Quarterhill Inc (QTRH-T)

Sold IP patent portfolio business, used proceeds to pay off debt. Now a pure-play transportation solutions provider, a great business. Leading technology. Record backlog. Great new Board members. Undervalued. Expects a massive re-rating when institutions come back in, especially once new CEO is chosen. Anticipates better execution and financial de-risking.

Transportation services business (tech in infrastructure).
Not at large enough scale to justify in yet.
Will be successful for the long term, but waiting to buy.

Earlier in the year, QTRH's subsidiary, Quarterhill ITS, had fallen outside of certain covenant ratios (covenants required to maintain credit with the bank), but this updated credit agreement will secure a covenant relief period till the end of the year. Essentially, it helps the company maintain its debt levels and it provides the company with more working room to attempt to grow its operations and bring those ratios back in line with its covenants. Without the company being in line with its covenants, additional debt cannot be taken on, and this hinders future growth opportunities, thus a relief program gives the company more time to bring those ratios in line.
Unlock Premium - Try 5i Free

World leaders in both electronic tolling and in weights and measures enforcement. Sold IP licensing, now pure-play intelligent transportation systems. This has piqued institutional interest. Huge backlog. Margins will improve. New Board members will bring new blood. Yield 3.97%.

It has two segments, Wi-Lan which is a patent portfolio, and intelligent transportation systems. It is trying to sell Wi-Lan and this would be a good catalyst if it did. It has had disappointing margins and needs to get through the implementation phase on some of the contracts. Costs have been out of control and the CEO has suddenly stepped down which means he was probably fired. A new CEO could add another catalyst to the company. They are very critical of the Board.

Expects them to sell a division so they become a pure play in intelligent transportation systems only like e-toll lanes. Now have an $800 million backlog, because governments need more ways to collect money from drivers to pay for highways. Should fetch $1 per share once that division is sold, and that's when instutional investors will come in.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. Their Q3 report was very positive and beat estimates. The revenue forecast is 40% compared to last year. The EBITDA forecast is nearly 75% of 2019 levels. The stock should start being more noticed. Unlock Premium - Try 5i Free

A lawsuit with Apple resulted in $85.3 million settlement in their favour, but it is not all settled yet -- it could take years. All three of their divisions are earning well, but earnings are lumpy. Earnings come out February 27. They are searching for a new CEO. They have $70 million in the bank, which may lead to a special dividend. Yield 2.66% (Analysts’ price target is $2.43)