- Quarterhill (TSX:QTRH) has generated US$4.9 million in product sales to regional partners in Thailand and South Korea, diversifying its primarily North American and European operations
- The volatility of the company’s long-life government contracts has made the market undervalue its more than US$500 million backlog and robust 54 per cent revenue growth over the past three years
- Quarterhill provides tolling and enforcement solutions in the intelligent transportation systems industry, including real-time container tracking and AI-powered demand forecasting
- Quarterhill stock has added 25.53 per cent year-over-year, but only 9.26 per cent since 2019
Quarterhill (TSX:QTRH) has generated US$4.9 million in product sales to regional partners in Thailand and South Korea, diversifying its primarily North American and European operations.
The first deal, secured through distributor TMS Engineering, will pay US$2.8 million for the company’s high-speed Weigh-In-Motion preclearance systems for numerous Ministry of Transportation projects across Thailand. Quarterhill recently named TMS its regional distributor for its Sensor Line fiber-optic toll treadle sensors, supporting revenue for the product in Thailand.
The second deal, secured through South Korean distributor S.A. Technology Co., will pay US$2.1 million for Quarterhill’s PAT Bending Plate Weigh-In-Motion scales and SAW portable enforcement scales.
Quarterhill’s prospects for future growth
Quarterhill’s transportation technologies handle more than 2 billion toll transactions each year and inspect vehicles on more than 2,000 lanes worldwide, generating US$141.4 million in revenue in 2023, up from US$91.47 million in 2021.
The company’s global operation is supported by a management team with more than 40 years of experience in tolling and enforcement, and is positioned for further growth backed by:
- A revenue backlog of more than US$500 million.
- A history of successful acquisitions, including WiLan, and most recently, Red Fox, with US$30.4 million in cash as of Q1 2024.
- A Q1 2024 workforce adjustment expected to save US$4 million per year.
- A global presence across North America (37 per cent), Europe (29 per cent) and Asia-Pacific (24 per cent) as of May 2023.
This is in addition to a strong sales pipeline with new and existing customers, leading management to forecast that cash flow will strengthen over the near term as the company collects milestone payments from several ongoing tolling projects.
Why Quarterhill stock looks cheap
Because of the long-term nature of Quarterhill’s predominantly government-based contracts, the company’s financial performance will fluctuate significantly over the short term. This dynamic has led the market to undervalue the stock’s significant prospects for further growth with only a 9.26 per cent return since 2019.
Investors should then be prepared to hold Quarterhill for at least five years to allow management to deliver on its goal of generating top-line growth, margin expansion and reliable cash flows to fund organic and non-organic growth, as stated in the Q1 2024 news release.
Leadership insights
“We are extremely pleased with these new contracts, which not only represent significant sales achievements but also affirm our strong position in Asia,” Chuck Myers, Quarterhill’s chief executive officer, said in a statement. “Our partnerships with TMS in Thailand and SAT in South Korea are instrumental to our success in the region. This collaboration aligns with our mission to deploy innovative transportation solutions that cater to the unique needs of our international clientele.”
About Quarterhill
Quarterhill provides tolling and enforcement solutions in the intelligent transportation systems industry, including real-time container tracking and AI-powered demand forecasting.
Quarterhill Inc. stock (TSX:QTRH) is up by 1.72 per cent, trading at C$1.77 per share as of 11:23 am ET. The stock has added 25.53 per cent year-over-year, but only 9.26 per cent since 2019.
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(Top photo: Quarterhill)