CIBC - KEY POINTSQ3 revenue was $36.3MM and lower than our estimate of $60.3MM (FactSet
$35.3MM). Adjusted EBITDA was $7.6MM vs. us at $11.5MM (FactSet
$5.9MM), while EPS were -$0.02 vs. our estimate of $0.05 (FactSet $0.00).
The recent acquisition of ETC fits within the company’s target of investing
$400MM in M&A over the next five years within the ITS industry and an initial
focus on acquisitions in the road systems vertical. ETC processes over
US$3B in toll billings annually across more than 1,500 “free flowing” toll lanes
in the U.S. The company reiterated that it expects ETC to generate annual
revenue of $95MM to $120MM and $12.5MM to $15MM in annual adjusted
EBITDA over the next 12 to 18 months. Our 2022 forecast is unchanged and
includes $100MM in revenue and $15MM of EBITDA to the ITS segment.
ETC brings scale and fit within Quarterhill’s ITS segment, while expanding its
presence in the tolling market, which management expects will benefit from
industry tailwinds that include the recent U.S. infrastructure bill. Additionally,
ETC will complement Quarterhill’s existing IRD business and provide further
revenue opportunities through product synergies and expansion
opportunities by leveraging IRD’s presence in over 80 countries.