Quarterhill Inc T.QTRH

Valuation & NCIB

[mrmoribund]

I'd say the lower the stock gets, the more the company should consider putting an NCIB in place.

It sounds great to keep building with acquisitions in ITS but everything has to be considered in terms of price and I'm having doubts that Quarterhill will be able to find any ITS high-quality bargain that's even remotely close in terms of value to the current price of Quarterhill shares.

I'm also thinking of how the market is currently likely to react to an ITS acquisition vs. even the mere announcement of an NCIB. In mid-2021 everything was about grow, grow, grow and who cares about actual earnings.

But how the market has changed on that score. My fear is that if an ITS acquisition--even a very high quality one--has nothing to offer but more EBITDA (and no earnings) and another year of integration, well, I doubt this very impatient mid-2022 market will take it well.

Indeed, it may be that the stock is currently slipping BECAUSE people are fearful that an acquisition is coming soon. Not sure.

[v_guerriero]

Rekor shareholders punished them for the STS acquisition. I think Quarterhill shareholders will punish them to raise 6% yield on debentures to retire 2.6% yielding stock, that management then issues to themselves in the form of RSUs and options The shelf prospectus sits there waiting to dilute shareholders.  And when the current management owns so few shares it is a much higher risk

[mrmoribund]

VG, you should let go of this comparing Quarterhill with Rekor. In terms of performance they are in totally different worlds. In Q1 Rekor had revenue of $3.6 million and an operating loss of $12.6 million. And I can't see why there should be any significant seasonal variation in their quarterly results. Plus they only had some $14 and a bit million in cash at the end of Q1. It looks to me

[v_guerriero]

Rekor matters. Analysts that perform any EV/EBITDA analysis of the ITS industry include REKR in their table.   This is a pure play ITS company.  It is also supposed to grow quickly and produce EBITDA next year.  On future EBITDA it trades at 6X.   But this is where we are in the market crash.  Multiples have shrunk as a result of higher interest rates.  Now

[mrmoribund]

VG, you are reaching new heights of illogic. You want to keep Rekor in your narrative and so it suddenly becomes respectable. You tell us: "Analysts that perform any EV/EBITDA analysis of the ITS industry include REKR in their table.   This is a pure play ITS company.  It is also supposed to grow quickly and produce EBITDA next year.  On future EBITDA it trades at 6X

[cabbieJBJ]

Mrmoribund, not only is QTRH's cash position super solid, as you note, but the ITS revenue pipeline is super solid as well - evidence that ~USD $430M in contracts have been signed by ETC and IRD over the past 24 months.  Additionally, the ~USD $430M does not include any change order add-ons (which in ETC's experience amounts ot ~8.5x the original face value on the agreement) or

[mrmoribund]

I'm basically with you Cabbie. The one thing I'd be a bit suspicious of, though, is that 8.5x number. I don't doubt that it's true re the past but it seems to me a bit of a stretch to expect something like that in the future. First off, if tolling system providers could rely on anything close to that then the whole razor blade / printer ink issue would have arisen. Gillette and

[v_guerriero]

This whole exchange highlights one important thing.   None of you know how the ITS business works.  You don't know what you now own and you don't understand the economics. You now own the equivalent of buying a SPAC investment.   And you just rely on a presentation from the management team that no longer works at Quarterhill.  And you trust the word of the Chair

[cabbieJBJ]

I guess we're lucky to have someone like you that has depth of understanding of ITS. LOL

[v_guerriero]

Yes you are. I've been more accurate than any analyst and any person on this Board.  I called the last two quarters perfectly.   And you heard it here first.  A negative EBITDA quarter is on deck.  

[v_guerriero]

Cash means they are less likely to go bankrupt.   Once you remove the potentially adverse effects from a negative Viziya arbitration ruling and the Vizio / Sharp litigation loss payments, how much will be left?  And what if McKool smith sues WiLan for settling and not going the distance against Apple?  McKool did sue VirnetX. $1.33 on the US listing today. Only $0.33 to go to a

[Buyreallow]

The F means the OTC shares are traded on a Foreigh exchange.  nothing more.