   

(113)

   

5,794

Net income (loss)

$

14,979

 

$

1,451

 

$

1,200

 

$

(7,102)

 

$

10,528

                             

Adjusted EBITDA

 

37,275

   

5,507

   

4,676

   

(7,467)

   

39,991

                             

Other reconciling items:

                           

Stock-based compensation

 

9

   

99

   

49

   

413

   

570

Dividends from joint venture

 

-

   

389

   

-

   

-

   

389

 

 

For the three months ended December 31, 2018

 

Licensing

 

Intelligent
Systems

 

Enterprise
Software

 

Corporate

 

Total

Revenues

$

10,623

 

$

12,541

 

$

2,252

 

$

-

 

$

25,416

Cost of revenues (excluding depreciation and amortization)

 

7,742

   

7,805

   

314

   

-

   

15,861

   

2,881

   

4,736

   

1,938

   

-

   

9,555

Selling, general and administrative expenses

 

599

   

2,753

   

1,593

   

1,087

   

6,032

Research and development expenses

 

-

   

429

   

448

   

-

   

877

Depreciation of property, plant and equipment

 

48

   

280

   

30

   

4

   

362

Amortization of intangibles

 

4,434

   

950

   

758

   

-

   

6,142

Impairment losses on intangibles

 

509

   

-

   

-

   

-

   

509

Impairment loss on goodwill

 

-

   

16,066

   

-

   

-

   

16,066

Special charges

 

2,498

   

115

   

-

   

(1,942)

   

671

Results from operations

 

(5,207)

   

(15,857)

   

(891)

   

851

   

(21,104)

Finance income

 

(33)

   

(2)

   

-

   

(402)

   

(437)

Finance expense

 

1

   

61

   

1

   

-

   

63

Foreign exchange loss (gain)

 

612

   

(392)

   

115

   

(453)

   

(118)

Other (income) expense

 

-

   

(58)

   

77

   

-

   

19

(Loss) income before taxes

 

(5,787)

   

(15,466)

   

(1,084)

   

1,706

   

(20,631)

Current income tax expense (recovery)

 

656

   

(92)

   

(137)

   

-

   

427

Deferred income tax (recovery) expense

 

(4,334)

   

(593)

   

(186)

   

3,984

   

(1,129)

Income tax (recovery) expense

 

(3,678)

   

(685)

   

(323)

   

3,984

   

(702)

Net loss

$

(2,109)

 

$

(14,781)

 

$

(761)

 

$

(2,278)

 

$

(19,929)

                             

Adjusted EBITDA

 

2,302

   

1,901

   

(89)

   

(951)

   

3,163

                             

Other reconciling items:

                           

Stock-based compensation

 

20

   

30

   

14

   

136

   

200

Dividends from joint venture

 

-

   

317

   

-

   

-

   

317

 

 

For the twelve months ended December 31, 2018

 

Licensing

 

Intelligent
Systems

 

Enterprise
Software

 

Corporate

 

Total

Revenues

$

20,811

 

$

45,051

 

$

11,539

 

$

-

 

$

77,401

Cost of revenues (excluding depreciation and amortization)

 

27,539

   

29,594

   

1,441

   

-

   

58,574

   

(6,728)

   

15,457

   

10,098

   

-

   

18,827

Selling, general and administrative expenses

 

2,598

   

10,250

   

6,723

   

7,421

   

26,992

Research and development expenses

 

-

   

2,022

   

1,549

   

-

   

3,571

Depreciation of property, plant and equipment

 

257

   

1,129

   

121

   

10

   

1,517

Amortization of intangibles

 

18,731

   

3,873

   

3,029

   

-

   

25,633

Impairment losses on intangibles

 

509

   

-

   

-

   

-

   

509

Impairment loss on goodwill

 

-

   

16,066

   

-

   

-

   

16,066

Special charges

 

2,498

   

2,435

   

-

   

(1,942)

   

2,991

Results from operations

 

(31,321)

   

(20,318)

   

(1,324)

   

(5,489)

   

(58,452)

Finance income

 

(36)

   

(11)

   

-

   

(912)

   

(959)

Finance expense

 

2

   

205

   

11

   

2

   

220

Foreign exchange loss (gain)

 

946

   

(556)

   

166

   

(748)

   

(192)

Other income

 

-

   

(942)

   

(192)

   

-

   

(1,134)

Loss before taxes

 

(32,233)

   

(19,014)

   

(1,309)

   

(3,831)

   

(56,387)

Current income tax expense (recovery)

 

1,793

   

66

   

(782)

   

1

   

1,078

Deferred income tax (recovery) expense

 

(11,262)

   

(1,731)

   

(935)

   

5,583

   

(8,345)

Income tax (recovery) expense

 

(9,469)

   

(1,665)

   

(1,717)

   

5,584

   

(7,267)

Net (loss) income

$

(22,764)

 

$

(17,349)

 

$

408

 

$

(9,415)

 

$

(49,120)

                             

Adjusted EBITDA

 

(9,280)

   

3,793

   

2,011

   

(7,161)

   

(10,637)

                             

Other reconciling items:

                           

Effect of deleted deferred revenue

 

-

   

167

   

147

   

-

   

314

Stock-based compensation

 

46

   

124

   

38

   

260

   

468

Dividends from joint venture

0

 

317

 

0

 

0

 

317

 

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/2189235/1F40377701F38205A1A0891EE7E28C0C 

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/2189235/1F40377701F38205A1A0891EE7E28C0C   

Telephone replay will be available from 1:00 p.m. Eastern Time on February 27, 2020 until 11:59 p.m. Eastern Time on March 5, 2020 at: 1.855.859.2056 (Toll Free) or 1.416.849.0833 (International). The telephone replay requires the passcode 3232057.

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) stock based compensation; (viii) foreign exchange (gain) loss; and (ix) equity in income and dividends from joint ventures. Adjusted EBITDA is a measure used by our management to analyze the performance of 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 AS DETERMINED IN ACCORDANCE WITH U.S. GAAP.

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 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.

Consolidated Statements of Operations

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

                       
   

Three months ended 
December 31,

   

Twelve months ended 
December 31,

   

2019

   

2018

   

2019

   

2018

Revenues

                     

License

$

22,965

 

$

10,646

 

$

87,068

 

$

23,544

Systems

 

10,482

   

9,495

   

36,108

   

29,252

Services

 

687

   

589

   

2,490

   

2,629

Recurring

 

5,023

   

4,686

   

21,054

   

21,976

   

39,157

   

25,416

   

146,720

   

77,401

Cost of revenues(excluding depreciation and amortization)

                     

License

 

8,635

   

7,775

   

40,012

   

27,702

Systems

 

6,216

   

5,553

   

22,550

   

18,945

Services

 

491

   

281

   

1,509

   

1,276

Recurring

 

1,768

   

2,252

   

9,762

   

10,651

   

17,110

   

15,861

   

73,833

   

58,574

   

22,047

   

9,555

   

72,887

   

18,827

 Operating expenses

                     

Depreciation of property, plant and equipment

 

191

   

362

   

1,112

   

1,517

Amortization of intangibles

 

5,014

   

6,142

   

20,592

   

25,633

Selling, general and administrative expenses

 

8,299

   

6,032

   

28,722

   

26,992

Research and development expenses

 

1,488

   

877

   

5,133

   

3,571

Impairment losses on intangible assets

 

87

   

509

   

87

   

509

Impairment loss on goodwill

 

-

   

16,066

   

-

   

16,066

Special charges

 

1,266

   

671

   

2,173

   

2,991

   

16,345

   

30,659

   

57,819

   

77,279

 Results from operations

 

5,702

   

(21,104)

   

15,068

   

(58,452)

                       

Finance income

 

(385)

   

(437)

   

(1,256)

   

(959)

Finance expense

 

53

   

63

   

394

   

220

Foreign exchange loss (gain)

 

116

   

(118)

   

266

   

(192)

Other (income) expense

 

(285)

   

19

   

(658)

   

(1,134)

Income (loss) before taxes

 

6,203

   

(20,631)

   

16,322

   

(56,387)

                       

Current income tax expense

 

683

   

427

   

5,991

   

1,078

Deferred income tax recovery

 

(114)

   

(1,129)

   

(197)

   

(8,345)

Income tax expense (recovery)

 

569

   

(702)

   

5,794

   

(7,267)

                       

Net income (loss)

$

5,634

 

$

(19,929)

 

$

10,528

 

$

(49,120)

                       

Net income (loss) per share

                     

Basic

$

0.05

 

$

(0.17)

 

$

0.09

 

$

(0.41)

Diluted

$

0.05

 

$

(0.17)

 

$

0.09

 

$

(0.41)

                       

Weighted average number of common shares

                     

Basic

 

118,817,466

   

118,817,466

   

118,817,466

   

118,768,728

Diluted

 

118,817,466

   

118,817,466

   

118,817,466

   

118,768,728

 

 

Quarterhill Inc.

Consolidated Statements of Comprehensive Income (Loss)

(in thousands of United States dollars)

                       
   

Three months ended 
December 31,

   

Twelve months ended 
December 31,

   

2019

   

2018

   

2019

   

2018

                       

Net income (loss)

$

5,634

 

$

(19,929)

 

$

10,528

 

$

(49,120)

Other comprehensive income (loss):

                     

Foreign currency translation adjustment

 

343

   

(2,021)

   

554

   

(3,868)

Comprehensive income (loss)

$

5,977

 

$

(21,950)

 

$

11,082

 

$

(52,988)

 

 

Quarterhill Inc.

Consolidated Balance Sheets

(in thousands of United States dollars)

           

As at

December 31, 2019

 

December 31, 2018

Current assets

         

Cash and cash equivalents

$

67,422

 

$

63,929

Short-term investments

 

1,189

   

1,139

Restricted short-term investments

 

-

   

2,200

Accounts receivable (net of allowance for doubtful accounts)

 

32,936

   

10,812

Other current assets

 

83

   

91

Unbilled revenue

 

6,879

   

3,990

Income taxes receivable

 

105

   

198

Inventories (net of obsolescence)

 

6,576

   

5,960

Prepaid expenses and deposits

 

1,720

   

2,332

   

116,910

   

90,651

Non-current assets

         

Accounts receivable

 

2,951

   

415

Right-of-use assets

 

3,570

   

-

Property, plant and equipment

 

2,168

   

2,655

Intangible assets

 

68,699

   

87,425

Investment in joint venture

 

4,015

   

3,822

Deferred income tax assets

 

25,497

   

27,141

Goodwill

 

25,303

   

25,303

   

132,203

   

146,761

TOTAL ASSETS

$

249,113

 

$

237,412

           

Liabilities

         

Current liabilities

         

Bank indebtedness

$

3,089

 

$

2,598

Accounts payable and accrued liabilities

 

19,762

   

18,103

Income taxes payable

 

156

   

-

Current portion of right-of-use lease liabilities

 

766

   

-

Current portion of deferred revenue

 

6,628

   

4,670

Current portion of long-term debt

 

45

   

299

Contingent consideration

 

-

   

929

   

30,446

   

26,599

Non-current liabilities

         

Deferred revenue

 

1,161

   

1,435

Right-of-use lease liabilities

 

2,724

   

-

Long-term debt

 

208

   

173

Deferred income tax liabilities

 

2,530

   

4,337

   

6,623

   

5,945

TOTAL LIABILITIES

 

37,069

   

32,544

           

Shareholders' equity

         

Capital stock

 

419,111

   

419,111

Additional paid-in capital

 

23,527

   

22,957

Accumulated other comprehensive income

 

16,797

   

16,243

Deficit

 

(247,391)

   

(253,443)

   

212,044

   

204,868

TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY

$

249,113

 

$

237,412

 

 

Quarterhill Inc.

Condensed Consolidated Interim Statements of Cash Flows

(in thousands of United States dollars)

                       
   

Three months ended 
December 31,

   

Twelve months ended 
December 31,

   

2019

   

2018

   

2019

   

2018

Cash generated from (used in):

                     

Operations

                     

Net income (loss)

$

5,634

 

$

(19,929)

 

$

10,528

 

$

(49,120)

Non-cash items

                     

Stock-based compensation

 

(33)

   

200

   

570

   

468

Depreciation and amortization

 

5,205

   

6,503

   

21,704

   

27,150

Foreign exchange (gain) loss

 

(24)

   

188

   

(85)

   

(942)

Equity (earnings) loss from joint venture

 

(289)

   

(58)

   

(659)

   

299

Loss on disposal of intangibles

 

162

   

-

   

162

   

-

Impairment losses on intangibles

 

87

   

509

   

87

   

509

Impairment losses on goodwill

 

-

   

16,066

   

-

   

16,066

Contingent consideration adjustment

 

-

   

(3,545)

   

(929)

   

(3,545)

(Gain) loss on disposal of assets

 

(16)

   

-

   

551

   

(24)

Deferred income tax recovery

 

(114)

   

(1,129)

   

(197)

   

(8,345)

Embedded derivatives

 

(11)

   

(75)

   

8

   

(78)

Changes in non-cash working capital balances

 

(12,391)

   

10,414

   

(24,192)

   

8,763

Cash generated (used in) from operations

 

(1,790)

   

9,144

   

7,548

   

(8,799)

Financing

                     

Dividends paid

 

(1,128)

   

(1,136)

   

(4,476)

   

(4,605)

Bank indebtedness

 

(664)

   

(3,076)

   

491

   

(970)

Repayment of long-term debt

 

42

   

48

   

(219)

   

(44)

Common shares issued for cash from Employee Share
Purchase Plan

 

-

 

-

   

-

   

27

Cash used in financing

 

(1,750)

   

(4,164)

   

(4,204)

   

(5,592)

Investing

                     

Dividends received from joint venture

 

389

   

317

   

389

   

317

Proceeds from sale of restricted short-term investments

 

2,100

   

1,300

   

2,200

   

1,300

Proceeds from sale of property, plant and equipment

 

10

   

-

   

33

   

54

Purchase of property and equipment

 

(393)

   

(156)

   

(1,123)

   

(575)

Repayment of patent finance obligations

 

-

   

-

   

-

   

(4,167)

Purchase of intangibles

 

(4)

   

(19)

   

(1,429)

   

(133)

Cash from (used in) investing

 

2,102

   

1,442

   

70

   

(3,204)

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

 

14

   

(191)

   

79

   

(294)

Net (decrease) increase in cash and cash equivalents

 

(1,424)

   

6,231

   

3,493

   

(17,889)

Cash and cash equivalents, beginning of period

 

68,846

   

57,698

   

63,929

   

81,818

Cash and cash equivalents, end of period

$

67,422

 

$

63,929

 

$

67,422

 

$

63,929

 

Consolidated Statements of Shareholders' Equity

                   

(in thousands of United States dollars)

                   
                     
 

Capital
Stock

Additional
Paid-in
Capital

Accumulated

Other

Comprehensive

Income

Deficit

Total
Equity

Balance - January 1, 2018

$

418,873

$

22,489

$

20,111

$

(199,718)

$

261,755

                     

Comprehensive loss:

                   

Net loss

 

-

 

-

 

-

 

(49,120)

 

(49,120)

Other comprehensive loss

 

-

 

-

 

(3,868)

 

-

 

(3,868)

Shares and options issued:

                   

Stock-based compensation expense

 

-

 

468

 

-

 

-

 

468

Conversion of deferred stock units to common shares

 

211

 

-

 

-

 

-

 

211

Sale of shares under Employee Share
  Purchase Plan

 

27

 

-

 

-

 

-

 

27

Dividends declared

 

-

 

-

 

-

 

(4,605)

 

(4,605)

Balance - December 31, 2018

$

419,111

$

22,957

$

16,243

$

(253,443)

$

204,868

                     

Balance - January 1, 2019

 

419,111

 

22,957

 

16,243

 

(253,443)

 

204,868

                     

Comprehensive income:

                   

Net income

 

-

 

-

 

-

 

10,528

 

10,528

Other comprehensive income

 

-

 

-

 

554

 

-

 

554

Options issued:

                   

Stock-based compensation expense

 

-

 

570

 

-

 

-

 

570

Dividends declared

 

-

 

-

 

-

 

(4,476)

 

(4,476)

Balance - December 31, 2019

$

419,111

$

23,527

$

16,797

$

(247,391)

$

212,044

 

Quarterhill Inc.

                     

Reconciliations of GAAP Net Income (Loss) to
Adjusted EBITDA

                     

(in thousands of United States dollars, except share and per share amounts) (unaudited)

                       
 

For the three months ended
December 31,

 

For the twelve months ended
December 31,

Adjusted EBITDA

2019

 

2018

 

2019

 

2018

                       

Net income (loss)

$

5,634

 

$

(19,929)

 

$

10,528

 

$

(49,120)

                       

Adjusted for:

                     

Income tax expense (recovery)

 

569

   

(702)

   

5,794

   

(7,267)

Foreign exchange loss (gain)

 

116

   

(118)

   

266

   

(192)

Finance expense

 

53

   

63

   

394

   

220

Finance income

 

(385)

   

(437)

   

(1,256)

   

(959)

Special charges

 

1,266

   

671

   

2,173

   

2,991

Amortization of intangibles

 

5,014

   

6,142

   

20,592

   

25,633

Impairment losses on intangible assets

 

87

   

509

   

87

   

509

Impairment loss on goodwill

 

-

   

16,066

   

-

   

16,066

Depreciation of property, plant and equipment

 

191

   

362

   

1,112

   

1,517

Effect of deleted deferred revenue

 

-

   

-

   

-

   

314

Stock based compensation

 

(33)

   

200

   

570

   

468

Dividend from joint venture

 

389

   

317

   

389

   

317

Other income

 

(285)

   

19

   

(658)

   

(1,134)

Adjusted EBITDA

$

12,616

 

$

3,163

 

$

39,991

 

$

(10,637)

                       
 

For the three months ended
December 31,

 

For the twelve months ended
December 31,

Adjusted EBITDA per share

2019

 

2018

 

2019

 

2018

                       

Net income (loss)

$

0.05

 

$

(0.17)

 

$

0.09

 

$

(0.42)

                       

Adjusted for:

                     

Income tax expense (recovery)

 

-

   

(0.01)

   

0.05

   

(0.07)

Foreign exchange loss (gain)

 

-

   

-

   

-

   

-

Finance expense

 

-

   

-

   

-

   

-

Finance income

 

-

   

-

   

(0.01)

   

-

Special charges

 

0.01

   

0.01

   

0.02

   

0.03

Amortization of intangibles

 

0.05

   

0.05

   

0.18

   

0.21

Impairment losses on intangible assets

 

-

   

-

   

-

   

-

Impairment loss on goodwill

 

-

   

0.14

   

-

   

0.14

Depreciation of property, plant and equipment

 

-

   

-

   

0.01

   

-

Effect of deleted deferred revenue

 

-

   

-

   

-

   

-

Stock based compensation

 

-

   

-

   

-

   

-

Dividend from joint venture

 

-

   

-

   

-

   

-

Other income

 

-

   

-

   

-

   

-

Adjusted EBITDA per share

$

0.11

 

$

0.02

 

$

0.34

 

$

(0.11)

 

Cision View original content:http://www.prnewswire.com/news-releases/quarterhill-announces-fourth-quarter-and-fiscal-2019-financial-results-301012401.html

SOURCE Quarterhill Inc.

IRD Portal

IRD Portal

Sign-in for access to brochures, manuals and other resources.

IRD Worldwide