Quarterhill Announces Fourth Quarter and Fiscal 2019 Financial Results

• 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 /CNW/ - 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 Systems			Enterprise Software			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 Systems			Enterprise Software			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 Systems			Enterprise Software			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 Systems			Enterprise Software			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  December 31,						Twelve months ended  December 31,
		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  December 31,						Twelve months ended  December 31,
		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  December 31,						Twelve months ended  December 31,
		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 Purchase Plan		-		-				-			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)
	Capital Stock		Additional Paid-in Capital		Accumulated Other Comprehensive Income		Deficit		Total Equity
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   Purchase Plan		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 December 31,						For the twelve months ended December 31,
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 December 31,						For the twelve months ended December 31,
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.

For media and investor inquiries, please contact: David Cortens, Interim Chief Financial Officer, T: 306.653.6612, E: [email protected]; Dave Mason, Investor Relations, T: 613.688.1693, E: [email protected]

Related Links

www.quarterhill.com