Opinions Gordon Henderson
Quarterhill IncQTRH.TODON'T BUYOct 05, 2000
Gordon HendersonStock price when the opinion was issued
As of Jun 05, 2026. Market Open.
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The company is seeing positive growth in the tolling and enforcement business, and it has a revenue backlog exceeding $500M. Its market cap is around $228M, and its price has begun to turnaround since the summer, where it announced a credit relief program for its subsidiary. The company expects a stronger Q4 as certain revenue from two of its tolling projects was pushed into subsequent periods due to scheduling adjustments. Its balance sheet is OK, profit margins have been improving (while still unprofitable), and its valuation is cheap (trading less than book value and a forward sales multiple of 1.2X). We feel this could be the beginnings of a turnaround for the company, but we would like to see sustained progress on its efforts towards profitability and growth.
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It has gone through tremendous changes in the past 6 months. He teamed up with others to buy 10% of the company and forced the board to make changes. It is in the Intelligent Transportation space and the board is now much more experienced in this area. Also the new CEO and Chairman have tremendous experience in this field and were part of a company that pioneered ITS. The balance sheet has been de-risked with the sale of Wi-Lan and the implementation stage of the transformed company is now over. There are also better margins now. It is very cheap so institutional investors may start to look at it again.
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.
Jamie Murray 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.
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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%.
(Analysts’ price target is $1.95)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.
He was the lead activist investor. Since then, they have a brand new board and management board with serious experience. They're in a great space; huge infrastructure spending will happen in coming decades in intelligent transportation. They lead in electronic tolls in the US and lead in electronic weighing of vehicles. Insiders are buying a lot of stock in recent months, so they have a lot of confidence; this is rare and bodes well. Much upside ahead.