Quarterhill Announces Second Quarter 2018 Financial Results
OTTAWA, Aug. 9, 2018 /PRNewswire/ - Quarterhill Inc. ("Quarterhill" or the "Company") (TSX: QTRH) (NASDAQ: QTRH), announces its financial results for the three- and six-month periods ended June 30, 2018. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.
Second Quarter 2018 Highlights
-- Revenue of $20.4 million
-- Recurring revenues of $6.8 million, representing 34% of total revenue
-- Adjusted EBITDA* of ($4.0) million
-- Net loss of ($7.9) million, or ($0.07) per common share
-- Cash and equivalents were $73.1 million at June 30, 2018
-- Announced Mr. James (Jim) Skippen will retire from his positions as
Executive Chairman of Quarterhill and interim CEO of WiLAN in August
2018; Mr. Skippen will continue as an outside director and Chair of the
Quarterhill Board
-- Appointed Mr. Keaton Parekh as President and Chief Executive Officer of
Wi-LAN
-- Subsequent to quarter-end, on August 1, 2018, a jury awarded WiLAN
$145.1 million in damages in its patent suit against Apple Inc.
"We are very pleased with the financial and operational performance in Q2 from IRD and VIZIYA," said Doug Parker, President and CEO of Quarterhill. "Both portfolio companies generated strong total revenue, recurring revenue and Adjusted EBITDA, which is indicative of what we believe the businesses are capable of delivering on a more regular basis. With WiLAN, we continue to experience the variability in performance inherent in the patent license industry as reflected in both the Q2 numbers, but as well, in our announcement on August 1, 2018, that a jury awarded WiLAN $145.1 million in damages in its patent suit against Apple Inc. WiLAN has more than 40 litigations ongoing in multiple jurisdictions and we continue to add patent portfolios via our partner program to build our pipeline for future license activity. As we've said in the past, WiLAN's track record suggests that it can deliver significant cash flows and its performance needs to be measured over a longer period due to the underlying dynamics that exist in the patent license industry.
Our M&A pipeline continues to build behind the efforts of our experienced deal team and our revised target focus on verticalized software companies. These efforts have led to ongoing late-stage discussions with certain targets, but we will remain patient in negotiation and disciplined in our investment criteria to ensure that we are acquiring businesses with the right characteristics at the right valuations. While it can be challenging to wait for the next transaction to occur, it is important to note that as our pipeline grows, a strategy such as ours gains momentum over time and the periods in-between transactions tend to shrink over the long term."
Approval of Eligible Dividend
The Board of Directors has declared an eligible quarterly dividend of CDN $0.0125 per common share payable on October 5, 2018, to shareholders of record on September 14, 2018.
Business Strategy and Segments
Our acquisition strategy focuses primarily on financial metrics while remaining cognizant of broader technology and market trends as we build 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, we seek to enable shareholders to benefit from consolidation and convergence trends in today's technology industry. As of June 30, 2018, the Company had investments in three segments: Technology (WiLAN); Mobility (IRD); and Factory (VIZIYA).
Q2 and Year-to-Date 2018 Consolidated Financial Review
Quarterhill's consolidated financial results for the three- and six-months ended June 30, 2018 include a full contribution from Wi?LAN Inc. ("WiLAN"), International Road Dynamics Inc. ("IRD") and VIZIYA Corp ("VIZIYA"). The 2017 comparative period information presented represents a full contribution from WiLAN along with IRD's results from operations for the period from June 1 to June 30, 2017 and VIZIYA's results from operations for the period from May 4 to June 30, 2017.
Consolidated revenues for the three months ended June 30, 2018 ("Q2 2018") were $20.4 million, compared to $18.6 million in Q2 2017, representing growth of 10%. Consolidated revenues for the six months ended June 30, 2018 ("Year-to-Date") were $32.4 million, compared to $26.2 million in the same period last year, representing growth of 24%. The year-over-year increases were due to the Company's diversification strategy and the inclusion of the operations of IRD and VIZIYA, which were acquired in Q2 2017.
Gross margin for Q2 2018 was $3.9 million, or 19%, compared to $9.1 million, or 49%, in Q2 2017. Gross margin for the six months ended June 30, 2018 was $4.1 million, or 13%, compared to $9.3 million, or 35%, in the same period last year. For both Q2 2018 and the Year-to-Date period, positive and increased gross margin from IRD and VIZIYA was mostly offset by negative gross margin at WiLAN.
Operating expenses include selling, general and administrative costs, research and development costs, depreciation and amortization of intangible assets. Operating expenses for Q2 2018 were $14.7 million, compared to $12.4 million in Q2 2017. Operating expenses for the six months ended June 30, 2018 were $29.9 million, compared to $20.2 million in the same period last year. Operating expenses increased year-over-year due to the addition of the IRD and VIZIYA operations for the full reporting period in 2018.
Adjusted EBITDA for Q2 2018 was ($4.0) million compared to $4.8 million in Q2 2017. Adjusted EBITDA for the six months ended June 30, 2018 was ($11.3) million compared to $2.6 million in the same period last year. Adjusted EBITDA for the three- and six-month periods ended June 30, 2018 reflects lower revenue and negative Adjusted EBITDA from WiLAN, which offset positive Adjusted EBITDA from both the IRD and VIZIYA operations.
Net loss for Q2 2018 was ($7.9) million, or ($0.07) per basic and diluted Common Share, compared to net earnings of $3.6 million, or $0.03 per basic and diluted Common Share, in Q2 2017. For Q2 2018, net loss increased due primarily to lower revenue and a greater net loss from WiLAN, offset in part by positive net income from IRD and VIZIYA. Net loss for the six months ended June 30, 2018 was ($19.9) million, or ($0.17) per basic and diluted Common Share, compared to a net loss of ($3.6) million, or ($0.03) per basic and diluted Common Share, in the same period last year. For the Year-to-Date period, net loss increased due to lower revenue and a greater net loss from WiLAN and a loss from IRD in Q1 2018, offset in part by positive net income from IRD in Q2 2018 and from VIZIYA in both Q1 and Q2 of 2018.
Cash used from operations for Q2 2018 was ($2.4) million, compared to $3.1 million in cash generated in Q2 2017. Cash used from operations for the six months ended June 30, 2018 was ($9.0) million, compared to $11.5 million of cash generated in the same period last year. For Q2 2018, the difference in cash from operations compared to Q2 2017 is primarily due to lower revenue in the WiLAN business, offset in part by higher revenue in the IRD and VIZIYA businesses. For the Year-to-Date period, the difference in cash from operations was primarily impacted by the timing of collections for certain receivables in Q1 2017, which led to a significant change in non-cash working capital balances in that period compared to Q1 2018.
Cash and cash equivalents and short-term investments amounted to $73.1 million at June 30, 2018, compared to $86.6 million at December 31, 2017.
Subsequent Event
In a trial verdict rendered on August 1, 2018 in the United States District Court for the Southern District of California a jury awarded WiLAN $145.1 million in damages against Apple Inc. for infringement of WiLAN's US patent Nos 8,457,145 and 8,537,757.
The table below highlights financial performance for the Company's Technology, Mobility and Factory 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 June 30, 2018
----------------------------------------
Technology Mobility Factory Corporate Total
---------- -------- ------- --------- -----
Revenues $3,976 $12,659 $3,762 $ - $20,397
Cost of revenues
(excluding
depreciation and
amortization) 8,015 8,083 441 - 16,539
----------------- ----- ----- --- --- ------
(4,039) 4,576 3,321 - 3,858
Selling, general and
administrative 607 2,713 1,733 1,983 7,036
Research and
development - 510 343 - 853
Depreciation of
property, plant and
equipment 72 284 30 2 388
Amortization of
intangibles 4,714 971 757 - 6,442
--------------- ----- --- --- --- -----
Results from
operations (9,432) 98 458 (1,985) (10,861)
Finance income - (6) - (185) (191)
Finance expense 1 36 3 - 40
Foreign exchange
loss (gain) 257 (124) 28 (196) (35)
Other income - (387) (192) - (579)
------------ --- ---- ---- --- ----
Earnings (loss)
before taxes (9,690) 579 619 (1,604) (10,096)
Current income tax
expense (recovery) 121 190 (95) 1 217
Deferred income tax
expense (recovery) (3,422) (66) (247) 1,287 (2,448)
------------------- ------ --- ---- ----- ------
Income tax expense
(recovery) (3,301) 124 (342) 1,288 (2,231)
------------------ ------ --- ---- ----- ------
Net earnings (loss) $(6,389) $455 $961 $(2,892) $(7,865)
================== ======= ==== ==== ======= =======
Adjusted EBITDA (4,641) 1,486 1,276 (2,072) (3,951)
Other reconciling
items:
Effect of deleted
deferred revenue - 61 21 - 82
Stock-based
compensation 5 72 10 (89) (2)
For the three months ended June 30, 2017
----------------------------------------
Technology Mobility Factory Corporate Total
---------- -------- ------- --------- -----
Revenues $12,048 $4,648 $1,915 $ - $18,611
Cost of revenues
(excluding
depreciation and
amortization) 6,368 2,752 401 - 9,521
----------------- ----- ----- --- --- -----
5,680 1,896 1,514 - 9,090
Selling, general and
administrative 1,772 972 876 594 4,214
Research and
development - 308 360 - 668
Depreciation of
property, plant and
equipment 88 48 34 - 170
Amortization of
intangibles 5,321 236 471 - 6,028
Special charges - - - 1,294 1,294
--------------- --- --- --- ----- -----
Results from
operations (1,501) 332 (227) (1,888) (3,284)
Finance income (173) - - (61) (234)
Finance expense - 11 3 - 14
Foreign exchange
loss (gain) (100) 286 41 (653) (426)
Other income - (69) - - (69)
------------ --- --- --- --- ---
Earnings (loss)
before taxes (1,228) 104 (271) (1,174) (2,569)
Current income tax
expense 691 101 39 - 831
Deferred income tax
recovery (1,877) (62) (194) (4,876) (7,009)
------------------- ------ --- ---- ------ ------
Income tax expense
(recovery) (1,186) 39 (155) (4,876) (6,178)
------------------ ------ --- ---- ------ ------
Net earnings (loss) $(42) $65 $(116) $3,702 $3,609
================== ==== === ===== ====== ======
Adjusted EBITDA 3,934 810 520 (504) 4,760
Other reconciling
items:
Effect of deleted
deferred revenue - 25 242 - 267
Increased costs from
inventory step-up - 137 - - 137
Stock based
compensation 26 32 - 90 148
For the six months ended June 30, 2018
--------------------------------------
Technology Mobility Factory Corporate Total
---------- -------- ------- --------- -----
Revenues $5,743 $20,071 $6,592 $ - $32,406
Cost of revenues
(excluding
depreciation and
amortization) 13,920 13,581 772 - 28,273
----------------- ------ ------ --- --- ------
(8,177) 6,490 5,820 - 4,133
Selling, general and
administrative 1,238 5,286 3,302 4,263 14,089
Research and
development - 1,059 733 - 1,792
Depreciation of
property, plant and
equipment 147 574 59 3 783
Amortization of
intangibles 9,716 1,963 1,514 - 13,193
--------------- ----- ----- ----- --- ------
Results from
operations (19,278) (2,392) 212 (4,266) (25,724)
Finance income - (7) - (375) (382)
Finance expense 1 72 6 - 79
Foreign exchange
loss (gain) 557 (272) 19 (469) (165)
Other income - (637) (269) - (906)
------------ --- ---- ---- --- ----
Earnings (loss)
before taxes (19,836) (1,548) 456 (3,422) (24,350)
Current income tax
expense (recovery) 225 199 (529) 1 (104)
Deferred income tax
expense (recovery) (4,825) (634) (485) 1,608 (4,336)
------------------- ------ ---- ---- ----- ------
Income tax expense
(recovery) (4,600) (435) (1,014) 1,609 (4,440)
------------------ ------ ---- ------ ----- ------
Net earnings (loss) $(15,236) $(1,113) $1,470 $(5,031) $(19,910)
================== ======== ======= ====== ======= ========
Adjusted EBITDA (9,404) 449 1,943 (4,276) (11,288)
Other reconciling
items:
Effect of deleted
deferred revenue - 158 148 - 306
Stock-based
compensation 11 146 10 (13) 154
For the six months ended June 30, 2017
--------------------------------------
Technology Mobility Factory Corporate Total
---------- -------- ------- --------- -----
Revenues $19,626 $4,648 $1,915 $ - $26,189
Cost of revenues
(excluding
depreciation and
amortization) 13,762 2,752 401 - 16,915
----------------- ------ ----- --- --- ------
5,864 1,896 1,514 - 9,274
Selling, general and
administrative 4,174 972 876 594 6,616
Research and
development - 308 360 - 668
Depreciation of
property, plant and
equipment 179 48 34 - 261
Amortization of
intangibles 10,624 236 471 - 11,331
Special charges - - - 1,294 1,294
--------------- --- --- --- ----- -----
Results from
operations (9,113) 332 (227) (1,888) (10,896)
Finance income (391) - - (61) (452)
Finance expense - 11 3 - 14
Foreign exchange
loss (gain) (385) 286 41 (653) (711)
Other income - (69) - - (69)
------------ --- --- --- --- ---
Earnings (loss)
before taxes (8,337) 104 (271) (1,174) (9,678)
Current income tax
expense 1,434 101 39 - 1,574
Deferred income tax
recovery (2,500) (62) (194) (4,876) (7,632)
------------------- ------ --- ---- ------ ------
Income tax expense
(recovery) (1,066) 39 (155) (4,876) (6,058)
------------------ ------ --- ---- ------ ------
Net earnings (loss) $(7,271) $65 $(116) $3,702 $(3,620)
================== ======= === ===== ====== =======
Adjusted EBITDA 1,747 810 520 (504) 2,573
Other reconciling
items:
Effect of deleted
deferred revenue - 25 242 - 267
Increased costs from
inventory step-up - 137 - - 137
Stock-based
compensation 57 32 - 90 179
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/1798009/38336DD85E0DB116C040273B8E599958
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/1798009/38336DD85E0DB116C040273B8E599958
Telephone replay will be available from 1:00 PM ET on August 9, 2018 until 11:59 PM ET on August 16, 2018 at: 1.855.859.2056 (Toll Free) or 1.416.849.0833 (International). The telephone replay requires the passcode 9748019.
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 earnings (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 (x) equity in earnings 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 EARNINGS 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 March 1, 2018 annual information form for the year ended December 31, 2017 (the "AIF"). Copies of the AIF may be obtained at www.sedar.com or www.sec.gov. 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 June 30, Six months ended June 30,
--------------------------- -------------------------
2018 2017 2018 2017
---- ---- ---- ----
Revenues $20,397 $18,611 $32,406 $26,189
Cost of revenues (excluding
depreciation and 16,539 9,521 28,273 16,915
amortization)
------------
3,858 9,090 4,133 9,274
Operating expenses
Selling, general and
administrative 7,036 4,214 14,089 6,616
Research and development 853 668 1,792 668
Depreciation of property, plant
and equipment 388 170 783 261
Amortization of intangibles 6,442 6,028 13,193 11,331
Special charges - 1,294 - 1,294
--------------- --- ----- --- -----
14,719 12,374 29,857 20,170
------ ------ ------ ------
Results from operations (10,861) (3,284) (25,724) (10,896)
Finance income (191) (234) (382) (452)
Finance expense 40 14 79 14
Foreign exchange gain (35) (426) (165) (711)
Other income (579) (69) (906) (69)
------------ ---- --- ---- ---
Loss before taxes (10,096) (2,569) (24,350) (9,678)
Current income tax expense
(recovery) 217 831 (104) 1,574
Deferred income tax recovery (2,448) (7,009) (4,336) (7,632)
---------------------------- ------ ------ ------ ------
Income tax recovery (2,231) (6,178) (4,440) (6,058)
------------------- ------ ------ ------ ------
Net earnings (loss) $(7,865) $3,609 $(19,910) $(3,620)
================== ======= ====== ======== =======
Net earnings (loss) per share
Basic and fully diluted $(0.07) $0.03 $(0.17) $(0.03)
Weighted average number of
common shares
Basic 118,779,445 118,587,106 118,719,182 118,579,684
Fully diluted 118,779,445 118,587,106 118,719,182 118,579,684
Quarterhill Inc.
Supplemental Condensed Consolidated Interim Statements of Operations Information
(Unaudited)
(in thousands of United States dollars)
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
2018 2017 2018 2017
---- ---- ---- ----
Revenues
License $5,643 $12,321 $8,136 $19,312
Systems 7,179 3,067 11,872 3,067
Services 727 714 1,380 714
Recurring 6,848 2,509 11,018 3,096
--------- ----- ----- ------ -----
Total revenues $20,397 $18,611 $32,406 $26,189
============== ======= ======= ======= =======
Cost of revenues (excluding depreciation and
amortization)
License $8,069 $6,448 $14,000 $13,842
Systems 4,645 1,898 8,111 1,898
Services 385 321 690 321
Recurring 3,440 854 5,472 854
--------- ----- --- ----- ---
Total cost of revenues $16,539 $9,521 $28,273 $16,915
====================== ======= ====== ======= =======
Quarterhill Inc.
Condensed Consolidated Interim Statements of Comprehensive Income (Loss)
(Unaudited)
(in thousands of United States dollars)
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
2018 2017 2018 2017
---- ---- ---- ----
Net earnings (loss) $(7,865) $3,609 $(19,910) $(3,620)
Other comprehensive income (loss):
Foreign currency translation
adjustment (1,481) 533 (2,271) 533
Comprehensive income
(loss) $(9,346) $4,142 $(22,181) $(3,087)
======= ====== ======== =======
Quarterhill Inc.
Condensed Consolidated Interim Balance Sheets
(Unaudited)
(in thousands of United States dollars)
As at June 30, 2018 December 31,
2017
--- ----
Current assets
Cash and cash equivalents $68,415 $81,818
Short-term investments 1,177 1,236
Restricted Short-term investments 3,500 3,500
Accounts receivable 15,043 19,298
Other current assets 14 13
Unbilled revenue 6,782 3,045
Income taxes receivable 198 144
Inventories 5,801 5,083
Prepaid expenses and deposits 3,146 4,129
----------------------------- ----- -----
104,076 118,266
Non-current assets
Property, plant and equipment 3,059 3,801
Intangible assets 100,898 114,944
Investment in joint venture 3,998 3,383
Deferred income tax assets 25,227 20,195
Goodwill 41,774 42,587
-------- ------ ------
TOTAL ASSETS $279,032 $303,176
============ ======== ========
Liabilities
Current liabilities
Bank indebtedness $4,681 $3,568
Accounts payable and accrued
liabilities 15,944 20,487
Income taxes payable - 599
Patent finance obligation 1,379 4,090
Current portion of deferred revenue 6,145 6,733
Current portion of long-term debt 86 115
--------------------------------- --- ---
28,235 35,592
Non-current liabilities
Contingent consideration 4,474 4,474
Deferred revenue 1,736 884
Long-term debt 355 401
Deferred income tax liabilities 6,592 7,291
------------------------------- ----- -----
TOTAL LIABILITIES 41,392 48,642
----------------- ------ ------
Shareholders' equity
Capital stock 419,111 418,873
Additional paid-in capital 22,643 22,489
Accumulated other comprehensive
income 17,840 20,111
Deficit (221,954) (206,939)
------- -------- --------
237,640 254,534
------- -------
TOTAL LIABILITIES AND SHAREHOLDERS'
EQUITY $279,032 $303,176
=================================== ======== ========
Quarterhill Inc.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
(in thousands of United States dollars)
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
2018 2017 2018 2017
---- ---- ---- ----
Cash generated from (used in):
Operations
Net earnings (loss) $(7,865) $3,609 $(19,910) $(3,620)
Non-cash items
Stock-based compensation (2) 147 154 179
Depreciation and amortization 6,830 6,197 13,976 11,592
Foreign exchange loss (gain) 84 (99) 162 (146)
Equity in earnings from joint
venture (388) (69) (638) (69)
Loss on disposal of assets - - 1 -
Deferred income tax recovery (2,448) (7,011) (4,336) (7,632)
Accrued investment income - (74) - (150)
Embedded derivatives (3) 10 (1) 10
Changes in non-
cash working
capital balances 1,362 392 1,623 11,318
---------------- ----- --- ----- ------
Cash generated (used) from operations (2,430) 3,102 (8,969) 11,482
Financing
Dividends paid (1,155) (1,099) (2,326) (2,228)
Bank indebtedness 3,170 1,523 1,113 1,523
Repayment of long-term debt (60) (24) (75) (24)
Common shares repurchased under
normal course - (552) - (552)
issuer bid
Common shares issued for cash from
Employee 27 33 27 33
Share Purchase Plan
-------------------
Cash generated (used) in financing 1,982 (119) (1,261) (1,248)
Investing
Business acquisitions, net of cash
acquired - (66,303) - (66,303)
Purchase of restricted short-term
investments - - - (3,500)
Proceeds from sale of property,
plant and equipment - - 11 -
Purchase of property and equipment (43) (107) (166) (114)
Repayment of patent finance
obligations (1,389) (1,389) (2,778) (2,778)
Purchase of intangibles (48) (4) (89) (4)
----------------------- --- --- --- ---
Cash used in investing (1,480) (67,803) (3,022) (72,699)
Foreign exchange gain (loss) on cash held in
foreign (76) 192 (151) 227
currency
--------
Net decrease in cash and cash equivalents (2,004) (64,628) (13,403) (62,238)
Cash and cash equivalents, beginning of period 70,419 108,943 81,818 106,553
---------------------------------------------- ------ ------- ------ -------
Cash and cash equivalents, end of
period $68,415 $44,315 $68,415 $44,315
================================= ======= ======= ======= =======
Quarterhill Inc.
Condensed Consolidated Interim Statements of Shareholders' Equity
(Unaudited)
(in thousands of United States dollars)
Capital Stock Additional Accumulated Deficit Total Equity
Paid-in
Capital Other
Comprehensive
Income
---
Balance - January 1, 2017 $419,485 $21,036 $16,225 $(212,602) $244,144
Comprehensive loss:
Net loss - - - (3,620) (3,620)
Other comprehensive income - - 533 - 533
Shares and options issued:
Stock-based compensation expense - 179 - - 179
Shares issued upon acquisition 662 - - - 662
Sale of shares under Employee Share Purchase Plan 33 - - - 33
Shares repurchased under normal course issuer bid (1,342) 790 - - (552)
Dividends declared - - - (2,228) (2,228)
------------------ --- --- --- ------ ------
Balance - June 30, 2017 $418,838 $22,005 $16,758 $(218,450) $239,151
======================= ======== ======= ======= ========= ========
Balance - December 31, 2017 $418,873 $22,489 $20,111 $(206,939) $254,534
Implementation of ASU 2014-09 - - - 4,272 4,272
Implementation of ASU 2016-16 - - - 2,949 2,949
----------------------------- --- --- --- ----- -----
Balance - January 1, 2018, revised 418,873 22,489 20,111 (199,718) 261,755
Comprehensive loss:
Net loss - - - (19,910) (19,910)
Other comprehensive loss - - (2,271) - (2,271)
Shares and options issued:
Stock-based compensation expense - 154 - - 154
Deferred stock units converted to shares 211 - - - 211
Shares issued under Employee Share Purchase Plan 27 - - - 27
Dividends declared - - - (2,326) (2,326)
------------------ --- --- --- ------ ------
Balance - June 30, 2018 $419,111 $22,643 $17,840 $(221,954) $237,640
======================= ======== ======= ======= ========= ========
Quarterhill Inc.
Reconciliations of GAAP Net Loss to Adjusted EBITDA
(Unaudited)
(in thousands of United States dollars, except share and per share amounts)
Three months ended June 30, Six months ended June 30,
--------------------------- -------------------------
Adjusted EBITDA 2018 2017 2018 2017
--------------- ---- ---- ---- ----
Net earnings (loss) $(7,865) $3,609 $(19,910) $(3,620)
Adjusted for:
Income tax recovery (2,231) (6,178) (4,440) (6,058)
Foreign exchange gain (35) (426) (165) (711)
Finance expense 40 14 79 14
Finance income (191) (234) (382) (452)
Amortization of intangibles 6,442 6,028 13,193 11,331
Special charges - 1,294 - 1,294
Depreciation of property, plant and
equipment 388 170 783 261
Effect of deleted deferred revenue 82 267 306 267
Increased costs from inventory
step-up - 137 - 137
Stock-based compensation (2) 148 154 179
Other income (579) (69) (906) (69)
------------ ---- --- ---- ---
Adjusted EBITDA $(3,951) $4,760 $(11,288) $2,573
=============== ======= ====== ======== ======
Adjusted EBITDA per share
-------------------------
Net earnings (loss) $(0.07) $0.03 $(0.17) $(0.03)
Adjusted for:
Income tax recovery (0.02) (0.05) (0.04) (0.05)
Foreign exchange gain - - - (0.01)
Finance expense - - - -
Finance income - - - -
Amortization of intangibles 0.05 0.05 0.11 0.10
Special charges - 0.01 - 0.01
Depreciation of property, plant and
equipment - - 0.01 -
Effect of deleted deferred revenue - - - -
Increased costs from inventory
step-up - - - -
Stock-based compensation - - - -
Other income - - (0.01) -
------------ --- --- ----- ---
Adjusted EBITDA per share $(0.04) $0.04 $(0.10) $0.02
========================= ====== ===== ====== =====
Weighted average number of Common
Shares
Basic 118,779,445 118,587,106 118,719,182 118,579,684
View original content:http://www.prnewswire.com/news-releases/quarterhill-announces-second-quarter-2018-financial-results-300694586.html
SOURCE Quarterhill Inc.
