Shift in strategy driving revenue
growth
OTTAWA, Aug. 10, 2017 /CNW/ - Quarterhill Inc.
("Quarterhill" or the "Company") (TSX:QTRH) (NASDAQ:QTRH),
announces its financial results for the three- and six-month
periods ended June 30, 2017. All
financial information in this press release is reported in U.S.
dollars, unless otherwise indicated.
Second Quarter Highlights
- Revenue of $18.6 million
- Adjusted EBITDA* of $4.8
million
- Net income of $3.6 million, or
$0.03 per share
- Cash from operations of $3.1
million
- Announced a new acquisition-oriented growth strategy and
changed the name of the public company to Quarterhill
- Acquired International Road Dynamics ("IRD"), a highway traffic
management technology company specializing in supplying products
and systems to the global Intelligent Transportation Systems
industry, on June 1, 2017
- Acquired VIZIYA Corp ("VIZIYA"), a software and services
provider that helps companies optimize their asset performance, on
May 4, 2017
- Completed the first tuck-in acquisition – iCOMS Detections
S.A
"Q2 was a significant period for the Company as we launched a
major shift in our growth strategy by transitioning our public
parent company into a diversified investment holding firm focused
on acquiring companies in the Industrial Internet of Things
market," said Shaun McEwan, Interim
CEO of Quarterhill. "We quickly began executing on our new plan and
completed the acquisitions of IRD and VIZIYA in the quarter. As
part of the new strategy, we renamed the public company
Quarterhill, and kept the WiLAN name with our patent license
business, which will continue to operate as one of the Company's
investments."
"Our new strategy reflects our belief that the best path to grow
the business and shareholder value is to acquire promising growth
companies and support them while they build their businesses. This
diversification strategy will add additional lines of business to
the overall public Company, which will open-up new revenue and cash
flow streams, and mitigate the lumpiness that we had experienced in
the past. This is evident already; even though the acquired
businesses had only a partial contribution to our Q2 financials, we
are already seeing the positive impact they can have on our revenue
and margins."
Approval of Eligible Dividend
The Board of Directors
has declared an eligible quarterly dividend of CDN $0.0125 per common share payable on October 5, 2017, to shareholders of record on
September 15, 2017.
Business Strategy and Segments
Quarterhill is
developing a portfolio of established businesses having histories
of generating cash flows from their operations in the "Technology",
"Mobility", "Factory" and "City" vertical segments of the
Industrial "Internet of Things" market. As of June 30, 2017, the Company had investments in
three of its four targeted vertical segments: Technology (WiLAN),
Mobility (IRD), and Factory (VIZIYA).
Quarterhill's goal is to build a consistently profitable company
with a diversified investment base and global market presence
within its vertical segments to increase shareholder value by
emphasizing the importance of recurring revenue streams and the
predictability of operating results. The Company intends to achieve
these objectives through a combination of organic growth and
acquisitions.
Q2 and Year-to-Date 2017 Consolidated Financial
Review
Quarterhill's consolidated financial results for Q2
2017 include contributions from its wholly owned subsidiaries;
WiLAN, IRD and VIZIYA. Included in these consolidated financial
results are IRD's results from operations for the period from
June 1 to June 30, 2017, VIZIYA's
results from operations for the period from May 4 to June 30, 2017, and WiLAN's results from
operations for the entire quarter. 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 June 30, 2017 were $18.6
million, compared to $16.0
million in the same period last year, which represents an
increase of $2.6 million or 16%. The
increase was due to the partial contribution in Q2 2017 from the
acquired IRD and VIZIYA businesses. Consolidated revenues for the
six-months ended June 30, 2017 were
$26.2 million, compared to
$46.1 million in the same period last
year.
Gross margin for the three-months ended June 30, 2017 was $9.0
million, or 48.8%, compared to $9.8
million, or 61%, in the same period last year. Gross margin
for the six-months ended June 30,
2017 was $9.3 million, or 35%,
compared to $31.9 million, or 69%, in
the same period last year. Gross margin for the three- and
six-month periods ended June 30, 2017
reflects contribution across all three vertical segments, compared
to the same periods last year, which reflect only the operations of
what is now the Company's Technology segment.
Operating expenses for the three-months ended June 30, 2017 were $12.4
million, compared to $12.6
million in the same period last year. Operating expenses
include selling, general and administrative costs, research and
development costs, and depreciation and amortization. The
acquisitions this quarter resulted in an incremental $1.3 million in acquisition related expenses ad
and an incremental $0.7 million in
amortization related to acquired intangible assets. Operating
expenses for the six-months ended June 30,
2017 were $20.2 million
compared to $25.3 million in the same
period last year.
Adjusted EBITDA for the three-months ended June 30, 2017 was $4.8
million, or $0.04 per basic
Common Share, compared to $7.0
million, or $0.06 per basic
Common Share, in the same period last year. The difference
primarily reflects the lower adjusted EBITDA performance of our
Technology segment due to its lower revenues, which was partially
offset by the addition of adjusted EBITDA from each of our acquired
businesses. For the six-months ended June
30, 2017, adjusted EBITDA was $2.6
million, or $0.02 per basic
Common Share, compared to $26.7
million, or $0.22 per basic
Common Share, in the same period last year, which reflects the
significantly lower revenues generated in our Technology segment
year-over-year.
Net income for three-months ended June
30, 2017 was $3.6 million, or
$0.03 per basic and diluted Common
Share, compared to a net loss of ($3.2)
million or ($0.03) per basic
and diluted Common Share in the same period last year. For the
six-months ended June 30, 2017, net
loss was ($3.6) million, or
($0.03) per basic and diluted Common
Share, compared to net income of $1.8
million, or $0.01 per basic
and diluted Common Share, in the same period last year.
Cash generated from operations for three-months ended
June 30, 2017 was $3.1 million, compared to $8.3 million in the same period last year. Cash
generated from operations for six-months ended June 30, 2017 was $11.5
million compared to $23.1
million in the same period last year.
Cash and cash equivalents and short-term investments amounted to
$49.0 million at June 30, 2017, compared to $107.7 million at December
31, 2016. The decrease is primarily attributable to
$66.3 million spent on the
acquisitions of IRD and VIZIYA, which was partially offset by cash
generated from operations of $11.5
million in the six-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 ("MD&A") document,
which will be filed on Sedar and at www.quarterhill.com in the
investor section.
|
For the three months
ended June 30, 2017
|
|
Technology
|
Mobility
|
Factory
|
Corporate
|
Total
|
Revenues
|
$
|
12,048
|
$
|
4,648
|
$
|
1,915
|
$
|
-
|
$
|
18,611
|
Cost of revenues
(excluding depreciation and amortization)
|
|
6,368
|
|
2,752
|
|
401
|
|
-
|
|
9,521
|
|
|
5,680
|
|
1,896
|
|
1,514
|
|
-
|
|
9,090
|
Selling, general and
administrative
|
|
1,772
|
|
972
|
|
876
|
|
594
|
|
4,214
|
Research and
development
|
|
-
|
|
308
|
|
360
|
|
-
|
|
668
|
Depreciation of
property, plant and equipment
|
|
88
|
|
48
|
|
34
|
|
-
|
|
170
|
Amortization of
intangibles
|
|
5,321
|
|
236
|
|
471
|
|
-
|
|
6,028
|
Special
charges
|
|
-
|
|
-
|
|
-
|
|
1,294
|
|
1,294
|
Results from
operations
|
|
(1,501)
|
|
332
|
|
(227)
|
|
(1,888)
|
|
(3,284)
|
Finance
income
|
|
(173)
|
|
-
|
|
-
|
|
(61)
|
|
(234)
|
Finance
expense
|
|
-
|
|
11
|
|
3
|
|
-
|
|
14
|
Foreign exchange loss
(gain)
|
|
(100)
|
|
286
|
|
41
|
|
(653)
|
|
(426)
|
Other expense
(income)
|
|
-
|
|
(69)
|
|
-
|
|
-
|
|
(69)
|
Income before
taxes
|
|
(1,228)
|
|
104
|
|
(271)
|
|
(1,174)
|
|
(2,569)
|
Current income tax
expense (recovery)
|
|
691
|
|
101
|
|
39
|
|
-
|
|
831
|
Deferred income tax
expense (recovery)
|
|
(1,877)
|
|
(62)
|
|
(194)
|
|
(4,876)
|
|
(7,009)
|
Income tax expense
(recovery)
|
|
(1,186)
|
|
39
|
|
(155)
|
|
(4,876)
|
|
(6,178)
|
Net income
(loss)
|
$
|
(42)
|
$
|
65
|
$
|
(116)
|
$
|
3,702
|
$
|
3,609
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
3,934
|
|
810
|
|
520
|
|
(504)
|
|
4,760
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
Effect of deleted
deferred revenue
|
|
-
|
|
25
|
|
242
|
|
-
|
|
267
|
Increased costs from
inventory step-up
|
|
-
|
|
137
|
|
-
|
|
-
|
|
137
|
Stock based
compensation
|
|
26
|
|
32
|
|
-
|
|
90
|
|
148
|
|
For the six months
ended June 30, 2017
|
|
Technology
|
Mobility
|
Factory
|
Corporate
|
Total
|
Revenues
|
$
|
19,626
|
$
|
4,648
|
$
|
1,915
|
$
|
-
|
$
|
26,189
|
Cost of revenues
(excluding depreciation and amortization)
|
|
13,762
|
|
2,752
|
|
401
|
|
-
|
|
16,915
|
|
|
5,864
|
|
1,896
|
|
1,514
|
|
-
|
|
9,274
|
Selling, general and
administrative
|
|
4,174
|
|
972
|
|
876
|
|
594
|
|
6,616
|
Research and
development
|
|
-
|
|
308
|
|
360
|
|
-
|
|
668
|
Depreciation of
property, plant and equipment
|
|
179
|
|
48
|
|
34
|
|
-
|
|
261
|
Amortization of
intangibles
|
|
10,624
|
|
236
|
|
471
|
|
-
|
|
11,331
|
Special
charges
|
|
-
|
|
-
|
|
-
|
|
1,294
|
|
1,294
|
Results from
operations
|
|
(9,113)
|
|
332
|
|
(227)
|
|
(1,888)
|
|
(10,896)
|
Finance
income
|
|
(391)
|
|
-
|
|
-
|
|
(61)
|
|
(452)
|
Finance
expense
|
|
-
|
|
11
|
|
3
|
|
-
|
|
14
|
Foreign exchange loss
(gain)
|
|
(385)
|
|
286
|
|
41
|
|
(653)
|
|
(711)
|
Other expense
(income)
|
|
-
|
|
(69)
|
|
-
|
|
-
|
|
(69)
|
Income before
taxes
|
|
(8,337)
|
|
104
|
|
(271)
|
|
(1,174)
|
|
(9,678)
|
Current income tax
expense (recovery)
|
|
1,434
|
|
101
|
|
39
|
|
-
|
|
1,574
|
Deferred income tax
expense (recovery)
|
|
(2,500)
|
|
(62)
|
|
(194)
|
|
(4,876)
|
|
(7,632)
|
Income tax expense
(recovery)
|
|
(1,066)
|
|
39
|
|
(155)
|
|
(4,876)
|
|
(6,058)
|
Net income
(loss)
|
$
|
(7,271)
|
$
|
65
|
$
|
(116)
|
$
|
3,702
|
$
|
(3,620)
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA
|
|
1,747
|
|
810
|
|
520
|
|
(504)
|
|
2,573
|
|
|
|
|
|
|
|
|
|
|
|
Other reconciling
items:
|
|
|
|
|
|
|
|
|
|
|
Effect of deleted
deferred revenue
|
|
-
|
|
25
|
|
242
|
|
-
|
|
267
|
Increased costs from
inventory step-up
|
|
-
|
|
137
|
|
-
|
|
-
|
|
137
|
Stock based
compensation
|
|
57
|
|
32
|
|
-
|
|
90
|
|
179
|
Conference Call and Webcast
WiLAN will conduct a
conference call to discuss its financial results today at
10:00 AM Eastern Time.
Call Information
The live audio webcast will be available at
http://event.on24.com/wcc/r/1465983-1/476A2A33D8B4F83D6332197F41AF0594
- 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
A webcast of the call will be available at
http://event.on24.com/wcc/r/1465983-1/476A2A33D8B4F83D6332197F41AF0594
A telephone replay will be available from 1:00 PM ET on August 10,
2017 until 11:59 PM ET on
August 17, 2017 at: 1.855.859.2056
(Toll Free) or 1.416.849.0833 (International).
Conference ID #: 54032419
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 of intangibles; (iv) special charges;
(v) depreciation of property, plant and equipment; (vi) effects of
deleted deferred revenue; (vii) the effects of fair value step up
in inventory acquired, and (viii) stock based compensation.
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. 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 a diversified
investment holding company focused on growing its business by
acquiring technology companies in the Industrial Internet of Things
("IIoT") segment across multiple verticals. Quarterhill targets
companies with a broad range of products and services that capture,
analyze and interpret data, and that have strong financial
performance, excellent management teams, strong intellectual
property underpinnings and significant opportunities to develop
long-term recurring and growing revenue streams. 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 its February 10, 2017 annual information form for the
year ended December 31, 2016 (the
"AIF"). Copies of the AIF may be obtained at www.sedar.com or
www.sec.gov. Quarterhill recommends that readers review and
consider all of these risk factors and notes that readers should
not place undue reliance on any of Quarterhill's forward-looking
statements. Quarterhill has no intention, and undertakes no
obligation, to update or revise any forward-looking statements or
forward-looking information, whether as a result of new
information, future events or otherwise, except as required by
law.
All trademarks and brands mentioned in this release are the
property of their respective owners.
Quarterhill Inc.
Condensed Consolidated Interim Statements of Operations
(in thousands of United States
dollars, except share and per share amounts) (unaudited)
|
For the three months
ended,
|
|
For the six months
ended,
|
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
$
|
18,611
|
|
$
|
15,961
|
|
$
|
26,189
|
|
$
|
46,121
|
Cost of revenues
(excluding depreciation and amortization)
|
|
9,521
|
|
|
6,293
|
|
|
16,915
|
|
|
14,263
|
|
|
9,090
|
|
|
9,668
|
|
|
9,274
|
|
|
31,858
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
Selling, general and
administrative
|
|
4,214
|
|
|
2,646
|
|
|
6,616
|
|
|
5,186
|
Research and
development
|
|
668
|
|
|
-
|
|
|
668
|
|
|
-
|
Depreciation of
property, plant and equipment
|
|
170
|
|
|
106
|
|
|
261
|
|
|
213
|
Amortization of
intangibles
|
|
6,028
|
|
|
9,850
|
|
|
11,331
|
|
|
19,872
|
Special
charges
|
|
1,294
|
|
|
-
|
|
|
1,294
|
|
|
-
|
|
|
12,374
|
|
|
12,602
|
|
|
20,170
|
|
|
25,271
|
Results from
operations
|
|
(3,284)
|
|
|
(2,934)
|
|
|
(10,896)
|
|
|
6,587
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign exchange
(gain) loss
|
|
(426)
|
|
|
(114)
|
|
|
(711)
|
|
|
(277)
|
Finance
(income)
|
|
(234)
|
|
|
(120)
|
|
|
(452)
|
|
|
(238)
|
Finance
expenses
|
|
14
|
|
|
-
|
|
|
14
|
|
|
-
|
Other expense
(income)
|
|
(69)
|
|
|
-
|
|
|
(69)
|
|
|
-
|
Income before
taxes
|
|
(2,569)
|
|
|
(2,700)
|
|
|
(9,678)
|
|
|
7,102
|
|
|
|
|
|
|
|
|
|
|
|
|
Current income tax
expense (recovery)
|
|
831
|
|
|
837
|
|
|
1,574
|
|
|
3,860
|
Deferred income tax
expense (recovery)
|
|
(7,009)
|
|
|
(385)
|
|
|
(7,632)
|
|
|
1,474
|
Income tax expense
(recovery)
|
|
(6,178)
|
|
|
452
|
|
|
(6,058)
|
|
|
5,334
|
Net income
(loss)
|
$
|
3,609
|
|
$
|
(3,152)
|
|
$
|
(3,620)
|
|
$
|
1,768
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income (loss) per
share
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted
|
$
|
0.03
|
|
$
|
(0.03)
|
|
$
|
(0.03)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of common shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and fully
diluted
|
118,587,106
|
|
119,255,090
|
|
118,579,684
|
|
119,768,540
|
Quarterhill Inc.
Supplemental Condensed Consolidated Interim Statement of Operations
Information
(in thousands of United States
dollars, except share and per share amounts) (unaudited)
|
For the three
months
ended,
|
|
For the six
months
ended,
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Licenses
|
$
|
12,842
|
|
$
|
15,961
|
|
$
|
20,420
|
|
$
|
46,121
|
|
Systems
|
|
3,067
|
|
|
-
|
|
|
3,067
|
|
|
-
|
|
Services
|
|
714
|
|
|
-
|
|
|
714
|
|
|
-
|
|
Recurring
|
|
1,988
|
|
|
-
|
|
|
1,988
|
|
|
-
|
Total
Revenues
|
$
|
18,611
|
|
$
|
15,961
|
|
$
|
26,189
|
|
$
|
46,121
|
|
|
|
|
|
|
|
|
|
|
|
|
Cost of revenues
(excluding depreciation and amortization)
|
|
|
|
|
|
|
|
|
|
|
|
|
License
|
$
|
6,448
|
|
$
|
6,293
|
|
$
|
13,842
|
|
$
|
14,263
|
|
Systems
|
|
1,898
|
|
|
-
|
|
|
1,898
|
|
|
-
|
|
Services
|
|
321
|
|
|
-
|
|
|
321
|
|
|
-
|
|
Recurring
|
|
854
|
|
|
-
|
|
|
854
|
|
|
-
|
Total cost of
revenues
|
$
|
9,521
|
|
$
|
6,293
|
|
$
|
16,915
|
|
$
|
14,263
|
Quarterhill Inc.
Condensed Consolidated Interim Statements of Comprehensive
Income
(in thousands of United States
dollars, except share and per share amounts) (unaudited)
|
For the three
months
ended,
|
|
For the six
months
ended,
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
(loss)
|
$
|
3,609
|
|
$
|
(3,152)
|
|
$
|
(3,620)
|
|
$
|
1,768
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
|
533
|
|
|
-
|
|
|
533
|
|
|
-
|
Comprehensive
income
|
$
|
4,142
|
|
$
|
(3,152)
|
|
$
|
(3,087)
|
|
$
|
1,768
|
Quarterhill Inc.
Condensed Consolidated Interim Balance Sheets
(in thousands of United States
dollars, except share and per share amounts) (unaudited)
As at
|
June 30,
2017
|
December 31,
2016
|
Current
assets
|
|
|
|
|
|
Cash and cash
equivalents
|
$
|
44,315
|
$
|
106,553
|
|
Short-term
investments
|
|
1,194
|
|
1,154
|
|
Restricted Short-term
investments
|
|
3,500
|
|
-
|
|
Accounts
receivable
|
|
13,001
|
|
20,357
|
|
Other current
assets
|
|
45
|
|
-
|
|
Unbilled
revenue
|
|
4,011
|
|
-
|
|
Income taxes
receivable
|
|
171
|
|
-
|
|
Inventories
|
|
5,391
|
|
-
|
|
Loans
receivable
|
|
1,918
|
|
1,766
|
|
Prepaid expenses and
deposits
|
|
4,013
|
|
1,293
|
|
|
77,559
|
|
131,123
|
Non-current
assets
|
|
|
|
|
|
Property Plant and
Equipment
|
|
4,153
|
|
1,240
|
|
Intangible
assets
|
|
152,126
|
|
123,351
|
|
Investment in joint
venture
|
|
3,179
|
|
-
|
|
Deferred income tax
assets
|
|
22,591
|
|
14,646
|
|
Goodwill
|
|
41,123
|
|
12,623
|
TOTAL
ASSETS
|
$
|
300,731
|
$
|
282,983
|
|
|
|
|
|
Liabilities
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
Bank
indebtedness
|
$
|
3,827
|
$
|
-
|
|
Accounts payable and
accrued liabilities
|
|
13,297
|
|
15,645
|
|
Income taxes
payable
|
|
646
|
|
-
|
|
Current portion of
patent finance obligation
|
|
5,362
|
|
10,372
|
|
Current portion of
deferred revenue
|
|
6,722
|
|
-
|
|
Current portion of
long-term debt
|
|
99
|
|
-
|
|
|
29,953
|
|
26,017
|
Non-current
liabilities
|
|
|
|
|
|
Acquisition notes
payable
|
|
6,450
|
|
-
|
|
Patent finance
obligation
|
|
15,195
|
|
12,775
|
|
Success fee
obligation
|
|
-
|
|
47
|
|
Deferred
revenue
|
|
475
|
|
-
|
|
Long-term
debt
|
|
383
|
|
-
|
|
Deferred income tax
liabilities
|
|
9,124
|
|
-
|
TOTAL
LIABILITIES
|
|
61,580
|
|
38,839
|
Shareholders'
equity
|
|
|
|
|
|
Capital
stock
|
|
418,838
|
|
419,485
|
|
Additional paid-in
capital
|
|
22,005
|
|
21,036
|
|
Accumulated other
comprehensive income
|
|
16,758
|
|
16,225
|
|
Deficit
|
|
(218,450)
|
|
(212,602)
|
|
|
239,151
|
|
244,144
|
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY
|
$
|
300,731
|
$
|
282,983
|
Quarterhill Inc.
Condensed Consolidated Interim Statements of Cash Flows
(in thousands of United States
dollars, except share and per share amounts) (unaudited)
|
|
For the six months
ended,
|
|
|
June 30,
2017
|
|
June 30,
2016
|
Cash generate from
(used in):
|
|
|
|
|
|
Operations
|
|
|
|
|
|
|
Net earnings
(loss)
|
$
|
(3,620)
|
|
$
|
1,768
|
|
Non-cash
items
|
|
|
|
|
|
|
|
Stock-based
compensation
|
|
179
|
|
|
154
|
|
|
Depreciation and
amortization
|
|
11,592
|
|
|
20,086
|
|
|
Foreign exchange
(gain) loss
|
|
(146)
|
|
(390)
|
|
|
Earnings from joint
venture
|
|
(69)
|
|
-
|
|
|
Gain (Loss) on
disposal of assets
|
|
-
|
|
13
|
|
|
Deferred income tax
expense (recovery)
|
|
(7,632)
|
|
1,474
|
|
|
Accrued investment
income
|
|
(150)
|
|
(128)
|
|
|
Embedded
Derivatives
|
|
10
|
|
-
|
|
Changes in non-cash
working capital balances
|
|
|
|
|
|
|
|
Accounts
receivable
|
|
18,818
|
|
824
|
|
|
Unbilled
revenue
|
|
862
|
|
-
|
|
|
Inventories
|
|
686
|
|
-
|
|
|
Prepaid expenses and
deposits
|
|
(436)
|
|
140
|
|
|
Deferred
Revenue
|
|
591
|
|
-
|
|
|
Payments associated
with success fee obligation
|
|
(492)
|
|
(1,732)
|
|
|
Accounts payable and
accrued liabilities
|
|
(9,236)
|
|
853
|
|
|
Income taxes
payable
|
|
525
|
|
-
|
Cash generated from
operations
|
|
11,482
|
|
|
23,062
|
Financing
|
|
|
|
|
|
|
Dividends
paid
|
|
(2,228)
|
|
|
(2,242)
|
|
Bank
indebtedness
|
|
1,523
|
|
|
-
|
|
Long Term
debt
|
|
(24)
|
|
|
-
|
|
Common shares
repurchased under normal course issuer bid
|
|
(552)
|
|
|
(3,123)
|
|
Common shares issued
for cash on the exercise of options
|
|
-
|
|
|
11
|
|
Common shares issued
for cash from Employee Share Purchase Plan
|
|
33
|
|
|
35
|
Cash used in
financing
|
|
(1,248)
|
|
|
(5,319)
|
Investing
|
|
|
|
|
|
|
Acquisition of
Viziya, net of cash acquired
|
|
(18,521)
|
|
|
-
|
|
Acquisition of IRD,
net of cash acquired
|
|
(47,782)
|
|
|
-
|
|
Pruchase of
short-term investment
|
|
(3,500)
|
|
|
-
|
|
Purchase of property
and equipment
|
|
(114)
|
|
|
(39)
|
|
Repayment of patent
finance obligations
|
|
(2,778)
|
|
|
(2,777)
|
|
Purchase of
intangibles
|
|
(4)
|
|
|
(6,150)
|
Cash used in
investing
|
|
(72,699)
|
|
|
(8,966)
|
Foreign exchange loss
(gain) on cash held in foreign currency
|
|
227
|
|
|
310
|
Net increase
(decrease) in cash and cash equivalents
|
|
(62,238)
|
|
|
9,087
|
Cash and cash
equivalents, beginning of period
|
|
106,553
|
|
|
93,431
|
Cash and cash
equivalents, end of period
|
$
|
44,315
|
|
$
|
102,518
|
Quarterhill Inc.
Condensed Consolidated Statements of Shareholders' Equity
(in thousands of United States
dollars, except share and per share amounts) (unaudited)
|
Capital
Stock
|
Additional
paid in
Capital
|
Accumulated
Other
Comprehensive
Income
|
Deficit
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December
31, 2015
|
$
|
427,781
|
$
|
16,549
|
$
|
16,225
|
$
|
(219,177)
|
$
|
241,378
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
earnings:
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
-
|
|
-
|
|
-
|
|
1,768
|
|
1,768
|
|
Other Comprehensive
Income
|
|
-
|
|
-
|
|
-
|
|
-
|
|
-
|
Shares and options
issued:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
-
|
|
154
|
|
-
|
|
-
|
|
154
|
|
Conversion of
deferred stock units to common shares
|
|
116
|
|
-
|
|
-
|
|
-
|
|
116
|
|
Exercise of stock
options
|
|
17
|
|
(6)
|
|
-
|
|
-
|
|
11
|
|
Sale of shares under
Employee Share Purchase Plan
|
|
35
|
|
-
|
|
-
|
|
-
|
|
35
|
Shares repurchased
under normal course issuer bid
|
|
(6,274)
|
|
3,151
|
|
-
|
|
-
|
|
(3,123)
|
Dividends
declared
|
|
-
|
|
-
|
|
-
|
|
(2,245)
|
|
(2,245)
|
Balance - June 30,
2016
|
$
|
421,675
|
$
|
19,848
|
$
|
16,225
|
$
|
(219,654)
|
$
|
238,094
|
|
|
|
|
|
|
|
|
|
|
|
Balance - December
31, 2016
|
|
419,485
|
|
21,036
|
|
16,225
|
|
(212,602)
|
|
244,144
|
|
|
|
|
|
|
|
|
|
|
|
Comprehensive
earnings:
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
-
|
|
-
|
|
-
|
|
(3,620)
|
|
(3,620)
|
|
Other Comprehensive
Income
|
|
-
|
|
-
|
|
533
|
|
-
|
|
533
|
Shares and options
issued:
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based
compensation expense
|
|
-
|
|
179
|
|
-
|
|
-
|
|
179
|
|
Shares issued upon
acquisition
|
|
662
|
|
-
|
|
-
|
|
-
|
|
662
|
|
Sale of shares under
Employee Share Purchase Plan
|
|
33
|
|
-
|
|
-
|
|
-
|
|
33
|
|
Shares repurchased
under normal course issuer bid
|
|
(1,342)
|
|
790
|
|
-
|
|
-
|
|
(552)
|
Dividends
declared
|
|
-
|
|
-
|
|
-
|
|
(2,228)
|
|
(2,228)
|
Balance - June 30,
2017
|
$
|
418,838
|
$
|
22,005
|
$
|
16,758
|
$
|
(218,450)
|
$
|
239,151
|
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 six months
ended,
|
Adjusted
EBITDA
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
$
|
3,609
|
|
$
|
(3,152)
|
|
$
|
(3,620)
|
|
$
|
1,768
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(6,178)
|
|
|
452
|
|
|
(6,058)
|
|
|
5,334
|
|
Foreign exchange
(gain) loss
|
|
(426)
|
|
|
(114)
|
|
|
(711)
|
|
|
(277)
|
|
Finance
expense
|
|
14
|
|
|
-
|
|
|
14
|
|
|
-
|
|
Finance
(income)
|
|
(234)
|
|
|
(120)
|
|
|
(452)
|
|
|
(238)
|
|
Special
charges
|
|
1,294
|
|
|
-
|
|
|
1,294
|
|
|
-
|
|
Amortization of
intangibles
|
|
6,028
|
|
|
9,850
|
|
|
11,331
|
|
|
19,872
|
|
Depreciation of
property, plant and equipment
|
|
170
|
|
|
106
|
|
|
261
|
|
|
213
|
|
Effect of deleted
deferred revenue
|
|
267
|
|
|
-
|
|
|
267
|
|
|
-
|
|
Increased costs from
inventory step-up
|
|
137
|
|
|
-
|
|
|
137
|
|
|
-
|
|
Stock based
compensation
|
|
148
|
|
|
-
|
|
|
179
|
|
|
-
|
|
Other expense
(income)
|
|
(69)
|
|
|
-
|
|
|
(69)
|
|
|
-
|
Adjusted
EBITDA
|
$
|
4,760
|
|
$
|
7,022
|
|
$
|
2,573
|
|
$
|
26,672
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
For the three months
ended,
|
|
For the six months
ended,
|
Adjusted EBITDA
per share
|
|
June 30,
2017
|
|
June 30,
2016
|
|
June 30,
2017
|
|
June 30,
2016
|
|
|
|
|
|
|
|
|
|
|
|
|
Net Income
(Loss)
|
$
|
0.03
|
|
$
|
(0.03)
|
|
$
|
(0.03)
|
|
$
|
0.01
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
for:
|
|
|
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
|
(0.05)
|
|
|
-
|
|
|
(0.05)
|
|
|
0.04
|
|
Foreign
exchange
|
|
-
|
|
|
-
|
|
|
(0.01)
|
|
|
-
|
|
Finance
expense
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Finance
income
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Special
charges
|
|
0.01
|
|
|
-
|
|
|
0.01
|
|
|
-
|
|
Amortization of
intangibles
|
|
0.05
|
|
|
0.08
|
|
|
0.10
|
|
|
0.17
|
|
Depreciation of
property, plant and equipment
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Effect of deleted
deferred revenue
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Increased costs from
inventory step-up
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Stock based
compensation
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
|
Other expense
(income)
|
|
-
|
|
|
-
|
|
|
-
|
|
|
-
|
Adjusted EBITDA
per share
|
$
|
0.04
|
|
$
|
0.06
|
|
$
|
0.02
|
|
$
|
0.22
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average
number of Common Shares
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
118,587,106
|
|
|
119,255,090
|
|
|
118,579,684
|
|
|
119,768,540
|
SOURCE Quarterhill Inc.