Quarterhill Inc. IRD Awarded $3.3m In Contracts
This morning, Quarterhill Inc. announced that IRD was awarded two two-year combined value US$3.3M contracts with South Dakota and Nebraska. The contracts are for advanced E-screening systems that incorporate IRD’s Tire anomaly and classification system (TACS). The contracts are with the South Dakota Department of transportation and the Nebraska Department of transportation respectively. South Dakota is implementing a fifth IRD E-Screening system. The E-screening system, incorporating TACS, helps to identify vehicles that are unsafe due to tire anomalies. The system also helps to detect unsafe brakes. Nebraska will update and upgrade existing WIM systems to include E-Screening and TACS.
These systems allow the states to more efficiently process commercial vehicles at weigh stations.
Our Thoughts: QTRH’s ITS business has now signed over $254.3M in new contracts in the last twelve months (Figure 1). QTRH’s ITS business continues to build recurring revenue. The contracts represent incremental development towards a reliable revenue generating ITS business providing positive segment adjusted EBITDA into the future. We remind readers that we expect ITS to post accelerating revenue growth and provide steady recurring revenue (unlike WiLAN).
QTRH maintains a strong balance sheet and we remain encouraged by the development of relationships with state agencies throughout the US. We are maintaining our BUY recommendation and $4.00/share target price based on a sum-of-the-parts valuation.