Quarterhill Announces Second Quarter 2020 Financial Results
KITCHENER, ON, Aug. 6, 2020 /PRNewswire/ - Quarterhill Inc. ("Quarterhill" or the "Company") (TSX: QTRH) (OTCQX: QTRHF), announces its financial results for the three- and six-month periods ended June 30, 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.
Second Quarter 2020 Financial Highlights
-- Revenue was $16.8 million, including recurring revenue of $5.6 million
-- Adjusted EBITDA* was ($2.0) million
-- Net income was $9.5 million, or $0.08 per basic and diluted common
share, which included a $17.7 million gain on the sale of VIZIYA
-- Cash used in continuing operations was ($4.3) million
-- Cash and equivalents were $143.1 million at June 30, 2020
Second Quarter 2020 Operational Highlights
-- Appointed Mr. Paul Hill as President and CEO of Quarterhill, effective
June 1st
-- Completed the sale of VIZIYA for total cash proceeds of $49.4 million
-- A Final Judgment was issued in WiLAN's case against Apple for US$108.98
million
-- Announced a Substantial Issuer Bid and subsequently completed it on July
7th, returning $5.8 million to shareholders via the purchase of 2.7
million common shares
-- Appointed Mr. Paul Hill and Dr. Michel Fattouche to Quarterhill's Board
of Directors
-- Appointed Mr. Rish Malhotra as President and CEO of International Road
Dynamics ("IRD"), effective June 1st
-- Announced today a Normal Course Issuer Bid to acquire up to 10%, or 11.3
million, of the Company's common shares in the public float for a
twelve-month period ending August 9, 2021
"Q2 had several positive operational developments including the previously announced sale of VIZIYA for a significant gain, the Final Judgment in WiLAN's case versus Apple for US$108.98 million, and the return of $5.8 million to shareholders via the Substantial Issuer Bid that was completed in mid-July," said Paul Hill, President & CEO of Quarterhill. "Today we announced the next step in our 'return of capital' commitment to shareholders with the launch of a Normal Course Issuer Bid to purchase up to 11.3 million of our shares over the next twelve months."
"Financial results in the quarter reflect both the steady performance at IRD and the variability in the business model at WiLAN, as well as the impact of COVID-19 on both businesses. At WiLAN, the COVID-19 impact was related to certain court closures in the U.S. as well as the inability to hold face-to-face meetings to conclude agreements. WiLAN's fundamentals remain in place and it continues to advance its pipeline despite the pandemic, although some deals may be delayed as was the case with certain opportunities we had expected to close in Q2 that were pushed out. These are not lost opportunities and they remain in our plan for completion. As we've said in the past, at WiLAN, performance over a longer time frame is a more accurate gauge of its potential compared to its quarterly business results. Case in point, while WiLAN had negative Adjusted EBITDA in Q2, it has had positive Adjusted EBITDA in five of the past seven quarters."
"At IRD, some impact from COVID-19 was felt in the quarter, but overall, the business continues to generate solid margins and results, and its prospects remain strong with both order backlog and order intake high and near record levels. On June 1, we announced Rish Malholtra would be taking over as CEO at IRD in a planned succession. Rish has deep knowledge of the Intelligent Transportation Systems, or ITS, industry and he has led many of the key functions at IRD during his tenure. These are exciting times at IRD and it is expected to play a significant role in our strategy going forward."
"While not a radical departure from Quarterhill's strategy of recent years, our go-forward strategy has a sharper focus. Foremost, the strategy involves executing on a M&A plan. While the M&A strategy was previously on hold, when I joined in June, we began discussions around how we could leverage the strong cash position of the business and the cash flow generating potential of our portfolio companies to drive long-term shareholder value. Ultimately that discussion coalesced around a strategy intended to drive organic growth from our existing businesses and M&A-related growth focused on the IRD business and the opportunities in the ITS market."
"The ITS market has attractive growth and market dynamics with reasonable valuations and IRD is an established and well-respected player in this market, which helps differentiate us as an acquirer. IRD serves as a well-run growth-oriented platform that acquisitions can be integrated into, which also opens up the prospect of greater revenue and cost synergies. As the broader ITS industry becomes more connected, we also believe there is an opportunity to leverage WiLAN's deep technological expertise; in particular in 5G, which may become a critical enabling technology for ITS in the future."
Mr. Hill concluded: "I will discuss our strategy in more detail on our conference call this morning at 10:00 a.m. EDT. The discussion will include accompanying slides that can be viewed via the webcast."
Subsequent Event - Normal Course Issuer Bid
In a separate press release issued today, Quarterhill announced that the Toronto Stock Exchange has accepted a notice filed by the Company of its intention to make a new Normal Course Issuer Bid. The notice provides that Quarterhill may, during the 12-month period commencing August 10, 2020 and ending August 9, 2021, purchase on the Toronto Stock Exchange up to 11.3 million common shares in total, being approximately 10% of the outstanding common shares in the public float. For full details regarding the Normal Course Issuer Bid, please see Quarterhill's related press release also issued today.
Approval of Eligible Dividend
The Board of Directors has declared an eligible quarterly dividend of $0.0125 per common share payable on October 9, 2020, to shareholders of record on September 11, 2020.
Q2 2020 and Year-to-date Consolidated Financial Review
Financial statements for the three- and six-month periods ended June 30, 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 current quarter and 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.
Consolidated revenues for the three months ended June 30, 2020 ("Q2 2020") were $16.8 million, compared to $52.9 million in Q2 2019. Consolidated revenues for the six-month period ended June 30, 2020 ("YTD 2020") were $38.4 million, compared to $102.7 million in the same period last year. 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. Revenue was lower in the Q2 2020 and YTD 2020 periods due primarily to the closure of a greater volume, and value, of licensing contracts in the prior year periods.
Recurring revenue for the Q2 2020 and YTD 2020 periods was $5.6 million and $9.5 million, compared to $6.0 million and $11.7 million in the same periods last year. 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 2020 is primarily a timing-based issue and does not reflect lower renewal or retention rates.
Gross margin for the Q2 2020 and YTD 2020 periods was 25% and 30%, compared to 46% and 47% in the same periods last year. Gross margin was lower in the Q2 2020 and YTD 2020 periods due primarily to lower revenue at WiLAN as described above, offset in part by higher gross margin at IRD. IRD and WiLAN's cost of sales benefited by $0.6 million and $0.3 million, respectively, via the Government of Canada's Canadian Emergency Wage Subsidy ("CEWS") program.
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. For Q2 2020, Quarterhill had special charges of $0.7 million compared to $15.0 million in Q2 2019. YTD 2020, special charges were $0.9 million compared to $16.7 million in the same period last year.
Excluding special charges, operating expenses for the Q2 2020 and YTD 2020 periods were $11.9 million and $24.3 million, compared to $14.0 million and $27.9 million in the same periods last year. Operating expenses were lower in 2020 due primarily to lower SG&A and R&D and a CEWS benefit at IRD of $0.7 million.
Adjusted EBITDA for the Q2 2020 and YTD 2020 periods was ($2.0) million and ($1.8) million, compared to $17.1 million and $34.2 million in the same periods last year. The decrease in Adjusted EBITDA reflects the lower revenue at WiLAN, offset in part, by higher Adjusted EBITDA at IRD and lower corporate expenses.
Net income for Q2 2020 was $9.5 million, or $0.08 per basic and diluted common share, compared to net loss of ($5.9) million, or ($0.05) per basic and diluted common share, in Q2 2019. Net income for the YTD 2020 period was $4.4 million, or $0.04 per basic and diluted common share, compared to net loss of ($6.0) million, or ($0.05) per basic and diluted common share, in the same period last year. Net income in the Q2 2020 and YTD 2020 periods was driven primarily by net income from discontinued operations of $14.5 million and $14.3 million, respectively, which included a $17.7 million gain on the sale of VIZIYA in Q2 2020.
Cash generated from (used in) continuing operations for the Q2 2020 and YTD 2020 periods was ($4.3) million and $5.4 million, compared to $45.0 million and $29.2 million in the same periods last year. Cash and cash equivalents and short-term investments increased to $143.1 million at June 30, 2020, compared to $89.4 million at December 31, 2019. The Company had debt of $7.4 million at June 30, 2020, compared to $4.4 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. Management slides that accompany the conference call can be viewed via the webcast.
Webcast Information
Live webcast: https://produceredition.webcasts.com/starthere.jsp?ei=1348487&tp_key=00592de315
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=1348487&tp_key=00592de315
Telephone replay will be available from 1:00 p.m. Eastern Time on August 6, 2020 until 11:59 p.m. Eastern Time on August 20, 2020 at: 1.855.859.2056 (Toll Free) or 1.416.849.0833 (International). The telephone replay requires the passcode 4283448.
The table below highlights financial performance for the Company's Licensing and Intelligent Systems 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.
Segmented statements of (loss) income for the three- and six-month periods ended June 30, 2020 and 2019 are included below:
For the Three months ended June 30, 2020
CONTINUING OPERATIONS Licensing Intelligent Corporate Total
Systems
Revenues
License $
68
$
$ $
68
Systems 11,138 11,138
Recurring 252 5,366 5,618
320 16,504 16,824
Direct cost of
revenues 3,062 9,594 12,656
Gross profit (2,742) 6,910 4,168
Depreciation of
right-of-use
assets 63 159 15 237
Depreciation of
property, plant and
equipment 16 225 6 247
Amortization of
intangibles 3,588 1,260 4,848
Selling, general and
administrative
expenses 746 2,333 2,747 5,826
Research and
development expenses 555 555
Impairment losses of
intangible assets 233 233
Special charges 659 659
Results from
operations (7,388) 1,719 (2,768) (8,437)
Finance income (22) (6) (132) (160)
Finance expense 38 74 6 118
Foreign exchange loss
(gain) 342 (235) (110) (3)
Other income (431) (431)
(Loss) income before
taxes (7,746) 2,317 (2,532) (7,961)
Current income tax
expense 56 22 78
Deferred income tax
(recovery) expense (4,582) 167 1,363 (3,052)
Income tax (recovery)
expense (4,526) 189 1,363 (2,974)
Net (loss) income
from continuing
operations $
(3,220) $
2,128 $
(3,895) $
(4,987)
Adjusted EBITDA $
(3,419) $
4,041 $
(2,614) $
(1,992)
===
For the Six months ended June 30, 2020
CONTINUING OPERATIONS Licensing Intelligent Corporate Total
Systems
Revenues
License $
9,817
$
$ $
9,817
Systems 19,141 19,141
Recurring 703 8,776 9,479
10,520 27,917 38,437
Direct cost of
revenues 8,831 18,012 26,843
Gross profit 1,689 9,905 11,594
Depreciation of
right-of-use
assets 124 327 30 481
Depreciation of
property, plant and
equipment 32 428 11 471
Amortization of
intangibles 7,071 2,519 9,590
Selling, general and
administrative
expenses 1,724 5,817 4,580 12,121
Research and
development expenses 1,424 1,424
Impairment losses of
intangible assets 233 233
Special charges 659 213 872
Results from
operations (7,495) (1,269) (4,834) (13,598)
Finance income (122) (7) (253) (382)
Finance expense 78 125 11 214
Foreign exchange loss
(gain) 1,596 (929) (1,252) (585)
Other income (809) (809)
(Loss) income before
taxes (9,047) 351 (3,340) (12,036)
Current income tax
expense 1,242 102 1,344
Deferred income tax
(recovery) expense (5,971) (608) 3,098 (3,481)
Income tax (recovery)
expense (4,729) (506) 3,098 (2,137)
Net (loss) income
from continuing
operations $
(4,318) $
857 $
(6,438) $
(9,899)
Adjusted EBITDA $
64 $
2,709 $
(4,528) $
(1,755)
===
For the Three months ended June 30, 2019
CONTINUING OPERATIONS Licensing Intelligent Corporate
Total
Systems
Revenues
License $
32,807
$
$ $
32,807
Systems 14,035 14,035
Recurring 292 5,744 6,036
$
33,099 $
19,779
$ $
52,878
Direct cost of
revenues 16,035 12,692 28,727
Gross profit 17,064 7,087 24,151
Depreciation of
right-of-use
assets 82 182 15 279
Depreciation of
property, plant and
equipment 40 391 5 436
Amortization of
intangibles 4,703 1,257 5,960
Selling, general and
administrative
expenses 451 3,255 2,869 6,575
Research and
development expenses 779 779
Special charges 711 14,244 14,955
Results from
operations 11,077 1,223 (17,133) (4,833)
Finance income (52) (5) (332) (389)
Finance expense 10 349 5 364
Foreign exchange
(gain) loss (236) 74 249 87
Other income (4) (237) (241)
Income (loss) before
taxes 11,359 1,042 (17,055) (4,654)
Current income tax
expense (recovery) 54 (19) 35
Deferred income tax
expense (recovery) 2,564 (489) (1,132) 943
Income tax expense
(recovery) 2,618 (508) (1,132) 978
Net income (loss)
from continuing
operations $
8,741 $
1,550 $
(15,923) $
(5,632)
Adjusted EBITDA 16,628 3,089 (2,635) 17,082
===
For the Six months ended June 30, 2019
CONTINUING OPERATIONS Licensing Intelligent Corporate
Total
Systems
Revenues
License $
69,527
$
$ $
69,527
Systems 21,483 21,483
Recurring 963 10,711 11,674
$
70,490 $
32,194
$ $
102,684
Direct cost of
revenues 33,038 21,596 54,634
Gross profit 37,452 10,598 48,050
Depreciation of
right-of-use
assets 381 355 30 766
Depreciation of
property, plant and
equipment 95 793 10 898
Amortization of
intangibles 9,394 2,515 11,909
Selling, general and
administrative
expenses 983 6,395 5,441 12,819
Research and
development expenses 1,517 1,517
Special charges 2,435 14,244 16,679
Results from
operations 24,164 (977) (19,725) 3,462
Finance income (76) (8) (574) (658)
Finance expense 14 443 8 465
Foreign exchange
(gain) loss (491) 329 527 365
Other income (4) (335) (339)
Income (loss) before
taxes 24,721 (1,406) (19,686) 3,629
Current income tax
expense 5,248 207 5,455
Deferred income tax
expense (recovery) 5,129 (1,285) (777) 3,067
Income tax expense
(recovery) 10,377 (1,078) (777) 8,522
Net income (loss)
from continuing
operations $
14,344 $
(328) $
(18,909) $
(4,893)
Adjusted EBITDA $
36,456 $
2,761 $
(4,996) $
34,221
===
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 a growth-oriented company in the Intellectual Property and Intelligent Transportation System (ITS) industries. Our goal is to pursue an investment strategy that capitalizes on attractive market trends in both ITS and its adjacent markets. 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 Income (Loss) and Comprehensive Income and (Loss)
(Unaudited)
(in thousands of Canadian dollars, except share and per share amounts)
Three months ended June 30, Six months ended June 30,
---
2020 2019 2020 2019
---
Revenues
License $
68 $
32,807 $
9,817 $
69,527
Systems 11,138 14,035 19,141 21,483
Recurring 5,618 6,036 9,479 11,674
--- ---
16,824 52,878 38,437 102,684
---
Direct cost of revenues
License 3,063 16,035 8,803 33,038
Systems 6,594 9,181 12,574 14,224
Recurring 2,999 3,511 5,466 7,372
--- ---
12,656 28,727 26,843 54,634
---
Gross profit 4,168 24,151 11,594 48,050
Operating expenses
Depreciation of right-of-
use assets 237 279 481 766
Depreciation of property,
plant and equipment 247 436 471 898
Amortization of intangibles 4,848 5,960 9,590 11,909
Selling, general and
administrative expenses 5,826 6,575 12,121 12,819
Research and development
expenses 555 779 1,424 1,517
Impairment losses on
intangibles 233 233
Special charges 659 14,955 872 16,679
--- ---
12,605 28,984 25,192 44,588
---
Results from operations (8,437) (4,833) (13,598) 3,462
Finance income (160) (389) (382) (658)
Finance expense 118 364 214 465
Foreign exchange (gain) loss (3) 87 (585) 365
Other income (431) (241) (809) (339)
--- ---
(Loss) income before taxes (7,961) (4,654) (12,036) 3,629
Current income tax expense 78 35 1,344 5,455
Deferred income tax
(recovery) expense (3,052) 943 (3,481) 3,067
--- ---
Income tax (recovery)
expense (2,974) 978 (2,137) 8,522
--- ---
Net loss from continuing
operations $
(4,987) $
(5,632) (9,899) (4,893)
Net income (loss) from
discontinued operations $
14,455 $
(306) 14,255 (1,092)
--- ---
Net income (loss) $
9,468 $
(5,938) 4,356 (5,985)
=== ===
Other comprehensive income (loss) that may be reclassified subsequently to net income (loss):
Foreign currency translation
adjustment $(11,188) $(4,290) 9,875 (8,869)
--- ---
Comprehensive (loss) income $(1,720) $(10,228) 14,231 (14,854)
=== ===
Net income (loss) per share
From continuing operations $(0.04) $(0.05) (0.08) (0.04)
From discontinued operations $0.12 $0.00 0.12 (0.01)
--- ---
Net income (loss) per share
-Basic $0.08 $(0.05) 0.04 (0.05)
=== ===
From continuing operations $(0.04) $(0.05) (0.08) (0.04)
From discontinued operations $0.12 $0.00 0.12 (0.01)
--- ---
Net income (loss) per share
-Diluted $0.08 $(0.05) 0.04 (0.05)
=== ===
Quarterhill Inc.
Condensed Consolidated Interim Statements of Financial Position
(Unaudited)
(in thousands of Canadian dollars)
As at June 30, 2020 December 31, 2019 January 1,
2019
Current assets
Cash and cash equivalents $
141,515 $
87,870 $
87,029
Short-term investments 1,551 1,550 1,551
Restricted short-term
investments - 2,995
Accounts receivable (net of
allowance for doubtful
accounts) 11,858 42,925 14,719
Other current assets 218 108 124
Unbilled revenue 11,260 8,965 5,432
Income taxes receivable 353 137 270
Inventories (net of
obsolescence) 10,242 8,570 8,114
Prepaid expenses and deposits 3,287 2,242 2,927
180,284 152,367 123,161
Non-current assets
Accounts receivable 682 3,846 565
Right-of-use assets 3,906 4,502 3,972
Property, plant and equipment 2,941 2,826 3,614
Intangible assets 70,760 89,534 119,015
Investment in joint venture 6,210 5,233 5,203
Deferred income tax assets 36,877 33,270 36,948
Goodwill 17,274 32,977 34,446
138,650 172,188 203,763
TOTAL ASSETS $
318,934 $
324,555 $
326,924
Liabilities
Current liabilities
Bank indebtedness $
7,036 $
4,026 $
3,537
Accounts payable and accrued
liabilities 12,106 25,755 24,644
Dividends payable 1,462
Income taxes payable 285 203
Current portion of lease
liabilities 884 998 1,120
Contingent liabilities - 1,265
Current portion of deferred
revenue 4,544 8,638 6,357
Current portion of long-term
debt 41 59 407
26,358 39,679 37,330
Non-current liabilities
Deferred revenue 1,522 1,513 1,954
Long-term lease liabilities 3,002 3,550 2,604
Long-term debt 285 271 236
Deferred income tax
liabilities - 3,297 5,905
4,809 8,631 10,699
TOTAL LIABILITIES $
31,167 $
48,310 $
48,029
Shareholders' equity
Capital stock $
570,591 $
570,553 $
570,553
Contributed surplus 32,207 32,011 31,252
Accumulated other
comprehensive income 20,811 10,936 22,112
Deficit (335,842) (337,255) (345,022)
287,767 276,245 278,895
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $
318,934 $
324,555 $
326,924
=== ===
Quarterhill Inc.
Condensed Consolidated Interim Statements of Cash Flows
(Unaudited)
(in thousands of Canadian dollars)
Three months ended June 30, Six months ended June 30,
2020 2019 2020 2019
Cash generated from (used in) Operations
Net loss from continuing
operations $
(4,987) $
(5,632) $
(9,899) $
(4,893)
Non-cash items
Stock-based compensation
expense 221 285 196 507
Depreciation of right-of-
use assets 237 279 481 766
Interest expense on lease
liabilities 56 54 112 103
Depreciation and
amortization 5,095 6,396 10,061 12,807
Foreign exchange (gain)
loss (478) (45) (194) (127)
Equity in earnings from
joint venture (431) (241) (809) (339)
Impairment losses on
intangibles 233 233
(Gain) loss on disposal of
assets (6) 785 (10) 785
Deferred income tax
(recovery) expense (3,052) 943 (3,481) 3,067
Long-term accounts
receivable - (85)
Embedded derivatives 121 39 (101) 132
Contingent consideration
adjustment - 14,244 14,244
Changes in non-cash working capital
balances
Accounts receivable 5,949 36,744 26,559 1,697
Unbilled revenue (2,762) (3,027) (2,026) (3,504)
Income taxes receivable (252) (72) (209) 195
Inventories (1,952) (213) (1,340) (185)
Prepaid expenses and
deposits (1,474) (278) (1,296) (4)
Deferred revenue (539) (771) (52) (331)
Accounts payable and
accrued liabilities (282) (4,423) (12,911) 4,269
Income taxes payable 45 (35) 92 49
Cash (used in) generated
from continuing operations (4,258) 45,032 5,406 29,153
Net cash flows attributable
to discontinuing
operations (2,478) 928 (3,075) 869
Net cash (used in)
generated from operating
activities (6,736) 45,960 2,331 30,022
Financing
Dividends paid - (1,473) (1,481) (2,975)
Bank indebtedness 4,796 2,467 2,984 2,566
Payment of lease
liabilities (271) (420) (586) (871)
Repayment of long-term
debt (13) (276) (120) (300)
Exercise of stock options 14 14
Common shares issued from
Performance Stock Units - 24
Cash generated from (used
in) continuing operations 4,526 298 835 (1,580)
Net cash flows attributable
to discontinuing
operations - (8) (19)
Net cash generated from
(used in) financing
activities 4,526 290 835 (1,599)
Investing
Proceeds from disposition
of a subsidiary 49,400 49,400
Cash sold on disposition of
a subsidiary (1,825) (1,825)
Proceeds from sale of
property, plant and
equipment 12 16
Purchase of property and
equipment (586) (381) (887) (499)
Purchase of intangibles (8) (98) (25) (125)
Cash generated from (used
in) continuing operations 46,993 (479) 46,679 (624)
Net cash flows attributable
to discontinuing
operations (11) (31) (81) (123)
Net cash generated from
(used in) investing
activities 46,982 (510) 46,598 (747)
Foreign exchange gain
(loss) on cash held in
foreign currency (4,853) (1,951) 3,881 (3,622)
Net increase in cash and
cash equivalents 39,919 43,789 53,645 24,054
Cash and cash equivalents,
beginning of period 101,596 67,294 87,870 87,029
Cash and cash equivalents,
end of period $
141,515 $
111,083 141,515 111,083
=== ===
Quarterhill Inc.
Condensed Consolidated Interim Statements of Changes in Shareholders' Equity
For the six months ended June 30, 2020 and 2019
(In thousands of Canadian dollars)
Capital Stock Contributed Accumulated Deficit Total Equity
Surplus Other
Comprehensive
Income
January 1, 2019 $
570,553 $
31,252 $
22,112 $
(345,022) $
278,895
Net loss - (5,985) (5,985)
Other comprehensive
loss - (8,869) (8,869)
Stock-based
compensation expense - 507 507
Dividends declared - (2,975) (2,975)
June 30, 2019 570,553 31,759 13,243 (353,982) 261,573
January 1, 2020 $
570,553 $
32,011 $
10,936 $
(337,255) $
276,245
Net income $
4,356 $
4,356
Other comprehensive income $
9,875 $
9,875
Stock-based compensation expense 196 196
Exercise of options 14 14
Common shares issued
from performance
stock units 24 24
Dividends declared (2,943) (2,943)
June 30, 2020 570,591 32,207 20,811 (335,842) 287,767
=== ===
Quarterhill Inc.
Reconciliations of Net loss to Adjusted EBITDA
(Unaudited)
(in thousands of Canadian dollars, except share and per share amounts)
Three months ended June 30,
2020 2019
---
$ Per Share
$ Per Share
---
Net loss from
continuing operations $
(4,987) $
(0.04) $
(5,632) $
(0.05)
Adjusted for:
Income tax (recovery)
expense (2,974) (0.03) 978 0.01
Foreign exchange (gain)
loss (3) 87
Finance expense 118 364
Finance income (160) (389)
Special charges 659 0.01 14,955 0.13
Impairment losses on
intangible assets 233
Amortization of
intangibles 4,848 0.04 5,960 0.05
Depreciation of
property, plant and
equipment 247 436
Depreciation of right-
of-use assets 237 279
Stock based
compensation expense 221 285
Other income (431) (241)
--- ---
Adjusted EBITDA $
(1,992) $
(0.02) $
17,082 $
0.14
=== ===
Weighted average number of Common Shares
Basic 118,861,166 11,817,466
Quarterhill Inc.
Reconciliations of Net loss to Adjusted EBITDA
(Unaudited)
(in thousands of Canadian dollars, except share and per share amounts)
Six months ended June 30,
2020 2019
---
$ Per Share
$ Per Share
---
Net loss from
continuing operations $
(9,899) $
(0.08) $
(4,893) $
(0.04)
Adjusted for:
Income tax (recovery)
expense (2,137) (0.02) 8,522 0.07
Foreign exchange (gain)
loss (585) 365
Finance expense 214 465
Finance income (382) (658) (0.01)
Special charges 872 0.01 16,679 0.14
Impairment losses on
intangible assets 233
Amortization of
intangibles 9,590 0.08 11,909 0.10
Depreciation of
property, plant and
equipment 471 898 0.01
Depreciation of right-
of-use assets 481 766 0.01
Stock based
compensation expense 196 507
Other income (809) (0.01) (339)
--- ---
Adjusted EBITDA $
(1,755) $
(0.02) $
34,221 $
0.28
=== ===
Weighted average number of Common Shares
Basic 118,861,166 11,817,466
View original content:http://www.prnewswire.com/news-releases/quarterhill-announces-second-quarter-2020-financial-results-301107385.html
SOURCE Quarterhill Inc.
