Contra the Heard - QTRH April 2023
Quarterhill: Two CEOs Down
At Quarterhill, another CEO walks the plank with-
out notice after less than two years at the helm.
Having this happen once is concerning, but twice
within two years is a serious problem. Evidently,
this intelligent transportation system company is
not so intelligent when choosing bosses. The big-
gest inference to be drawn here is that there is di-
vision over corporate direction.
In the wake of the boardroom drama, the
ticker dropped below $1.40 after flirting with $2.00
for most of February. No surprise there, given the
degree of uncertainty regarding the corporation’s
direction and future strategy.
The WiLAN strategic alternative saga con-
tinues, raising concerns about whether value will
be realized for this division. With WiLAN making
up a large portion of total revenues — 47.9% in
2022 — getting sub-par value could spell trouble.
Why management is unable to get a deal done is
unclear, but the questions remain: When will they
sell it? And how much will they get at the end of
this soap opera? In our dreams, it is taking so long
because they are looking to sell the whole shebang.
Yes, we have lots of reveries, but the firm could
just as easily fail to attract a suitor at all.
On the bright side, Quarterhill had a positive
2022, is in good financial health, and insiders
scooped up $486,420 in shares over the past 12
months. They achieved their best top line in years
after bringing in $305.7 million, more than doubling
the 2021 haul. This played a major role in turning
the bottom line green. In addition, Quarterhill
made $36.1 million in debt repayments and reduced
overall debt by roughly half.
Quarterhill is a Hold. Last year was solid, the
name is cheap, and the upside appears good, but
the leadership issues and uncertainty around
WiLAN prevent it from being considered a Buy.