RE:RE:Thoughts on Q4 & JanuaryThe conference call regarding the reorganization and the Wilan strategic review is very important because it guides investors on QTRH’s strategy blueprint for 2022 and 2023, possibly beyond.
These are my key takeaways from the prepared remarks and Q&A.
John Gillberry’s remarks The goal of the reorganization and personnel changes is to accelerate QTRH’s transformation and growth by becoming an operational leader in the Intelligent Transportation Systems (ITS) space.
Currently QTRH has one of the largest ITS footprints in North America and seeks to use that to leverage the substantial market opportunities in front of it, both domestically and internationally.
QTRH will operate with two divisions, ETC, focused on tolling, and IRD focused on commercial enforcement. Both divisions have stable and experienced staff/leadership to move their businesses forward. Both ETC and IRD are leaders in their respective fields and are well positioned to grow both organically and through acquisition.
The best way for QTRH to grow is to take advantage of the opportunities through the operating companies. These companies are led by individuals who are immersed in the businesses and have their finger on the pulse of the ITS industry and technologies in the industry and are capable of monitoring the evolving nature of the industry itself.
As a result, QTRH was left with a corporate holding company management structure that was both expensive and redundant to the overall business strategy. The changes were made now, because the necessary resources were in place now.
Brett Kidd’s remarks First, Brett kidd acknowledged the strong foundation already in place marking QTRH very well positioned to succeed in the ITS market. QTRH has two excellent companies, and industry with very strong tailwinds and a strong balance sheet to execute.
Kidd outlined his experience in technology companies in transportation, travel and public sectors and leadership in organizations experiencing rapid growth and change simultaneously. This experience in situations where technology, private sector and public sector converge is exactly the situation QTRH finds itself in today.
The current M&A strategy will continue unchanged. In addition, Kidd is excited at the synergy opportunities between IRD and ETC.
Kidd outlined ETC's approach in M&A. This is important because these guidelines probably highlight the approach he will bring to QTRH. He outlined three criteria that guide ETC's acquisition strategy.
- Expand scale, especially in geographies that ETC does not have a strong presence;
- Identify technologies that will enhance current ETC capabilities but are profitable freestanding; and
- Diversify and extend into adjacent markets where there is leverage on the IT/resources currently in place at ETC.
Gillberry on the Wilan strategic review Gillberry stated that he expects a lot of activity around the strategic review. He again reiterated Paul Hill’s position on good cash flow and good patents. He sees private equity and pension funds as prime targets, as they are characterized wanting steady, predictable cash flow and returns. This suggests QTRH is comfortable that they can show why the 5-year cash flow is representative of Wilan operations. So, in this strategic review, QTRH is selling an asset with predictable results over time and a low cost partnership operational structure, whereas in 2016/2017 Wilan was seeking a buyer for a business that very strong headwinds, a high cost structure, a capital intensive strategy of acquiring patents and an uncertain return on investment.