Quarterhill (QTRH) investor relations material

Executive summary

• Q2 revenue reached $43.1M, up 4% year-over-year, driven by Safety and Enforcement business strength, partially offset by tolling contract timing.

• Net loss widened to ($6.8)M from ($3.0)M in Q2 2024; year-to-date net loss was ($15.2)M versus ($7.2)M last year.

• Adjusted EBITDA was negative $2.7M, impacted by two problem tolling contracts, but would have been positive $1.2M excluding these.

• Major restructuring reduced headcount by 15% (100 positions), targeting $12M in annual savings, with benefits expected from Q3 onward.

• Leadership changes include new CFO and CTO with significant industry and technology experience.

Financial highlights

• Gross margin for Q2 was 15%, down from 21% last year but up from 12% in Q1, mainly due to cost overruns on two tolling projects.

• Adjusted EBITDA for Q2 was ($2.7)M, down from $1.7M in Q2 2024; year-to-date Adjusted EBITDA was ($6.1)M versus $1.8M last year.

• Cash at quarter end was $22.7M, down from $31.9M at year end; cash used in operations was ($4.6)M in Q2.

• Backlog stands at $463M, with a large portion in higher-margin contracted maintenance revenue.

• Operating expenses rose to $12.9M from $10.8M year-over-year, mainly due to investments in leadership and development teams.

Outlook and guidance

• Management expects restructuring and operational improvements to drive sustainable profitability, margin expansion, and positive cash flow.

• Positive cash from operations is targeted for 2025, with cash burn expected to moderate.

• Double-digit EBITDA margin is seen as achievable in 2026, supported by a strong order backlog and new project focus.

• Progress made on renegotiating tolling contracts, with mediation expected to begin by end of July.

• Forward-looking statements caution that actual results may differ due to various risks and assumptions.