Q1 2022 Quarterhill Inc Earnings Call
[music].
Good morning, and welcome to your quarter Hills, Q1 fiscal 2022 financial results Conference call.
On this morning's call we have Mr. Bryan Kipp, President and CEO and Mr. Steve Thompson interim Chief Financial Officer.
At this time all participants are in listen only mode. Following the management's presentation, we will conduct a question answer session.
During which analysts are invited to ask questions.
To ask a question. Please press star one on your touch on falling to register.
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Earlier this morning quarter Hill issued a news release announcing its financial results for the three months period ended March 31st 2022.
This news release, along with the Companys N DNA and financial statements will be available on quarter Hills, let's say and will be filed on SEDAR.
Certain matters discussed during today's conference call or answers that may be given to questions could constitute forward looking statements.
Actual results could differ materially from those anticipated risk factors that could affect results are detailed in the company's annual information form and other public filings that are available on SEDAR.
During this conference call quarter Hill will refer to adjusted EBITDA.
Adjusted EBITDA does not have any standardized meaning prescribed by the fr Ifr S. Please refer to the Companys Q1, 2022 management's discussion and analysts for full cautionary notes regarding the use of forward looking statements and non <unk> measures.
Finally, please note that all financial information provided is in Canadian dollars unless otherwise specified.
I will now turn the meeting over to Mr. Kit. Please go ahead Sir.
Thank you good morning, everyone and thank you all for joining us on today's call.
Before we begin with our review and outlook I wanted to take a moment to honor the memory of Michael Eskew, Wildland, CEO , who passed away last week.
Suddenly an untimely passing was a tragic shock to the entire team at quarter Hill and in particular to those who worked closely with us on the wireline.
Michael was appointed violin CEO in 2019, having previously served as CFO since joining the company in 2012.
Michael was active in the patent licensing industry for more than 25 years and it was a well regarded and recognized leader often cited as a speaker at industry events and ranked prominently in annual rankings of IP dealmakers and Influencers, but most importantly, he was a talented hard working and kind person who is equally loved and respected by his call.
Leagues, and those who came to know in the IP industry.
I worked closely with Michael for the past five years to six months and then during that relatively short period of time, you'll have to big and lasting impression on me.
Michael was an outstanding leader and a key driver of wildland success over the past 10 years. His presence will be sorely missed and my thoughts condolences and prayers are with his family friends and colleagues during this difficult time.
So in terms of the agenda for today's call I'll start with a look at business highlights for Q1, followed by discussion on our outlook and priorities after which Steve will take a look at the key financial results then we'll open it up for questions.
Looking at the numbers at a high level Q1 consolidated revenue was $168 5 million and adjusted EBITDA was $79 1 million. These were significant increases year over year and were due primarily to the substantial contribution from our licensing business wildland as well as top line contribution from Bgs.
<unk> and EDC Ics businesses.
Acquired in April and September 2021, respectively, our working capital stood at $176 9 million at quarter end, providing plenty of firepower to execute on our growth plan.
Wildlands license activity in the quarter led to our significant outperformance in Q1 and once again reflects the important role that it has played in helping us execute on our Ics mandate.
Patent license business model has variability and its near term quarterly financial performance, but over a longer time, Brian Wyland has consistently shown it can generate significant cash flow Q1 was no exception.
Violent success provided the initial capital required to pivot the business back in 2017, and it has been contributing meaningful cash flows to the Ics expansion ever sense.
We announced this morning that Andrew apparel line has been appointed CEO of Wildland, Andrew has been a senior executive of island for nearly 15 years and represents the amazing leadership talent bench at wireline.
Most recently, Andrew <unk> Senior Vice President licensing responsible for the licensing of the company's portfolio of wireless wireline digital TV and other technologies Andrew.
Andrew has an exceptional talent in the patent licensing industry and during his tenure as business unit has negotiated license agreements with more than 100 companies.
<unk> Global technology leaders, LG, Cisco, Nokia Ericsson, Panasonic and Sony.
It provides great continuity with the wildland team as well as the quarter held board and executive team and I look forward to working even more closely with them in the months ahead.
In December last year, we announced a strategic review to the wireline business in Q1, we hired stout a global investment banking advisory firm as lead advisor for the review process.
While it was a difficult decision to launch a process for wireless it was recognized that there may be better alternatives for that business and as part of a public company holdco structure, especially given quarter Hills strategic focus on the Ics business.
Now moving to Etfs.
The Ics segment had contract wins in Q1 totaling approximately $75 million, including Orange County, California, and Alameda County, California for ETE and Indiana for IRT. Shortly after quarter end, ETE announced a new contract with EZ pass and <unk> announced another with Indiana.
Combined for an additional $35 million.
Dollar amounts again, representing over $110 million total do not include the option years, nor did they include change or follow on orders both of which are commonly associated with contracts that DTC and both of which can have a materially higher impact on final contract value and on lifetime margins.
As I mentioned at our AGM, we are very excited for the EZ pass opportunity.
Essentially we are building an interoperability hub for 40 tolling agencies spanning 18 U S. States. This enables seamless billing and transaction processing across all agencies assuring that drivers from different states are charged accordingly, as they travel from one state to another.
This contract combined with Atc's current operation of the Central U S interoperability hub effectively make ATC the interoperability provider for all tolling agencies east of the Rockies.
Over time, the EZ pass interoperability hub could become a foundation for mobility as a service transactions.
With any of the agencies enable us enables you to pay for tolls parking mass transit and other mobility services that could create new opportunities for ATC to expand the nature of this relationship to include these or other services and to develop a transaction based revenue model around them.
While we've had a good run of winning new business and our implementation and new sales pipelines remain full several factors in Q1 impacted our top and bottom lines in the Ics segment, which are largely timing related.
One is that there is seasonality in <unk> Q1, due to regular delays related to winter weather. This can impact project implementation and related billing and we saw some of that in Q1.
We see R&D is picking up in Q2 and into the second half of the year as we enter the stronger seasonal periods.
R&D also had a project for which certain costs were recognized in Q1, while related revenue will be recognized in Q2 and Q3.
At ECC certain new project implementations ramped up a bit slower than expected in Q1, but again nothing that we don't see us picking up during the remainder of the year.
We're definitely not talking about any lost opportunities in any way.
As an example in one case the customer decided to begin implementation on a series of smaller tolling lanes first rather than starting with a larger portion of their route network, which had been originally planned it doesn't alter the scope of the project just the timing of the work and the receipt of the implementation revenue associated with each set of lines.
The third factor relates to the macro economic forces that I spoke of on our European call in March which include both availability and cost of labor and supply chain issues impacting access to certain project materials.
Both had an impact in Q1, but we are working to mitigate that impact going forward.
The address supply chain impacts we are working to secure alternative sourcing adjusting operations and working with customers to get hardware orders and much earlier programs.
On the labor side, our Ics businesses have strong cultures, and we're doing well retaining staff, which is certainly a competitive advantage. These days.
Nominate the significant amount of new business. This year, we continued to add resources in our recruiting experienced hires while also ramping up college recruiting offshore capabilities and other sources of technical talent.
Finally, each recognized both supply chain and labor cost, we are aligning our proposals and pricing to reflect the realities.
The outlook for the Ics segment in 2022, we have work to do but our view has not changed from our year end call and we continue to expect growth for the year from that Q4 revenue run rate with an adjusted EBITDA margin in line with that generated in Q4.
Looking out two to three years, we're targeting an adjusted EBITDA margin at 15% and we will get there through revenue expansion and a greater percentage of higher margin revenue.
Higher margin revenue projects.
As they move into the operations phase.
Well is there cost savings at the corporate and segment levels.
I'll spend a few minutes now discussing my top priorities for the next 12 to 24 months, which serves to underpin our growth and margin objectives.
First is to focus our solutions on the top III mobility challenges today, which in our view really equate to three undeniable trends in the market.
First is user funded infrastructure and revenue generating solutions.
As I've mentioned on prior calls there is a multi trillion dollar gap between infrastructure funds and needs as government struggled to finance infrastructure projects user funded infrastructure projects like tolling offer of fear and impactful solution.
<unk> is strong in this area with its drilling solutions as the XI or D offers tolling, along with Red light and speed cameras, and the evolving future of weight based charging for commercial vehicles.
The second area is safety, where their ever growing demands for improvement.
Safety is an R&D strength with its leading way in motion as higher anomaly solutions for commercial vehicles and growing capabilities in red light and speed enforcement DTE.
Ptc's tolling solutions also have a role here as studies have shown that fatality on toll roads are one third of that on non toll roads.
Sustainability is the third industry challenge, where governments are making ever larger commitments and are in need of technologies to meet those commitments, both <unk> and ATC have solutions that address environmental priorities, including managed lanes and congestion pricing of DTC and <unk>.
IRT is traffic management bicycle detection in way it motion solutions among others.
Staying ability is certainly an area, where we will continue to expand in the coming years.
We have a great industry reputation to leverage in these areas. For example, UTC has received the highest technical scores in every procurement. It has participated in the last three years.
D has differentiate differentiated technical capabilities across the commercial vehicle unfortunate space and continues to expand and smart cities and we will continue to elevate our solutions through internal development and M&A, reinforcing our strengths and sensors and software, while adding data and operational solutions that will help us move towards more.
<unk> processing and recurring revenue models.
My second priority is to continue with our strategic consolidation plan M&A remains a core of our approach going forward with our focus to add scale, which could be international or North America technologies, our operational capabilities that reinforce our leadership in our current markets and diversification via businesses that address usage.
Charging safety and our sustainability challenges in new markets.
We have considerable resources to pursue M&A, but we will continue to be patient and disciplined buyers.
Looking to pay reasonable valuations for opportunities with both good operational and financial profiles.
Our third priority is to continue to integrate the <unk> businesses and the corporate function at quarter Hill.
We do expect to see some modest decline in corporate spend this year, but it will be more of a transition year as we still have three portfolio companies are running the process for the wireless business and as we carefully optimize cost and fast growing in the fast growing <unk> businesses.
Savings will increase further in 2023 and beyond a larger portion of savings will take some time as some elements, especially third party services like insurance contracts have set expiration dates.
The integration between <unk> and ATC will focus on revenue technological and operational synergies cost efficiencies will be realized but given that we are in growth mode. At both businesses. These were required extra care.
On our Q2 call I will provide some additional detail on our integration plan and the savings we believe can be achieved in 2023.
On the personnel front one of my top priorities is to appoint a full time CFO search is well underway and we've made good progress we've narrowed down the field of candidates and expect to have an announcement in due course.
At the board level, we have added new leadership and expertise geared to the Ics strategy.
Steve Lewis Pamela steer and Kevin Stevenson have all joined the board since March I spoke about Pam and Rusty on our last call that just today, we announced that Ken will be joining the board.
Kim has had a distinguished career in the tech industry, having held leadership roles at Intel Lenovo HP and IBM and most recently she was responsible for a $6 billion P&L at net out leading their foundational data service business unit.
Notes during her eight years at until Chem advanced progressively senior roles that included Chief Information Officer, and Chief operating officer for Intel's Internet of things unit, which focused on Intel's expansion into automotive technologies.
Tim is currently on the board of Mitek systems and spent five years on the board at Sky works, both NASDAQ listed companies and both with capability central to Ics Scott.
Sky works as a $5 billion leader in wireless networking internet of things and <unk> semiconductor technologies, including automotive applications like cellular telematics, Lidar radar and camera technologies and vehicle to everything and communication.
<unk> is a global leader in mobile capture and digital identity verification solutions built on AI and machine learning, which is also very relevant to our Ics business.
We look forward to drawing on Ken's extensive tech background, and our knowledge and experience in emerging fields like AI and mobile capture Iot and their applications to the automotive industry to help us broaden our leadership in Ics.
In closing we are very excited with the opportunity in front of us today and are well positioned to execute on our organic and M&A growth plan.
It is an industry tailwind are significant and remain in place even into most of those markets.
We have a $4 billion.
<unk> sales pipeline and Ics, we have strong M&A deal flow, that's being generated internally from both <unk> and R&D as well as from our network of third party advisors, we have a leadership team.
<unk> experienced an ats and M&A.
And we have a strong balance sheet, giving us great flexibility to grow.
With that at this point I will hand, it over to Steve to talk through the financials Steve.
Yes.
Thank you Brett and good morning, everyone I'll take a look at key consolidated numbers as well as numbers from our Ics and licensing segments.
As Brent mentioned the April year over year topline growth was driven primarily by licensing activity at wilen in Q1.
<unk> revenue in Q1 with $37 8 million and included a full quarter contribution from EPC and media.
Acquired after Q1 last year compared to 11 5 million in Q1 last year.
As Brett mentioned, we expect a pickup in revenue from IRB in subsequent quarters on account of Q1 seasonality and one particular contract for which revenue was pushed into Q2 Q3 and at ATC certain projects experienced slower than expected implementation for which we expect to make up for lost ground throughout the course of the year.
Gross margin for Q1, 2022 was 55% compared to 34% in Q1 2021.
Gross margin increased in Q1 2022 due to the result from the licensing business.
Licensing gross margin rose significantly in the quarter to 63% compared to 25% in Q1 2021.
Licensing gross margin will fluctuate, depending primarily on the level of litigation and contingent legal and partner costs incurred in the quarter relative to the revenue generated.
Gross margin in the Ics segment with 28% in Q1 2022 compared to 40% in Q1 2021.
Ics margin reflect the recognition in Q1 of costs related to an IRB project for which revenue will be recognized in Q2 or three.
As well as government subsidy payment made in Q1 last year related to pandemic really that did not reoccur this year.
With the EPC business as we move through the initial implementation phases.
Projects with Ohio River bridges, Central, Texas, and Orange County margins in 2022 will affect that in the initial implementation year do you see the first two revenue tends to have a lower gross margin and the subsequent operational years that those contracts revenues.
Higher gross margin in a range of 30% to 50% with the higher end largely dependent on the level of charge orders involved.
Great change orders change orders can have a significant impact on the overall contract value based on EPC barcode track record change orders on average at the impact of multiplying initial contract value by a factor of more than eight times for example, a contract with a base period value.
$50 million would ultimately generate more than $400 million in revenue over its entirety.
Operating expenses for Q1 2022 were up on a dollar basis due to the addition of the acquired EPC and <unk> expenses and were down significantly on a percentage of revenue basis due to leverage any licensing operating model.
As Brent mentioned, we are not immune to inflationary pressures and particular as it relates to personnel resources and that did have some impact on expenses in the quarter.
We do expect expenses at the corporate level to have a modest decline this year with a more material reduction in 2023.
Consolidated adjusted EBITDA in Q1 was $79 1 million driven by wireless which built on its track record for generating cash flows to the business.
Adjusted EBITDA in the Ics segment will improve in coming quarters, as we pick up some revenue for which costs were recognized in Q1 as implementation activity accelerate.
Income before taxes was $71 1 million and taxes were $14 8 million or an effective rate of 21%.
Of the $14 8 million in income tax expense.
$14 2 million of deferred income tax expense.
600000 current income tax expense.
Cash used in operations was $8 5 million in Q1, and cash cash equivalents and short term investments were $60 2 million at March 31, 2022, compared to $72 $6 million at the end of 2021.
Working capital increased significantly to $176 9 million at quarter end up from $105 1 million at year end.
Accounts receivable jumped from $32 million at the end of 2021 to $158 1 million at the end of Q1.
The substantial portion of these receivables having been collect collected subsequent to quarter end.
Regarding the recurring return of capital to shareholders. We continue our quarterly dividend payments in Q1, and then on May four the board of directors declared the next eligible dividend of 125 cents per share to be payable on July eight 2022 for shareholders of record on June <unk>.
<unk> 2022.
In closing our outlook remains strong we have a focused strategy a healthy M&A pipeline.
Fundamentals in both our Ics and licensing segment and a very strong financial foundation to support our growth initiatives.
This concludes my review of the financial results and I will now turn the call.
Over to the operator for Q&A. Thank you very much.
Thank you.
Ladies and gentlemen, we will now begin the question answer session should you have a question. Please press the star followed by the one on your Touchtone phone.
Here with me to impart prompt acknowledging your request and your questions will be pulled in the order that you received.
Should you wish to decline from the polling process. Please press the star followed by the Q.
And if you are using a speaker phone please lift the handset before pressing any Keith one moment. Please for your first question.
Your first question comes from Maxim Baron from Cormack Cormack Securities. Please go ahead.
Hi, good morning.
Want to start off on the wireless business.
Business, there and I was hoping you could give us any sort of sales process update for that business or timing expectations from your end.
Good morning, and thanks, Thanks for the question.
As mentioned in the opening remarks, we did hire staff in Q1 and are working with them on.
Process diligently as.
As I had mentioned probably on previous calls we've been very encouraged by the inbound interest that we've received on.
On wildland since we announced the review earlier or late last year.
And that's only been confirmed by by Stout as we've gone into the process in fact, they've indicated or a business in this space, it's actually quite a bit more interest than they would normally expect to see so we're.
Very encouraged by what we're.
Hearing so far and.
Also about obviously the progress in the business itself.
With the performance in Q1, and the indications are that you end up having on the ultimate ultimate outcome of course, there could be several different.
Potential ways that a process like that will end, but given the interest in the creative ideas that we're hearing.
Yes.
The advisors, where we're very encouraged and optimistic about the outcome.
Great that's great to hear.
Just switching to the Ics segment I know you mentioned that sales pipeline seems to be strong.
Just hoping to get any color that you might have on change in demand from potential clients given the current market environment or anything youre seeing along the pipeline there. Thanks.
Yes, great question as well and actually both pipelines continue to grow they grew from the end of last year to the to the end of the first quarter. So.
The Ics segment, which is one of the one of the many great things about it.
Really isn't cyclical.
The infrastructure needs that are out there and some of those undeniable trends that I talked about before are not really going to change as a result of.
Macro conditions, so there could be things slowing slowing down or in some other speeding up but overall, we're seeing the pipelines grow and with the capabilities that we have two strong units as I mentioned in the opening comments.
The <unk> is getting the highest technical scores across all the competition thats in its bids and then likewise R&D is very differentiated technologies. So with the position we have the momentum that we have in the market coming from 'twenty, one and continuing into 'twenty. Two we expect that to continue on again even.
In the midst of.
The markets, which are getting tougher from a macro perspective.
Great that's great to hear and maybe just a quick follow up on that are you seeing any international progress yet coming in with <unk> or <unk>.
Wanted to see how you look at the geographical potential there.
Yes, there is absolutely.
Market for for OTC solutions abroad.
And with <unk> footprint in 80 countries that certainly becomes a great conduit for that and there are several.
Several opportunities already that both R&D and <unk> are working on internationally.
Do you expect those to develop more probably next year as opposed to this year.
In the meantime.
A lot of that $4 billion in pipeline that that.
We talked about that I mentioned earlier is actually in the EPC business and just in the United States. So there's still a tremendous amount of work and opportunity <unk> here, but that's just just expanding.
Nationally as well again, especially with.
The distribution if you will that already has already globally.
Okay.
Great. Thanks for taking my questions I'll pass the line.
Thank you very much.
Thank you.
And your next question comes from Todd Coupland from CIBC. Please go ahead.
Good morning.
I had a few good morning, I had a few financial questions and then the macro question.
First on.
Working capital, obviously is up a lot from the licensing.
How much of that should turn into cash and what is the timing on that please.
Alright, Thanks, Steve I'll, let you jump in on this.
Yes, I think.
We've mentioned that a significant portion of our AI and collected after quarter.
Quarter end.
If you look at our recent past couple of years, you can take a look particularly on the licensing segment look at our larger quarters when we.
Had significant revenue then look at our collection experienced in the quarter following youll see that.
There is a fairly.
Strong correlation on when we're collecting after.
After revenues.
Our entered into it from.
Licensing segment.
Okay.
So.
Like if we look at the December quarter.
You ended 30, roughly $30 million or 158, so is the messaging that year you've collected.
$125 million to $130 million something like that.
Yes, I can't I can't get into the exact amount, but I can just say that we're we've shown that we have significant collections following our quarters when we have.
Revenue Rec.
<unk> recognized in the licensing segment.
And we expect to continue.
Trend that <unk> been showing the past couple of years in that area.
Okay.
And then is there any residual tax on var that you haven't collected by the end of the quarter or is that just turned into cash whatever you end up collecting.
I think.
We provided a breakdown between our deferred taxes expense in our current tax expense and within the current tax expense.
Thats fair.
That's our accrual in our estimate for the quarter through the tax provision so.
We're following the <unk>.
I have asked the accounting rules on it.
Within that amount of current tax expense that you sometimes also have withholding taxes.
But.
But it does include.
Estimates of corporate tax expenses out.
Okay.
And sorry to be so technical on this but just trying to understand.
The net cash looks like and are there any other sort of like fees or or royalties that need to go to third parties or that what's there is yours.
Yes so.
That's a good question.
We've spoken before about our contingent.
We have ongoing litigation expenses.
In the licensing.
<unk>.
Our expense in the quarter, which included incurred when we when we conclude licensing.
There are contingent expenses from partner fees as well as well.
The litigation partners that are out and they would be accrued in the quarter in which the licensing is incurred.
Got it okay great.
Okay, that's great.
And then just on the Opex $21 million I know youre going to talk about synergies with strategic.
Refocusing I guess in Q2.
<unk>.
Is there any way to size, though.
What that would look like just for the EPC business like percentage wise, the $21 million is it like three quarters of that number 90% any.
Have any any color you can provide on that.
Okay.
Yes, I guess.
Yes, Steve I don't know if you have anything.
Don't know if theres any additional color that we can provide right now.
On one versus the other Steve I don't know if <unk> got any other.
Comment.
I think just referring to what we provided in our MD&A on the breakdown there is sort of what we can disclose on on our operating expenses and the breakdown between the segments.
Yes, okay.
Right.
Fine.
And.
Two macro questions. So first on.
ETP.
It was interesting to hear your commentary about focusing on infrastructure that can get funding.
And I'm, just wondering that segment of the market with all the trends that you spoke about do you have.
And expectation for market growth.
So the slice of the market that is likely going to get the funding that you were talking about is this a single digit growth.
Many of the market.
High double digits any any any color along those lines would be interesting.
Yes, absolutely.
The tailwind.
And this space R. R.
Very impressive and again sustainable.
Really talk about it in terms of undeniable undeniable trends and it goes back multi trillion are GAAP has to be filled and so that that's where it comes back to the need for user funded infrastructure in the U S. Just a couple of data points.
I think the number of miles driven and I believe went up by something like 20% over the past number of years, but Meanwhile, 65% erosion bridges are in need of repair so given that our combined than some of the safety and sustainability objectives that are out there.
CAGR for this industry used to be more in the 5% realm, but the market studies that we have shaw going to 15% over the next over the next five years.
It's a massive market and.
Accelerating in growth given all of those those trends that are behind that and again, that's where we're excited about the position that we already have and user funded infrastructure and safety and with it is to growing our presence in other parts of those two areas.
If you think about road usage true.
Additional tolling is.
Defined road.
With points Ada be that that get charged for it but we're starting to see already in different parts of the world congestion zones.
Around entire perimeters that help help.
To help collect revenues, but also manage environmental priorities and increasingly we're seeing road usage charging models experimented with as well here in the U S too.
So we just see that continue.
Continuing to accelerate.
Across the board because it has to be.
The way that.
That infrastructure can get funded given that the shortage of other revenue sources and declines in things like the gas tax which is the traditional method.
Okay.
That's interesting. Thank you for that and then my last question is on on M&A.
Are you seeing valuations come down with the overall market.
<unk>.
And are you contemplating.
I know you gave the categories of the areas, where you could add but for you are you in that context are you contemplating also transformational deals.
And if so just talk about what that might look like thanks a lot.
Sure Yeah on the first question, it's something we've been talking about it.
Probably a bit early to tell but usually.
The public public markets tend to affect the private deals as well.
But it's a little early to say that in specific conversations.
We are having.
And in terms of the kinds of deals that we're looking for you I mentioned the areas scale and capabilities that reinforce our technical leadership and then diversification.
And really weird.
Most of the deals that we are going to be looking at.
Tuck in category, so those would fit inside either IRB or ATC, but we also do.
Keep keep our eyes open for transformational deals or other kinds of platform deals as well those are again, they're going to be.
Fewer.
Given their very nature, but we're certainly.
And to those as well mainly.
We want to maintain.
Reinforce the strategy that we have on the growth in the areas that I outlined but we're going to be disciplined in our approach and make sure that.
We are paying appropriate valuations for the assets that we're getting and then specifically looking for things that are accretive.
Both from a multiple and a margin standpoint.
Great. Thanks, a lot appreciate it.
Thank you. Your next question comes from Andy Nguyen from Raymond James. Please go ahead.
Hi, Brian This is Andy I'll, just be evenly just wanted to follow up on the.
Licensing payment and I know you guys can I get into the detail, but could you guys give us some color on win.
Can you expect the payments to Epo accounts on the cash.
Right.
Okay.
Yeah. Yeah go ahead, Steve if you have.
Yes, I think I think we are.
If you can take a look at.
What we've said about it being a collections.
Quarter end being.
Being substantial.
I think that that's that's what we're talking about today and.
I think we can look at the last couple of years of history on how.
Our licensing segment, how the collections come in following quarters and Youll see Youll see.
I guess.
Thank you a picture of what your expectations could be in that area, but we can't comment directly on the exact amount of what we collected since quarter end. Thank you.
Got you. Thank you I'll pass it along.
Okay.
Thank you.
Ladies and gentlemen, just as a reminder, if you do have a question. Please press the star followed by the one.
And your next question comes from Nicholas quite tell Lucy from M Partners. Please go ahead.
Good morning, guys.
On the quarter, especially on the.
Been a long time coming.
I had a question about the Ics.
So.
In Q4, you guys posted 9% EBIT margin.
We are guiding for that around there going forward. So is that still a number you guys are comfortable with given the timing delays in the supply chain issues.
Hi, Yes. Good morning, Thanks for the question.
Yes short answer is yes, we believe that's the.
The right way to think about this year on the margin side I guess, one point to make is that because of the seasonality, especially in the in the in the.
<unk> business.
Our plan did not call for margins that were the same as Q4, so thats sort of anticipated.
We came in.
A bit below that.
But given the.
<unk>.
Move out of seasonality in terms of the Iot business and also.
The success that they're having in the market with some new wins that we've announced and there is others that we.
We haven't yet, but we're we're progresses.
It continues to move along on some other deals as well we feel good about.
The overall.
That overall direction for marginality this year.
Okay, great. Thank you.
And then on the M&A.
I was kind of wondering just what's been holding you guys back from doing some tuck ins you guys have had some dry powder for a few quarters now.
And we haven't seen anything so.
Multiples are.
Are you going to wait and in discussions with certain files, just some color there would be helpful.
Yes, I'll just say that we are active in the market and so we've had multiple multiple conversations.
Over the last over the last couple of quarters and are continuing to have those we are.
In advance.
Advanced stage discussions on a couple and.
And there have been some others where.
We could have been further down the path, but kind of pointing back to that sort of a disciplined approach.
We're being cognizant of the valuations and sort of the appropriate.
Fitness.
The price relative to what we're getting both operationally and financially so.
We do expect.
More progress on that front I think this year of course, it's really hard to predict time the timing of.
Of M&A deals, but we do expect more more progress this year.
Okay, great. Thank you for that those are all my questions I'll jump back in the queue.
Okay. Thank you.
Okay.
Thank you.
And there are no further questions at this time Mr. Kim you May proceed.
Okay. Thank you again I. Thank you everyone for joining the call today.
Good listening with with all of you and just to reiterate sort of the final comments that I made before.
About the position that we're in where we are excited about the strategy that we have the units that we have in place certainly the momentum from from Wilen in Q1, but also across the Ics part of the portfolio as well excited about this year and where it's going to go and then certainly the yes.
Continued growth and margin expansion over the over the next couple of years is something that we.
We're confident and excited too to realize so thank each of you participating today.
Look forward to speaking with all of you and keeping you up to date in the coming months.
Thanks and have a good day.
Yeah.
Ladies and gentlemen, this concludes your conference call for today, we thank you very much for participating and ask that you. Please disconnect your lines have a great day.