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11 Mar, 21


TORONTO, March 11, 2021 /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, 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. 

Fiscal 2020 Financial Highlights

  • Revenue was $144.5 million
  • Adjusted EBITDA1 was $31.2 million
  • Cash generated from operations was $35.2 million
  • Cash, cash equivalents, and short-term investments were $141.3 million at December 31, 2020
  • Working capital was $159.7 million at December 31, 2020

Fiscal 2020 Operational Highlights

  • Appointed Paul Hill as President and CEO, and John Rim as Chief Financial Officer 
  • Launched M&A diversification strategy to acquire businesses in the Intelligent Transportation Systems ("ITS") industry. On January 5, 2021, acquired Sensor Line GmbH ("Sensor Line"), a provider of highly regarded fiber optic traffic sensors for road and rail markets 
  • Appointed Rish Malhotra as President and CEO of International Road Dynamics ("IRD") 
  • A Final Judgment was issued in WiLAN's case against Apple for US$108.98 million
  • Appointed Paul Hill and Dr. Michel Fattouche to Quarterhill's Board of Directors 
  • Completed the sale of VIZIYA for total cash proceeds of $49.4 million
  • Repurchased 4.9 million shares via a Substantial Issuer Bid and a Normal Course Issuer Bid, reducing the total number of shares outstanding to 114.3 million

"2020 was a strong year both financially and operationally, despite the challenges posed by the COVID-19 pandemic," said Paul Hill, President and CEO of Quarterhill. "We established new leadership, launched our  M&A diversification strategy in the ITS industry, significantly grew our cash balance and returned capital to shareholders via our dividend and share buybacks. Both portfolio companies had solid years with IRD delivering margin expansion and steady revenue, and with WiLAN generating significant Adjusted EBITDA and cash flow."

"The recent acquisition of Sensor Line was the first under our new ITS-focused M&A strategy. As a tuck-in transaction for IRD, Sensor Line expands IRD's geographic footprint in Europe and broadens its product suite in tolling and enforcement, which are two areas of focus. ITS is an ideal market for us to pursue M&A; it is a stable and growing industry that blends technology with infrastructure in order to provide essential services to governments that are looking to improve safety, tackle environmental challenges and generate new revenue opportunities. ITS also stands to benefit from government stimulus plans targeting infrastructure, in particular in the U.S. market. As ITS becomes more inter-connected, we believe this could create opportunities that leverage WiLAN's expertise in 5G, which will be a key enabling technology for the industry in the future."

Approval of Eligible Dividend
The Board of Directors has declared an eligible quarterly dividend of $0.0125 per common share payable on April 9, 2021, to shareholders of record on March 19, 2021.

Q4 2020 and Fiscal 2020 Consolidated Financial Review
Financial statements for the three- and twelve-month periods ended December 31, 2020 and for the respective comparison periods, have been prepared to reflect continuing operations and therefore exclude results during those periods from VIZIYA, which was sold by Quarterhill on May 15, 2020. The year-to-date operating results from VIZIYA, up to the date of sale on May 15, 2020, are reported as net income (loss) from discontinued operations in accordance with IFRS 5. 

Quarterhill's revenue is broadly segmented into Licensing, reflecting the WiLAN business, and Intelligent Transportation Systems, reflecting the IRD business. Quarterhill's Management's Discussion and Analysis and Consolidated Financial Statements for the three- and twelve-month periods ended December 31, 2020 are available on the Company's websiteand on its profile at SEDAR

Consolidated revenues for the three-month period ended December 31, 2020 ("Q4 2020") were $18.1 million, compared to $48.3 million in Q4 2019. Consolidated revenues for the twelve-month period ended December 31, 2020 ("Fiscal 2020") were $144.5 million, compared to $172.9 million in Fiscal 2019. The majority of WiLAN's licenses are one-time in nature and significant fluctuations in revenue, gross margin, and Adjusted EBITDA can result when the volume or dollar value of licenses changes from one period to the next. WiLAN revenue was lower in Q4 2020 and Fiscal 2020 due primarily to the closure of a greater volume, and value, of licensing contracts in the prior year periods. Revenue at IRD for Q4 2020 and Fiscal 2020 was relatively flat when compared with the same periods in 2019.

Gross margin for Q4 2020 and Fiscal 2020 was 9% and 41%, compared to 55% and 44% in the same periods last year. Gross margin for the licensing business in Q4 2020 was impacted by the factors noted above and to a lesser degree for Fiscal 2020. Fiscal 2020 gross margin for the ITS business increased year-over-year reflecting higher profitability on certain projects entered into by IRD during the year.  

Operating expenses include selling, general and administrative costs ("SG&A"), research and development costs ("R&D"), depreciation and amortization of intangible assets, impairment loss on intangibles and special charges. Operating expenses for Q4 2020 and Fiscal 2020 were $14.2 million and $51.5 million, compared to $15.4 million and $58.1 millionin the same periods last year. Q4 2020 operating expenses were 8% lower compared to Q4 2019. For Fiscal 2020, operating expenses decreased 11%, due primarily to lower amortization of intangibles compared to Fiscal 2019.

Adjusted EBITDA for Q4 2020 and Fiscal 2020 was ($6.1) million and $31.2 million, compared to $18.7 million and $48.5 million in the same periods last year. The licensing business generated $28.8 million of Adjusted EBITDA in Fiscal 2020, reflecting WiLAN's ability to generate significant margin and cash flow on an annual basis. Adjusted EBITDA from the ITS business grew 67.0% to $13.8 million.   

Cash generated from (used in) continuing operations for Q4 2020 and Fiscal 2020 was $25.3 million and $35.2 million, compared to ($4.9) million and $8.6 million in the same periods last year. Cash and cash equivalents and short-term investments was $141.3 million at December 31, 2020, compared to $89.4 million at December 31, 2019. Working capital at December 31, 2020, was $159.7 million compared to $112.2 million at December 31, 2019.

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

Webcast Information 
The live audio webcast will be available at:     

Dial-in Information

  • To access the call from Canada and U.S., dial 1.888.231.8191 (Toll Free) 
  • To access the call from other locations, dial 1.647.427.7450 (International)

Replay Information 
Webcast replay will be available for 365 days at:    

Telephone replay will be available until 11:59 p.m. Eastern Daylight Time on March 18, 2021 at: 1.855.859.2056 (Toll Free North America) or 1.416.849.0833 (International).The telephone replay requires the passcode 7395359.

1Non-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)  stock-based  compensation;  (vii)  foreign  exchange  (gain)  loss;  and  (viii)  equity  in earnings and dividends from joint ventures. Adjusted EBITDA is used by our management to assess our normalized cash generated on a consolidated basis and in our operating segments. Adjusted EBITDA is also a performance measure that may be used by investors to analyze the cash generated by Quarterhill and our operating segments. Adjusted EBITDA should not be interpreted as an alternative to net income and cash flows from operations as determined in accordance with IFRS or as a measure of liquidity.

About Quarterhill
Quarterhill is a growth-oriented company in the Intelligent Transportation System (ITS) industry as well as a leader in Intellectual Property licensing. Our goal is to execute an investment strategy that capitalizes on attractive growth opportunities within ITS - and its adjacent markets - to become a global leader in that industry. Quarterhill is listed on the TSX under the symbol QTRH and on the OTCQX Best Market under the symbol QTRHF. For more information:

Forward-looking Information
This news release contains forward-looking statements regarding Quarterhill and its business. Forward-looking statements are based on estimates and assumptions made by Quarterhill in light of its experience and its perception of historical trends, current conditions, expected future developments and the expected effects of new business strategies, as well as other factors that Quarterhill believes are appropriate in the circumstances. The forward-looking events and circumstances discussed herein may not occur and could differ materially as a result of known and unknown risk factors and uncertainties affecting Quarterhill, including: potential risks and uncertainties relating to the ultimate geographic spread of the novel coronavirus ("COVID-19"); the severity of the disease; the duration of the COVID-19 outbreak; actions that may be taken by governmental authorities to contain the COVID-19 outbreak or to treat its impact; the potential negative impacts of COVID-19 on the global economy and financial markets and any resulting impact on Quarterhill and/or its business. Other factors include, without limitation, the risks described in Quarterhill's March 11, 2021 annual information form for the year ended December 31, 2020 (the "AIF"). Copies of the AIF may be obtained at Quarterhill recommends that readers review and consider all of these risk factors and notes that readers should not place undue reliance on any of Quarterhill's forward-looking statements. Quarterhill has no intention, and undertakes no obligation, to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

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