Canada's Quarterhill Q3 revenue rises on contract wins, gross margin expands

Overview

• Canada ITS solutions provider's Q3 revenue grew 9% yr/yr, highest since 2022

• Adjusted EBITDA for Q3 rose to $3.9 mln, driven by improved margins and restructuring

• Company repaid CAD$57.5 mln convertible debentures after quarter, strengthening balance sheet

Outlook

• Company continues to work towards closing Conduent tolling acquisition, subject to closing conditions

• Quarterhill remains focused on long-term growth and value creation for the combined business

• Company highlights ongoing demand for its solutions and a growing commercial pipeline

Result Drivers

• CONTRACT WINS - Co cited key contract awards with LA Metro, Oklahoma DOT, PennDOT, and Idaho Transportation Department as supporting commercial momentum and revenue growth

• GROSS MARGIN EXPANSION - Year-over-year gross margin increase attributed to restructuring, improved margins on certain tolling contracts, and strong margin performance in commercial vehicle and enforcement business

• OPERATING EXPENSES - Higher operating expenses mainly due to stock-based compensation, consulting for acquisitions, impairment, and facilities costs

Company press release:

Key Details

Analyst Coverage

• The current average analyst rating on the shares is "buy" and the breakdown of recommendations is 5 "strong buy" or "buy", no "hold" and no "sell" or "strong sell"

• The average consensus recommendation for the electronic equipment & parts peer group is "buy"

• Wall Street's median 12-month price target for Quarterhill Inc is C$5.00, about 77.9% above its November 9 closing price of C$2.81

• The stock recently traded at 31 times the next 12-month earnings vs. a P/E of 32 three months ago

Reuters Recommended Reads

• Nov 9 - Canada's Strathcona Resources Q3 production rises sequentially, raises quarterly dividend

• Nov 9 - Canada's Adentra Q3 sales beat estimates on higher product prices

• Nov 9 - Canada's Chorus Aviation Q3 adjusted net income beats estimates

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(This story was created using Reuters automation and AI based on LSEG and company data. It was checked and edited by a Reuters journalist prior to publication.)