- Quarterhill (TSX:QTRH), a tolling and transportation technology stock, posted positive cash flow from operations for the first time in two years in Q2 2024
- Cash from continuing operations for the three and six months ended June 30, 2024, was US$0.8 million and -US$9.3 million, respectively, compared with -US$6.9 million and -US$13.5 million year-over-year
- Quarterhill provides tolling and enforcement solutions in the intelligent transportation systems industry
- Quarterhill stock has added 5.88 per cent year-over-year, but has lost 7.95 per cent since 2019
Quarterhill (TSX:QTRH), a tolling and transportation technology stock, posted positive cash flow from operations for the first time in two years in Q2 2024.
Key quarterly highlights
- Revenue for the quarter reached US$41.5 million, up by 7.5 per cent from US$38.6 million in Q2 2023, while revenue for the first half of 2024 was US$76.4 million, up by 14 per cent from US$67 million year-over-year, thanks to increased activity and improved performance in North America.
- Gross profit for the quarter was US$8.5 million or 21 per cent, down from US$10 million and 26 per cent, while gross profit for the six months ended June 30, 2024, was US$14.9 million or 19 per cent, as compared with US$13.8 million or 26 per cent year-over-year. The company attributes decreases to a tolling project under maintenance that is experiencing temporary lower-than-expected margins. Quarterhill’s gross profit as a value and as a percentage of revenue may vary significantly on a quarter-to-quarter basis because of the long-term nature of the government projects it is developing.
- Adjusted EBITDA for the quarter was US$1.7 million, down from US$2.9 million year-over-year, because of lower gross profit, offset by increased revenue and lower operating expenses. Adjusted EBITDA for the six months ended June 30, 2024, came to US$1.8 million, up from -US$0.9 million year-over-year thanks to higher revenue and lower operating expenses.
- Cash from continuing operations for the three and six months ended June 30, 2024, was US$0.8 million and -US$9.3 million, respectively, compared with -US$6.9 million and -US$13.5 million year-over-year.
- Total operating expenses for the three and six months ended June 30, 2024, were US$10.8 million and US$21.2 million, compared with US$10.6 million and US$22.2 million year-over-year, driven by lower R&D expenses and other charges, offset by higher selling, general and administrative costs.
- Net loss from continuing operations for the three and six months ended June 30, 2024, of -US$3 million and -US$$7.2 million, compared with -US$10.2 million and -US$19.3 million year-over-year.
- A revenue backlog of US$500 million as of June 30, 2024.
- An expanded software offering through the acquisition of Red Fox, a provider of automatic vehicle detection and classification software to the tolling industry.
- Cash and cash equivalents of US$24 million as of June 30, 2024, down from US$42.7 million as of Dec. 31, 2023.
- Adjusted working capital of US$68.4 million as of June 30, 2024, down from US$78.9 million as of Dec. 31, 2023. Like gross profit, Quarterhill’s operating cash flow can vary significantly because of the long-term nature of its projects.
Effective Friday, Quarterhill is also announcing the appointment of Vineet Khosla, chief technology officer at The Washington Post, to its board of directors. Khosla brings a track record of innovation in artificial intelligence, machine learning and cloud computing that also includes stints at Uber and Apple.
Prospective investors can check out my article published on July 17 about why Quarterhill stock looks undervalued at the current price.
Leadership insights
“Q2 saw continued execution on our goals to drive top-line growth, expand adjusted EBITDA margin and improve cash flow,” Chuck Myers, Quarterhill’s chief executive officer, said in a statement. “Adjusted EBITDA margin grew sequentially from Q1, and we anticipate continued progress in growing our margin throughout the year. Additionally, we generated positive cash flow from operations for the first time in two years and expect our cash balance to grow through the end of the year.”
“Our two business units – tolling and enforcement – made progress in Q2 on their ongoing projects, as well as closing new business, resulting in a contracted revenue backlog of US$500 million at quarter end,” Myers added. “We remain focused on leveraging the improvements we’ve made in the past year to our project management and contract bidding processes to grow these leading businesses. At the same time, we continue to work to increase our market reach through operational integration, exploring new opportunities in Europe, penetrating the logistics sector and building out our suite of software solutions, in particular with artificial intelligence applications.”
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 stock (TSX:QTRH) is down by 1.82 per cent, trading at C$1.62 per share as of 12:16 pm ET. The stock has added 5.88 per cent year-over-year, but has lost 7.95 per cent since 2019.
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(Top photo: Quarterhill)