Release Date: August 09, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenue increased by 7.5% year-over-year to $41.5 million.
- Positive cash from operations of $802,000, a significant improvement from the previous year's negative cash flow.
- Substantial revenue backlog of $500 million, providing good visibility for future revenue.
- Successful acquisition and integration of Red Fox, enhancing the company's tolling and enforcement capabilities.
- Continued strong performance from the enforcement unit, with new agreements in multiple states and international deals.
Negative Points
- Adjusted EBITDA decreased to $1.7 million from $2.9 million in the previous year.
- Gross margin percentage declined to 21% from 26% year-over-year.
- Cash and cash equivalents decreased to $24 million from $42.7 million at the end of 2023.
- Operating expenses slightly increased to $10.8 million from $10.6 million in the previous year.
- One tolling project experienced a transitory period of lower-than-expected margins.
Q & A Highlights
Quarterhill Inc (QTRHF, Financial) Q2 2024 Earnings Call Highlights
Q: Can you give a bit more color on where you're hiring specifically for the sales team?
A: The hiring is strategic, both in the US and Europe. We had significantly cut back on the sales and BD team, so we're now starting to rebuild it. (Charles Myers, CEO)
Q: Can you talk a bit more about the progress made in Europe during the quarter?
A: We continue to streamline businesses in Europe, focusing on both enforcement and tolling opportunities. We have four different subsidiaries there and are aggressively pursuing tolling opportunities. (Charles Myers, CEO)
Q: How are the ramping tolling operations progressing from implementation to operations?
A: The progress is quite good. We've significantly improved customer relations and are almost out of the hot water with problem contracts. Most are starting to convert to the maintenance phase. (Charles Myers, CEO)
Q: What does the sales pipeline look like for the second half of the year?
A: We have a positive pipeline with significant opportunities ahead. The enforcement business typically performs better in the second half, and we expect tolling to do well too. (Charles Myers, CEO)
Q: How much visibility do you have into your plan for the second half of the year and 2025?
A: We have strong visibility with a $500 million backlog, which is impressive for a company doing $150 million a year. The enforcement business is growing nicely, and the tolling business remains strong. (Charles Myers, CEO)
Q: Are you seeing any macroeconomic impacts on your pipeline, such as longer lead times or smaller deals?
A: We see little impact from macroeconomic factors. Our customers, primarily local and state agencies, require our systems to maintain roads and traffic. We are fairly recession-proof. (Charles Myers, CEO)
Q: Can you discuss the importance of Red Fox in your bids and its competitive position?
A: Red Fox is important as it represents the next generation of tolling and vehicle classification. It helps us reduce equipment in the roadbed, which is a significant pain point for our customers. It is unique in the market. (Charles Myers, CEO)
Q: Was weather a factor in Q2?
A: No, there was no impact from weather in Q2. (Charles Myers, CEO)
Q: Does strong visibility in the second half mean quarterly revenues will be similar to or up from Q2?
A: We have strong visibility into our revenues for the next two quarters, with most of our 2024 projects and projected revenue in sight. We expect close to double-digit growth year-over-year. (Kyle Chriest, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
