-
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 |
Enterprise |
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 |
Enterprise |
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 |
Enterprise |
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 |
Enterprise |
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 |
Twelve months ended |
||||||||||
|
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 |
Twelve months ended |
|||||||||||
|
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 |
Twelve months ended |
||||||||||||
|
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 |
- |
- |
- |
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)
|
Accumulated Other Comprehensive Income |
Deficit |
Total |
||||||||
|
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 |
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 |
For the twelve months ended |
||||||||||||
|
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 |
For the twelve months ended |
||||||||||||
|
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) |
|||||
SOURCE Quarterhill Inc.