Launches diversification strategy and achieves record revenue and Adjusted EBITDA
OTTAWA, March 1, 2018 /PRNewswire/ - Quarterhill Inc. ("Quarterhill" or the "Company") (TSX: QTRH) (NASDAQ: QTRH), announces its financial results for the three and twelve month periods ended December 31, 2017. All financial information in this press release is reported in U.S. dollars, unless otherwise indicated.
Fiscal 2017 Highlights
-
Revenue of $134.7 million representing 45% growth over last year
-
Recurring revenues of $13.4 million representing 10% of total revenue
-
Adjusted EBITDA* of $64.6 million
-
Net income of $10.2 million, or $0.09 per share
-
Operating cash flow was $70.0 million, with an ending cash and cash equivalents and short-term investments balance of $86.6 million
-
Launched diversification strategy; deployed $67.4 million to acquire International Road Dynamics, VIZIYA Corporation and iCOMS Detections S.A.
-
Announced the appointment of Douglas (Doug) Parker as President and Chief Executive Officer
-
Subsequent to year-end, appointed Russ Stuebing as SVP, Corporate Development, and Neil Urquhart as SVP, Human Resources, to enhance acquisition capabilities
"Quarterhill delivered record financial results in 2017 while making tangible progress on its diversification strategy with three strategic acquisitions and improved recurring revenue streams," said Doug Parker, President & CEO of Quarterhill. "In 2018, we will look to build-on and maintain this momentum. Already this year we have enhanced our acquisition capabilities by broadening the target set of companies we are looking at and by adding experienced technology M&A veterans to our acquisition team."
"Our acquisition focus is to capitalize on market consolidation and convergence trends in the following three markets: vertical market software, intelligent industrial systems, and innovation and licensing. While remaining committed to growing the businesses we have acquired and their strategic visions, including related IIoT elements, we also see good acquisition opportunities in other target-rich technology niches such as vertical market software, with its attractive recurring revenue, cash flow and margin profiles."
"To execute on our plan, we have also recently added two senior members to our team and established an office in Waterloo, Ontario. Talent is a key component to building our diversified portfolio and we are focused on attracting execution-oriented M&A professionals with proven industry track records of identifying, acquiring and integrating value enhancing technology acquisitions. Both Russ and Neil fit this profile admirably and I am delighted that they have joined Quarterhill."
"With a presence in both of Canada's premier technology hubs, Ottawa and Waterloo, we are well positioned to continue to attract the top talent needed to execute on, and expand, our growth potential. I look forward to the busy year ahead of us and I remain excited about our long-term ability to provide investors with a profitable growth-oriented investment opportunity that follows a proven strategy."
Approval of Eligible Dividend
The Board of Directors has declared an eligible quarterly dividend of CDN $0.0125 per common share payable on April 5, 2018, to shareholders of record on March 23, 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 December 31, 2017, the Company had investments in three segments: Technology (WiLAN); Mobility (IRD); and Factory (VIZIYA).
Q4 and Fiscal 2017 Consolidated Financial Review
Quarterhill's consolidated financial results for Fiscal 2017 include a full year contribution from Wi‑LAN Inc. ("WiLAN"), a full quarter contribution from International Road Dynamics Inc. ("IRD") and VIZIYA Corp ("VIZIYA") in Q3 2017 and Q4 2017, and a partial contribution from IRD and VIZIYA in Q2 2017. The 2016 comparative period information presented represents solely WiLAN's results for the specified period. Certain comparative information has been restated to conform to the new basis of presentation.
Consolidated revenues for the three months ended December 31, 2017 were $22.6 million, compared to $30.2 million in the same period last year. Consolidated revenues for Fiscal 2017 were $134.7 million, an increase of 45% compared to $92.9 million in Fiscal 2016. The year-over-year increase was primarily due to strong patent licensing results from WiLAN and the inclusion of the operations of IRD and VIZIYA, which were acquired in Q2 2017.
Gross margin for the three months ended December 31, 2017 was $8.7 million, or 38%, compared to $19.3 million, or 64%, in the same period last year. Gross margin for Fiscal 2017 was $85.4 million, or 63%, compared to $63.0 million, or 67%, in Fiscal 2016. Gross margins for the three and twelve month periods ended December 31, 2017 reflect contribution from all three businesses, compared to the same periods last year, which reflect only the operations of WiLAN.
Operating expenses include selling, general and administrative costs, research and development costs, depreciation, amortization of intangible assets, loss on disposal of intangible asset, impairment of intangible assets and special charges. Operating expenses for the three months ended December 31, 2017 were $23.7 million, compared to $9.4 million in the same period last year. Operating expenses for Fiscal 2017 were $75.2 million compared to $44.0 million in Fiscal 2016. Operating expenses increased in Fiscal 2017 due to the addition of the IRD and VIZIYA operations, acquisition-related costs associated with the purchases of IRD and VIZIYA, and a combined $26.3 million in non-cash charges related to a loss on disposal of intangible assets and impairment loss on intangibles.
Adjusted EBITDA for the three months ended December 31, 2017 was $1.5 million, or $0.01 per basic Common Share, compared to $17.6 million, or $0.14 per basic Common Share, in the same period last year. For Fiscal 2017, Adjusted EBITDA was $64.6 million, or $0.56 per basic Common Share, compared to $53.8 million, or $0.45 per basic Common Share, in Fiscal 2016. The year-over-year increase in Adjusted EBITDA is primarily due to strong performance in the patent license business and the inclusion of operations from the businesses acquired during 2017.
Net loss for the three months ended December 31, 2017 was ($12.4) million, or ($0.10) per basic and diluted Common Share, compared to net income of $8.6 million, or $0.07 per basic and diluted Common Share, in the same period last year. For Fiscal 2017, net income was $10.2 million, or $0.09 per basic and diluted Common Share, compared to net income of $11.1 million, or $0.09 per basic and diluted Common Share, in Fiscal 2016. Net income for Fiscal 2017 compared to Fiscal 2016, was primarily impacted by the combined $26.3 million in non-cash charges related to a loss on disposal of intangible assets and impairment loss on intangibles.
Cash generated from operations for the three months ended December 31, 2017 was $49.2 million, compared to $7.6 million in the same period last year. Cash generated from operations for Fiscal 2017 was $70.0 million compared to $36.8 million in Fiscal 2016. Cash from operations was positively impacted in Q4 2017 due to the collection of a significant level of accounts receivable which were outstanding at the end of Q3 2017.
Cash and cash equivalents and short-term investments amounted to $86.6 million at December 31, 2017, compared to $107.7 million at December 31, 2016. The decrease is primarily attributable to $67.4 million spent on the acquisitions of IRD, VIZIYA and iCOMS, and $19.6 million spent on the repayment of patent finance obligations, which were partially offset by cash generated from operations of $70.0 million in the twelve month period.
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 December 31, 2017 |
|||||||||||||||
|
Technology |
Mobility |
Factory |
Corporate |
Total |
|||||||||||
|
Revenues |
$ |
8,427 |
$ |
10,820 |
$ |
3,378 |
$ |
- |
$ |
22,625 |
|||||
|
Cost of revenues (excluding depreciation and |
5,834 |
7,846 |
289 |
- |
13,969 |
||||||||||
|
2,593 |
2,974 |
3,089 |
- |
8,656 |
|||||||||||
|
Selling, general and administrative |
1,006 |
2,368 |
1,529 |
1,950 |
6,853 |
||||||||||
|
Research and development |
- |
722 |
373 |
- |
1,095 |
||||||||||
|
Depreciation of property, plant and equipment |
78 |
134 |
27 |
1 |
240 |
||||||||||
|
Amortization of intangibles |
4,514 |
984 |
757 |
- |
6,255 |
||||||||||
|
Loss on disposal of intangibles |
6,726 |
- |
- |
- |
6,726 |
||||||||||
|
Impairment losses on intangible assets |
4,350 |
- |
- |
- |
4,350 |
||||||||||
|
Special charges |
- |
- |
- |
(1,806) |
(1,806) |
||||||||||
|
Results from operations |
(14,081) |
(1,234) |
403 |
(145) |
(15,057) |
||||||||||
|
Finance income |
(147) |
(2) |
- |
(9) |
(158) |
||||||||||
|
Finance expense |
6 |
59 |
4 |
- |
69 |
||||||||||
|
Foreign exchange loss (gain) |
41 |
134 |
(1) |
94 |
268 |
||||||||||
|
Other expense (income) |
- |
(90) |
- |
- |
(90) |
||||||||||
|
Income (loss) before taxes |
(13,981) |
(1,335) |
400 |
(230) |
(15,146) |
||||||||||
|
Current income tax expense (recovery) |
(55) |
(57) |
424 |
- |
312 |
||||||||||
|
Deferred income tax expense (recovery) |
11,591 |
(841) |
(270) |
(13,573) |
(3,093) |
||||||||||
|
Income tax expense (recovery) |
11,536 |
(898) |
154 |
(13,573) |
(2,781) |
||||||||||
|
Net income (loss) |
$ |
(25,517) |
$ |
(437) |
$ |
246 |
$ |
13,343 |
$ |
(12,365) |
|||||
|
Adjusted EBITDA |
1,586 |
351 |
1,361 |
(1,814) |
1,484 |
||||||||||
|
Other reconciling items: |
|||||||||||||||
|
Effect of deleted deferred revenue |
- |
107 |
174 |
- |
281 |
||||||||||
|
Increased costs from inventory step-up |
- |
108 |
- |
- |
108 |
||||||||||
|
Stock-based compensation |
(1) |
76 |
- |
136 |
211 |
||||||||||
|
Dividend from joint venture |
- |
176 |
- |
- |
176 |
||||||||||
|
For the year ended December 31, 2017 |
|||||||||||||||
|
Technology |
Mobility |
Factory |
Corporate |
Total |
|||||||||||
|
Revenues |
$ |
100,645 |
$ |
27,023 |
$ |
7,043 |
$ |
- |
$ |
134,711 |
|||||
|
Cost of revenues (excluding depreciation and |
29,478 |
18,646 |
1,185 |
- |
49,309 |
||||||||||
|
71,167 |
8,377 |
5,858 |
- |
85,402 |
|||||||||||
|
Selling, general and administrative |
6,490 |
5,870 |
3,310 |
4,300 |
19,970 |
||||||||||
|
Research and development |
- |
1,883 |
1,372 |
- |
3,255 |
||||||||||
|
Depreciation of property, plant and equipment |
339 |
627 |
89 |
2 |
1,057 |
||||||||||
|
Amortization of intangibles |
20,611 |
2,292 |
2,019 |
- |
24,922 |
||||||||||
|
Loss on disposal of intangibles |
21,916 |
- |
- |
- |
21,916 |
||||||||||
|
Impairment losses on intangible assets |
4,350 |
- |
- |
- |
4,350 |
||||||||||
|
Special charges |
- |
- |
- |
(294) |
(294) |
||||||||||
|
Results from operations |
17,461 |
(2,295) |
(932) |
(4,008) |
10,226 |
||||||||||
|
Finance income |
(614) |
(3) |
- |
(86) |
(703) |
||||||||||
|
Finance expense |
932 |
113 |
10 |
(2) |
1,053 |
||||||||||
|
Foreign exchange loss (gain) |
(475) |
829 |
42 |
(600) |
(204) |
||||||||||
|
Other expense (income) |
- |
(390) |
- |
- |
(390) |
||||||||||
|
Income (loss) before taxes |
17,618 |
(2,844) |
(984) |
(3,320) |
10,470 |
||||||||||
|
Current income tax expense |
6,461 |
276 |
458 |
- |
7,195 |
||||||||||
|
Deferred income tax expense (recovery) |
3,722 |
(1,761) |
(755) |
(8,157) |
(6,951) |
||||||||||
|
Income tax expense (recovery) |
10,183 |
(1,485) |
(297) |
(8,157) |
244 |
||||||||||
|
Net income (loss) |
$ |
7,435 |
$ |
(1,359) |
$ |
(687) |
$ |
4,837 |
$ |
10,226 |
|||||
|
Adjusted EBITDA |
64,733 |
1,868 |
1,884 |
(3,868) |
64,617 |
||||||||||
|
Other reconciling items: |
|||||||||||||||
|
Effect of deleted deferred revenue |
- |
214 |
708 |
- |
922 |
||||||||||
|
Increased costs from inventory step-up |
- |
689 |
- |
- |
689 |
||||||||||
|
Effect of deleted prepaid expense |
- |
(10) |
- |
- |
(10) |
||||||||||
|
Stock-based compensation |
56 |
175 |
- |
432 |
663 |
||||||||||
|
Dividend from joint venture |
- |
176 |
- |
- |
176 |
||||||||||
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: http://event.on24.com/wcc/r/1600077-1/A298E603919911BC7B8CF45B231A3984
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: http://event.on24.com/wcc/r/1600077-1/A298E603919911BC7B8CF45B231A3984
Telephone replay will be available from 1:00 PM ET on March 1, 2018 until 11:59 PM ET on March 8, 2018 at: 1.855.859.2056 (Toll Free) or 1.416.849.0833 (International).
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 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 * 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 each of its February 10, 2017 annual information form for the year ended December 31, 2016 (the "AIF") and its November 8, 2017 Management's Discussion and Analysis of Financial Condition and Results of Operations for the 3 and 9 months ended September 30, 2017 and 2016 (the "Q3 MD&A"). Copies of the AIF and the Q3 MD&A 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. |
|||||||||||||
|
Consolidated Statements of Operations |
|||||||||||||
|
(in thousands of United States dollars, except share and per share amounts) |
|||||||||||||
|
For the three months ended, |
For the year ended, |
||||||||||||
|
December 31, |
December 31, |
December 31, |
December 31, |
||||||||||
|
Revenues |
$ |
22,625 |
$ |
30,186 |
$ |
134,711 |
$ |
92,876 |
|||||
|
Cost of revenues (excluding depreciation and |
13,969 |
10,928 |
49,309 |
29,868 |
|||||||||
|
8,656 |
19,258 |
85,402 |
63,008 |
||||||||||
|
Operating expenses |
|||||||||||||
|
Selling, general and administrative |
6,853 |
2,400 |
19,970 |
9,386 |
|||||||||
|
Research and development |
1,095 |
- |
3,255 |
- |
|||||||||
|
Depreciation of property, plant and equipment |
240 |
92 |
1,057 |
409 |
|||||||||
|
Amortization of intangibles |
6,255 |
6,905 |
24,922 |
34,242 |
|||||||||
|
Loss on disposal of intangibles |
6,726 |
- |
21,916 |
- |
|||||||||
|
Impairment losses on intangibles |
4,350 |
- |
4,350 |
- |
|||||||||
|
Special charges |
(1,806) |
- |
(294) |
- |
|||||||||
|
23,713 |
9,397 |
75,176 |
44,037 |
||||||||||
|
Results from operations |
(15,057) |
9,861 |
10,226 |
18,971 |
|||||||||
|
Finance income |
(158) |
(172) |
(703) |
(548) |
|||||||||
|
Finance expense |
69 |
- |
1,053 |
- |
|||||||||
|
Foreign exchange (gain) loss |
268 |
96 |
(204) |
(103) |
|||||||||
|
Other income |
(90) |
- |
(390) |
- |
|||||||||
|
Income (loss) before taxes |
(15,146) |
9,937 |
10,470 |
19,622 |
|||||||||
|
Current income tax expense |
312 |
651 |
7,195 |
5,539 |
|||||||||
|
Deferred income tax expense (recovery) |
(3,093) |
659 |
(6,951) |
3,031 |
|||||||||
|
Income tax expense (recovery) |
(2,781) |
1,310 |
244 |
8,570 |
|||||||||
|
Net income (loss) |
$ |
(12,365) |
$ |
8,627 |
$ |
10,226 |
$ |
11,052 |
|||||
|
Net Income (loss) per share |
|||||||||||||
|
Basic and fully diluted |
$ |
(0.10) |
$ |
0.07 |
$ |
0.09 |
$ |
0.09 |
|||||
|
Weighted average number of common shares |
|||||||||||||
|
Basic |
118,642,749 |
118,555,989 |
118,607,569 |
119,245,581 |
|||||||||
|
Fully diluted |
118,642,749 |
118,555,989 |
118,615,683 |
119,245,581 |
|||||||||
|
Quarterhill Inc. |
|||||||||||||
|
Supplemental Consolidated Statement of Operations Information |
|||||||||||||
|
(in thousands of United States dollars, except share and per share amounts) |
|||||||||||||
|
For the three months ended, |
For the year ended, |
||||||||||||
|
December 31, |
December 31, |
December 31, |
December 31, |
||||||||||
|
Revenues |
|||||||||||||
|
Licenses |
$ |
10,083 |
$ |
29,902 |
$ |
101,553 |
$ |
87,765 |
|||||
|
Systems |
7,815 |
- |
17,641 |
- |
|||||||||
|
Services |
592 |
- |
2,086 |
- |
|||||||||
|
Recurring |
4,135 |
284 |
13,431 |
5,111 |
|||||||||
|
Total Revenues |
$ |
22,625 |
$ |
30,186 |
$ |
134,711 |
$ |
92,876 |
|||||
|
Cost of revenues (excluding depreciation and |
|||||||||||||
|
License |
$ |
5,853 |
$ |
10,928 |
$ |
29,559 |
$ |
29,868 |
|||||
|
Systems |
5,242 |
- |
11,880 |
- |
|||||||||
|
Services |
270 |
- |
1,091 |
- |
|||||||||
|
Recurring |
2,604 |
- |
6,779 |
- |
|||||||||
|
Total cost of revenues |
$ |
13,969 |
$ |
10,928 |
$ |
49,309 |
$ |
29,868 |
|||||
|
Quarterhill Inc. |
||||||||||||||||
|
Consolidated Statements of Comprehensive Income |
||||||||||||||||
|
(in thousands of United States dollars, except share and per share amounts) |
||||||||||||||||
|
For the three months ended, |
For the year ended, |
|||||||||||||||
|
December 31, |
December 31, |
December 31, |
December 31, |
|||||||||||||
|
Net income (loss) |
$ |
(12,365) |
$ |
8,627 |
$ |
10,226 |
$ |
11,052 |
||||||||
|
Other comprehensive income (loss): |
||||||||||||||||
|
Foreign currency translation adjustment |
144 |
- |
3,886 |
- |
||||||||||||
|
Comprehensive income |
$ |
(12,221) |
$ |
8,627 |
$ |
14,112 |
$ |
11,052 |
||||||||
|
Quarterhill Inc. |
||||||||
|
Consolidated Balance Sheets |
||||||||
|
(in thousands of United States dollars, except share and per share amounts) |
||||||||
|
As at |
December 31, 2017 |
December 31, 2016 |
||||||
|
Current assets |
||||||||
|
Cash and cash equivalents |
$ |
81,818 |
$ |
106,553 |
||||
|
Short-term investments |
1,236 |
1,154 |
||||||
|
Restricted Short-term investments |
3,500 |
- |
||||||
|
Accounts receivable |
19,298 |
20,357 |
||||||
|
Other current assets |
13 |
- |
||||||
|
Unbilled revenue |
3,045 |
- |
||||||
|
Income taxes receivable |
144 |
- |
||||||
|
Inventories |
5,083 |
- |
||||||
|
Loans receivable |
- |
1,766 |
||||||
|
Prepaid expenses and deposits |
4,129 |
1,293 |
||||||
|
118,266 |
131,123 |
|||||||
|
Non-current assets |
||||||||
|
Property Plant and Equipment |
3,801 |
1,240 |
||||||
|
Intangible assets |
114,944 |
123,351 |
||||||
|
Investment in joint venture |
3,383 |
- |
||||||
|
Deferred income tax assets |
20,195 |
14,646 |
||||||
|
Goodwill |
42,587 |
12,623 |
||||||
|
TOTAL ASSETS |
$ |
303,176 |
$ |
282,983 |
||||
|
Liabilities |
||||||||
|
Current liabilities |
||||||||
|
Bank indebtedness |
$ |
3,568 |
$ |
- |
||||
|
Accounts payable and accrued liabilities |
20,487 |
15,645 |
||||||
|
Income taxes payable |
599 |
- |
||||||
|
Current portion of patent finance obligation |
4,090 |
10,372 |
||||||
|
Current portion of deferred revenue |
6,733 |
- |
||||||
|
Current portion of long-term debt |
115 |
|||||||
|
35,592 |
26,017 |
|||||||
|
Non-current liabilities |
||||||||
|
Contingent consideration |
4,474 |
- |
||||||
|
Patent finance obligation |
- |
12,775 |
||||||
|
Success fee obligation |
- |
47 |
||||||
|
Deferred revenue |
884 |
- |
||||||
|
Long-term debt |
401 |
- |
||||||
|
Deferred income tax liabilities |
7,291 |
- |
||||||
|
TOTAL LIABILITIES |
48,642 |
38,839 |
||||||
|
Shareholders' equity |
||||||||
|
Capital stock |
418,873 |
419,485 |
||||||
|
Additional paid-in capital |
22,489 |
21,036 |
||||||
|
Accumulated other comprehensive income |
20,111 |
16,225 |
||||||
|
Deficit |
(206,939) |
(212,602) |
||||||
|
254,534 |
244,144 |
|||||||
|
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY |
$ |
303,176 |
$ |
282,983 |
||||
|
Quarterhill Inc. |
||||||||||||||
|
Consolidated Statements of Cash Flows |
||||||||||||||
|
(in thousands of United States dollars, except share and per share amounts) |
||||||||||||||
|
For the three months ended, |
For the year ended, |
|||||||||||||
|
December 31, |
December 31, |
December 31, |
December 31, |
|||||||||||
|
Cash generated from (used in): |
||||||||||||||
|
Operations |
||||||||||||||
|
Net income |
$ |
(12,365) |
$ |
8,627 |
$ |
10,226 |
$ |
11,052 |
||||||
|
Non-cash items |
||||||||||||||
|
Stock-based compensation |
211 |
20 |
663 |
217 |
||||||||||
|
Depreciation and amortization |
6,495 |
7,718 |
25,979 |
34,651 |
||||||||||
|
Foreign exchange (gain) loss |
(101) |
90 |
(267) |
(247) |
||||||||||
|
Equity in earnings from joint venture |
(90) |
- |
(390) |
- |
||||||||||
|
Loss on disposal of intangible |
6,726 |
- |
21,916 |
- |
||||||||||
|
Impairment losses on intangibles |
4,350 |
- |
4,350 |
- |
||||||||||
|
Contingent consideration adjustment |
(1,976) |
- |
(1,976) |
- |
||||||||||
|
Loss (gain) on disposal of assets |
(4) |
- |
(9) |
13 |
||||||||||
|
Deferred income tax expense (recovery) |
(3,093) |
659 |
(6,951) |
3,031 |
||||||||||
|
Accrued investment income |
1,000 |
(75) |
1,772 |
(269) |
||||||||||
|
Embedded derivatives |
18 |
- |
39 |
- |
||||||||||
|
Changes in non-cash working capital balances |
48,025 |
(9,461) |
14,603 |
(11,606) |
||||||||||
|
Cash generated from operations |
49,196 |
7,578 |
69,955 |
36,842 |
||||||||||
|
Financing |
||||||||||||||
|
Dividends paid |
(1,162) |
(1,132) |
(4,563) |
(4,527) |
||||||||||
|
Bank indebtedness |
(576) |
- |
1,348 |
- |
||||||||||
|
Repayment of long-term debt |
(38) |
- |
(434) |
- |
||||||||||
|
Common shares repurchased under normal course issuer bid |
- |
- |
(552) |
(4,225) |
||||||||||
|
Common shares issued for cash on the exercise of options |
- |
- |
- |
11 |
||||||||||
|
Common shares issued for cash from Employee Share |
35 |
37 |
68 |
72 |
||||||||||
|
Cash used in financing |
(1,741) |
(1,095) |
(4,133) |
(8,669) |
||||||||||
|
Investing |
||||||||||||||
|
Acquisition of Viziya, net of cash acquired |
- |
- |
(18,521) |
- |
||||||||||
|
Acquisition of IRD, net of cash acquired |
- |
- |
(47,782) |
- |
||||||||||
|
Acquisition of iCOMS, net of cash acquired |
- |
- |
(1,112) |
- |
||||||||||
|
Dividends received from joint venture |
176 |
- |
176 |
- |
||||||||||
|
Purchase of restricted short-term investments |
- |
- |
(3,500) |
- |
||||||||||
|
Proceeds from sale of property, plant and equipment |
13 |
- |
13 |
- |
||||||||||
|
Purchase of property and equipment |
(143) |
(2) |
(399) |
(48) |
||||||||||
|
Repayment of patent finance obligations |
(1,389) |
(1,389) |
(19,556) |
(5,555) |
||||||||||
|
Purchase of intangibles |
(138) |
(510) |
(150) |
(9,660) |
||||||||||
|
Cash used in investing |
(1,481) |
(1,901) |
(90,831) |
(15,263) |
||||||||||
|
Foreign exchange loss (gain) on cash held in foreign currency |
27 |
(63) |
274 |
212 |
||||||||||
|
Net increase (decrease) in cash and cash equivalents |
46,001 |
4,519 |
(24,735) |
13,122 |
||||||||||
|
Cash and cash equivalents, beginning of period |
35,817 |
102,034 |
106,553 |
93,431 |
||||||||||
|
Cash and cash equivalents, end of period |
$ |
81,818 |
$ |
106,553 |
$ |
81,818 |
$ |
106,553 |
||||||
|
Quarterhill Inc. |
||||||||||||||||
|
Consolidated Statements of Shareholders' Equity |
||||||||||||||||
|
(in thousands of United States dollars, except share |
||||||||||||||||
|
Capital Stock |
Additional |
Accumulated |
Deficit |
Equity |
||||||||||||
|
Balance - December 31, 2015 |
$ |
427,781 |
$ |
16,549 |
$ |
16,225 |
$ |
(219,177) |
$ |
241,378 |
||||||
|
Comprehensive earnings: |
||||||||||||||||
|
Net income |
- |
- |
- |
11,052 |
11,052 |
|||||||||||
|
Other Comprehensive Income |
- |
- |
- |
- |
- |
|||||||||||
|
Shares and options issued: |
||||||||||||||||
|
Stock-based compensation expense |
- |
217 |
- |
- |
217 |
|||||||||||
|
Conversion of deferred stock units to common |
116 |
- |
- |
- |
116 |
|||||||||||
|
Exercise of stock options |
17 |
(6) |
- |
- |
11 |
|||||||||||
|
Sale of shares under Employee Share Purchase |
72 |
- |
- |
- |
72 |
|||||||||||
|
Shares repurchased under normal course issuer |
(8,501) |
4,276 |
- |
- |
(4,225) |
|||||||||||
|
Dividends declared |
- |
- |
- |
(4,477) |
(4,477) |
|||||||||||
|
Balance - December 31, 2016 |
$ |
419,485 |
$ |
21,036 |
$ |
16,225 |
$ |
(212,602) |
$ |
244,144 |
||||||
|
Balance - December 31, 2016 |
419,485 |
21,036 |
16,225 |
(212,602) |
244,144 |
|||||||||||
|
Comprehensive earnings: |
||||||||||||||||
|
Net income |
- |
- |
- |
10,226 |
10,226 |
|||||||||||
|
Other Comprehensive Income |
- |
- |
3,886 |
- |
3,886 |
|||||||||||
|
Shares and options issued: |
||||||||||||||||
|
Stock-based compensation expense |
- |
663 |
- |
- |
663 |
|||||||||||
|
Shares issued upon acquisition |
662 |
- |
- |
- |
662 |
|||||||||||
|
Sale of shares under Employee Share Purchase |
68 |
- |
- |
- |
68 |
|||||||||||
|
Shares repurchased under normal course issuer |
(1,342) |
790 |
- |
- |
(552) |
|||||||||||
|
Dividends declared |
- |
- |
- |
(4,563) |
(4,563) |
|||||||||||
|
Balance - December 31, 2017 |
$ |
418,873 |
$ |
22,489 |
$ |
20,111 |
$ |
(206,939) |
$ |
254,534 |
||||||
|
Quarterhill Inc. |
|||||||||||||
|
Reconciliations of GAAP Net Income (Loss) to |
|||||||||||||
|
(in thousands of United States dollars, except share and per share amounts) |
|||||||||||||
|
For the three months ended, |
For the year ended, |
||||||||||||
|
Adjusted EBITDA |
December 31, |
December 31, |
December 31, |
December 31, |
|||||||||
|
Net income (loss) |
$ |
(12,365) |
$ |
8,627 |
$ |
10,226 |
$ |
11,052 |
|||||
|
Adjusted for: |
|||||||||||||
|
Income tax expense (recovery) |
(2,781) |
1,310 |
244 |
8,570 |
|||||||||
|
Foreign exchange (gain) loss |
268 |
96 |
(204) |
(103) |
|||||||||
|
Finance expense |
69 |
- |
1,053 |
- |
|||||||||
|
Finance income |
(158) |
(172) |
(703) |
(548) |
|||||||||
|
Special charges |
(1,806) |
- |
(294) |
- |
|||||||||
|
Amortization of intangibles |
6,255 |
7,626 |
24,922 |
34,242 |
|||||||||
|
Loss on disposal of intangibles |
6,726 |
- |
21,916 |
- |
|||||||||
|
Impairment losses on intangible assets |
4,350 |
- |
4,350 |
- |
|||||||||
|
Depreciation of property, plant and equipment |
240 |
92 |
1,057 |
409 |
|||||||||
|
Effect of deleted deferred revenue |
281 |
- |
922 |
- |
|||||||||
|
Increased costs from inventory step-up |
108 |
- |
689 |
- |
|||||||||
|
Effect of deleted prepaid expenses |
- |
- |
(10) |
- |
|||||||||
|
Stock-based compensation |
211 |
22 |
663 |
217 |
|||||||||
|
Dividend from joint venture |
176 |
- |
176 |
- |
|||||||||
|
Other expense (income) |
(90) |
- |
(390) |
- |
|||||||||
|
Adjusted EBITDA |
$ |
1,484 |
$ |
17,601 |
$ |
64,617 |
$ |
53,839 |
|||||
|
Adjusted EBITDA per share |
|||||||||||||
|
Net income (loss) |
$ |
(0.10) |
$ |
0.07 |
$ |
0.09 |
$ |
0.09 |
|||||
|
Adjusted for: |
|||||||||||||
|
Income tax expense (recovery) |
(0.02) |
0.01 |
- |
0.07 |
|||||||||
|
Foreign exchange (gain) loss |
- |
- |
- |
- |
|||||||||
|
Finance expense |
- |
- |
0.01 |
- |
|||||||||
|
Finance income |
- |
- |
(0.01) |
- |
|||||||||
|
Special charges |
(0.02) |
- |
- |
- |
|||||||||
|
Amortization of intangibles |
0.05 |
0.06 |
0.21 |
0.29 |
|||||||||
|
Loss on disposal of intangibles |
0.06 |
- |
0.18 |
- |
|||||||||
|
Impairment losses on intangible assets |
0.04 |
- |
0.04 |
- |
|||||||||
|
Depreciation of property, plant and equipment |
- |
- |
0.01 |
- |
|||||||||
|
Effect of deleted deferred revenue |
- |
- |
0.01 |
- |
|||||||||
|
Increased costs from inventory step-up |
- |
- |
0.01 |
- |
|||||||||
|
Effect of deleted prepaid expenses |
- |
- |
- |
- |
|||||||||
|
Stock-based compensation |
- |
- |
0.01 |
- |
|||||||||
|
Dividend from joint venture |
- |
- |
- |
- |
|||||||||
|
Other expense (income) |
- |
- |
- |
- |
|||||||||
|
Adjusted EBITDA per share |
$ |
0.01 |
$ |
0.14 |
$ |
0.56 |
$ |
0.45 |
|||||
|
Weighted average number of Common Shares |
|||||||||||||
|
Basic |
118,642,749 |
118,555,989 |
118,607,569 |
119,245,581 |
|||||||||
SOURCE Quarterhill Inc.
For media and investor inquiries, please contact:
Shaun McEwan, Chief Financial Officer
T: 613.688.4898
Dave Mason, Investor Relations
T: 613.688.1693