Quarterhill Inc

TSX:QTRH

Earnings Call Transcript 2021-Q4

[Operator]

Good morning, and welcome to Quarterhill's Q4 and Fiscal Year-end 2021 Financial Results Conference Call. On this morning's call, we have Bret Kidd, President and CEO; and Steve Thompson, Interim Chief Financial Officer.

[Operator Instructions] Earlier this morning, Quarterhill issued a news release announcing its financial results for the 3- and 12-month periods ended December 30, 2021. This news release, along with the company's MD&A and financial statements will be available on Quarterhill's website and will be filed on SEDAR. Certain matters discussed during today's conference call or answers that may be given to your 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, Quarterhill will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. Please refer to Page 3 of the company's fiscal 2021 management's discussion analysis for full cautionary notes regarding the use of forward-looking statements and non-IFRS 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. Kidd. Please go ahead, sir.

[Bret Kidd, executive]

Thank you, and good morning, everyone. Thanks for joining us on today's call. In terms of agenda, I'll start with a look at business highlights for Q4. and the year, followed by a discussion on our strategy and priorities for 2022. 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, Q4 consolidated revenue was $51.2 million, while revenue for the year was $125.7 million. Adjusted EBITDA was $878,000 in Q4 and $5 million for the year. Q4 results include a full quarterly contribution from ETC, which is reflected in the strong performance of the ITS segment, which generated revenue of $46.5 million, compared to $17.6 million in Q4 of last year. Adjusted EBITDA in ITS in Q4 was $4.1 million.

For the ITS business, 2021 was characterized as a year of M&A with the completion of 3 acquisitions, ETC, Sensor Line and VDS. The $150 million acquisition of ETC brought about transformational changes for Quarterhill. It immediately scaled Quarterhill's ITS business, it established Quarterhill as a leader in tolling, it provided a second platform in ITS for tuck-ins and organic growth and delivered a good integration partner for IRD. And it also onboarded a deep and experienced ITS team with a sales pipeline of more than $4 billion and strong organic growth potential.

ETC completed some of the largest contracts in its history in 2021, resulting in a record year for order bookings and the momentum has carried over into 2022 with 2 new deals announced already this year. In Q3, just prior to the acquisition, ETC signed a contract to provide back-office ERP solutions to the Ohio River Bridges Joint Board. The base value of the 10-year agreement is approximately $100 million, with options to extend it another 6 years beyond that.

In December, ETC announced a contract with the Central Texas Regional Mobility Authority or CTRMA, also valued at approximately $100 million over a 6-year base period, options on that agreement could extend it another 4 years. ETC's track record of securing option years has been very strong. So we would expect the total value of the contracts -- these contracts to be much higher over their lifetimes.

In 2022, so far, we have completed 2 new agreements. First is a 9-year $60 million subcontract agreement with WSP USA to provide our back-office system for the 405 Express Lanes in Orange County, California. Second is a 2-year $5 million contract to implement and operate Express Lanes in Alameda County, California. This is a short-term interim solution while the toll agency finalized its procurement plans for the expansion of the roadway network and integration of a permanent tolling solution.

Another key development at ETC in 2021 was the appointment of Kevin Holbert as CEO. Kevin is an accomplished leader with more than 30 years in the ITS industry and almost 20 of those years with ETC. He knows both the industry and the ETC business inside and out and has been an instrumental person in bringing new business and new talent to the company. He is the right person to lead ETC today as it seeks to capitalize on its large pipeline and explore collaboration with IRD.

IRD has also had a record year for order bookings in 2021 with new contracts in New York State, Illinois, Idaho, Oklahoma and Hawaii, among others, resulting in a record backlog at the end of the year. On the implementation front, considerable work was done in Indiana, which has been the company's largest project over the past 18 months. IRD is deploying its Weigh-in-Motion systems to promote safer roadways and with an eye to using its data collection expertise to facilitate direct enforcement capabilities in the future.

Earlier this month, IRD announced another $5 million contract with Indiana further extending this relationship. Weigh-in-Motion systems were also deployed in Ohio in 2021 with the potential for IRD's technology to be used in the future to enable weight-based towing for trucks. In Virginia, IRD's TACS system, which is used to identify unsafe tires at highway speeds was responsible for removing 13,000 faulty tires from the road in 2021. TACS is now deployed in 12 states, and these results in Virginia have garnered interest from several other neighboring states.

IRD made 2 tuck-in acquisitions in 2021, Sensor Line and VDS, which have expanded the company's enforcement offerings as well as their presence in Europe. The transactions led to the establishment of IRD Europe and the hiring of Heimo Haub in January to lead the organization. Heimo's priorities for 2022 are integration and growth. They'll have to further integrate processes, functions and development across the European business, while driving growth in the safety and enforcement products in the IRD portfolio, such as red light and speed cameras, sensors and traffic intersection control solutions.

Looking now at WiLAN, our licensing business. It was a year characterized by a number of licensing and patent acquisition successes, while continuing with challenges posed by the pandemic. Throughout the year, COVID was a hurdle for licensing and business development travel preventing in-person meetings, and the courts experienced continued COVID-related delays and rescheduling as they work through their backlog of cases. Despite this, WiLAN completed several licensing deals with the likes of LG, Motorola and Marvell, among others, and generated positive adjusted EBITDA for the year as a whole, which was WiLAN's fourth positive adjusted EBITDA in the past 5 years.

WiLAN's new subsidiary, Universal Connectivity Technologies, Inc., acquired a portfolio of patents in Q4 2021 from a leading semiconductor company. The acquired patents relate to a wired connectivity, including various USB-C technologies used in applications such as desktop and laptop computers, tablets, mobile phones, gaming consoles and smart TVs. This new portfolio establishes a new licensing program addressing several new market segments.

In terms of ongoing litigation subsequent to 2021 year-end, we received a decision from the Court of Appeals for the Federal Circuit or CAFC in the U.S. in the case against Apple Inc. As noted in our press release on February 4, we view that appeal decision as favorable to WiLAN. The CAFC has handed the case back to the District Court for another trial focusing on the amount of damages payable.

Polaris Innovations Inc, a WiLAN subsidiary, also has pending litigation against Apple in Germany. There are 3 infringement hearings scheduled during 2022, corresponding to the 3 patents in suit. In addition to these cases, WiLAN or its subsidiaries has several other litigations and ongoing licensing discussions that are expected to move forward with in 2022.

In December, we announced a strategic review for the WiLAN process -- sorry, for the WiLAN business. And we're encouraged by the inbound interest that we've received since the announcement was made. WiLAN is one of the licensing industry's leading companies, having established a strong track record over the past 15 years. WiLAN has a diverse collection of patent portfolios that have been successfully licensed to many companies around the world by a focused and experienced team of IP professionals.

The process is underway, and Stout has been hired as the financial adviser to run the review. Stout is a global investment bank and advisory firm that has served companies in more than 80 countries over its 30-year history. With its substantial experience in IP transactions, we believe that Stout will be an excellent adviser to assist with the WiLAN strategic review process.

Turning now to our strategy and priorities for 2022 and beyond. For several years, we have spoken of our focus on ITS and in 2022, we'll continue to transition towards that of a pure-play ITS business. In my opinion, there has never been a better time to be in ITS. The industry has multiple market tailwinds and including first, that simple need for new and upgraded infrastructure; second, an inadequate funding from traditional sources like the gas tax, which will be increasingly supplemented by newer tech-based user-driven solutions like tolling and enforcement. Third, yes, federal government infrastructure bill, which will see it allocate billions for new infrastructure projects in the coming years, which is a trend that we're seeing worldwide.

Finally, policy initiatives related to sustainability objectives, traffic management and enhanced safety are driving governments at all levels to look in tech-based infrastructure solutions. These tailwinds are having the effect of increasing the industry outlook for growth into double-digit percentages. Historically, ITS grew with a rate in the neighborhood of 5% per year. But over the next several years, it is expected that the industry could grow at a CAGR of up to 15%.

Quarterhill is well positioned to capitalize on this growth. We have 2 strong platform businesses in ETC and IRD, both have talented teams and a strong reputation in their respective fields, where for ETC it's tolling and for IRD it's commercial vehicle operations and enforcement. Both are coming on record years in terms of new order bookings, having grown backlogs and sales pipelines and both have internally generated pipeline for M&A to go with the external deal flow sources.

So against this backdrop, our key priorities in 2022 are first, to drive organic growth with the execution on new project implementations and sales pipeline conversion; second, execute on our M&A opportunities; and third, integrate further our ITS businesses. On the M&A front, we have previously spoken of a commitment to deploy $400 million over 5 years on M&A, and we continue to work towards this goal. In 2021, we deployed $160 million of capital on M&A. And in the fall, we added a $57.5 million -- added a $57.5 million to the balance sheet with a convertible debenture financing. Along with our working capital and additional flexibility in our debt facility, we have a strong balance sheet to deliver on our M&A effectives and we have good deal flow for transactions of all sizes.

Our M&A will focus on 3 areas: first, scaling existing businesses, which could be either international or in North America; second, adding product service capabilities, including technologies or operational assets that reinforce the markets we're already in, or third, diversifying into new customer bases or in markets, which typically will also leverage our existing solutions. On the integration front, while IRD and ETC will continue to operate with their unique branding, we see lots of opportunities for the businesses to work together and leverage one another strengths.

With cost synergies, there are some savings to be had in certain administrative areas but by and large, the businesses are in fairly unique verticals and operating independently. With operational synergies, we are already starting to get some talent benefits between the 2 companies, project implementation time lines for either IRD or ETC can lead to a spike in the need for engineering or other skill sets that can then tail off over time. The businesses are thinking about that talent pool collectively and how they can start to harmonize the need for these specialized skill sets.

Regarding technology roadmaps and product plans for the 2 businesses, even though they are focused on different areas, there are some foundational types of technology that if developed together can benefit both. Computer vision is one example. It is expected that over time, the industry will move away from transponder reading to using more intelligent cameras to identify vehicles. Broadly speaking, computer vision can enable this. Both businesses had plans to make investment in this technology so we can work together to better maximize that investment.

On the revenue side, there have been times in the past when ETC partnered with IRD, and we'll see more of that going forward. Already, there are a number of international deals that IRD has insights into for where ETC could potentially play a role. In the U.S., we are seeing some places where there is overlap in the customer pulls with select state or local entities and it's still in early days, but ETC is starting to see opportunities where IRD's traffic management solutions could form part of a more holistic offering to the customer.

In summary, we're very pleased to see how the relationship between the 2 businesses has developed so far, and we have only scratched the surface of the potential collaboration between the 2. Our recent contract wins in ITS suggest that we should see growth in 2022 revenue from our Q4 2021 run rate level with the new revenue coming on board more than offsetting a few projects that are rolling off this year. In addition, we think that adjusted EBITDA margins in 2022 should resemble those in Q4 but it will expand in subsequent years towards a targeted level of 15% as some of those major projects move into the operations phase.

Finally, as our business continues to evolve, we'll look to add leadership and expertise to help us execute on our strategy and capitalize on the opportunity in ITS. Along these lines at this year's annual meeting on April 21, we're looking to add 2 new board members, Rusty Lewis and Pamela Steer. Rusty is a veteran with the ITS industry and played an instrumental role in creating and leading TransCore, one of the industry's leading tolling companies.

Pamela has more than 20 years of experience in accounting and finance from a variety of public and private corporations and professional services providers, including C-suite experience and transaction processing, which makes her well positioned to provide insights into our tolling back-office systems and interoperability opportunities.

More information on both can be found in our circular, which is now available on our website. We look forward to their contributions as we pursue both organic and acquisition-related growth opportunities for the business.

With that, I'll turn it over to Steve to take a closer look at our financials.

[Stephen Thompson, executive]

Thank you, Bret, and good morning, everyone. I'll take a look at key consolidated numbers as well as numbers from our ITS and Licensing segments. Starting at the top line. Consolidated revenue in Q4 was $51.2 million and $125.7 million for the year. ITS revenue in Q4 included a full quarter of contribution from ETC and was significantly higher at $46.5 million, compared to $17.6 million in Q4 2020. Q4 2021 revenue also included revenue from Sensor Line and VDS, which were acquired earlier in 2021.

The Central Texas and Orange County contracts represent 2 of the 3 opportunities mentioned on Quarterhill's last conference call where ETC has been selected as vendor of choice but had not yet signed a contract. At the time, we were either in the standard protest period post-election or we're in the final contract negotiating stage. Regarding the third opportunity, we are currently in contract negotiations and expect to announce completion in due course.

Licensing revenue was up in Q4 compared to Q4 last year, but down year-over-year due to significant licensing activity in Q3 of 2020. Despite the headwinds related to COVID-19 WiLAN continues to show a -- complete agreements in a challenging environment, while simultaneously planning for the future and adding to its patent portfolio. Consolidated gross margin was 24% in Q4 and 30% for the year. ITS segment gross margin was 28% in Q4 and 34% for the year. Gross margin in ITS can fluctuate depending primarily on the nature of the projects underway during the period and the related margin profile.

In addition, since more than half of our ITS revenues are denominated in U.S. dollars, currency volatility between the U.S. and Canadian dollar can impact margins. As we move through the initial implementation phase of projects with Ohio River Bridges, Central Texas and Orange County, margins in 2022 will reflect that in the initial implementation year. It's usually the first 2, revenue tends to have a gross -- have a lower gross margin in a range of 10% to 15%, while in the subsequent operational years of those contracts, revenue has a higher gross margin in the range of 30% to 50%, with the higher end largely dependent on the level of change orders involved. Gross margin at WiLAN will fluctuate depending primarily on the level of litigation and contingent legal and partner costs incurred in the respective period relative to revenue generated. For the full year, WiLAN had gross margin of 15%.

Total consolidated operating expenses were higher year-over-year in both Q4 and the full year period. The increase in operating expenses was primarily driven by the addition of the cost base of Sensor Line, VDS and ETC, as well as by special charges which primarily represented acquisition-related costs.

During 2022, we will take steps to establish an optimal cost structure for the business as we continue the shift towards more of an operating company structure versus that of a holdco with operating entities beneath it. 2022 will be a bit of a transition year in that respect. Consolidated adjusted EBITDA in Q4 was $878,000 and $5 million for the full year period. On a segmented basis, the ITS business generated adjusted EBITDA of $4.1 million in Q4 and $12.7 million for 2021. Adjusted EBITDA benefits from the addition of ETC, Sensor Line and VDS, via acquisition. However, those increases were offset by a high-margin project in Indiana, which occurred during the second half of 2020.

Government expense relief programs that were in place in 2020 due to COVID-19 and foreign exchange fluctuations, which negatively impacted revenue and margins in 2021. WiLAN's adjusted EBITDA for 2021 was $1.2 million, demonstrating its ability to generate positive margin on more modest levels of revenue and which reflects the leaner business model put into place in recent years. Cash generated from operations was $794,000 in Q4 and cash used in operations for the year was $13.3 million. Cash, cash equivalents and short-term investments were $72.6 million at December 31, 2021, compared to $141.3 million at the end of the prior year.

During 2021, we used appropriately $88.2 million of cash, including transaction costs, from the balance sheet on the acquisition of ETC, Sensor Line and VDS. Working capital stood at $105.7 million at year-end. We had several positive developments regarding our capital structure in 2021, which were: the addition of a debt facility totaling approximately $82 million, of which $75 million was used for the ETC acquisition; the filing of a preliminary shelf prospectus with capacity to raise up to $200 million over a 25-month period; and we also raised $57.5 million of convertible debentures in October. Collectively, these give us further flexibility and resources to pursue M&A.

Regarding the return of capital to shareholders, we continue our quarterly dividend payments in Q4 and in our March 10 press release, we announced details of our next dividend payment. The Board of Directors has declared an eligible dividend of $0.0125 per share payable on April 8, 2022, for shareholders of record on March 18, 2022.

In closing, we remain well positioned to continue to execute our M&A strategy. We have a strong balance sheet today with cash and working capital, and we have 3 operating companies capable of generating cash to further support the ITS acquisition strategy. ITS revenue comes with a more steady and predictable profile, which we believe should result in Quarterhill elevating its profile in the investment community, receiving a valuation consistent with other public ITS companies at scale and ultimately unlocking growth in shareholder value.

This concludes my review of the financial results, and I'll now turn the call over to the operator for Q&A. Thank you.

[Operator]

[Operator Instructions] Your first question comes from Steven Li with Raymond James.

[Steven Li, analyst]

A couple of questions for me. First on licensing. So now that the sales process is underway, are you still out there signing licenses and therefore, 2022 is going to be a normal year for licensing or should we expect licensing activity to be down substantially?

[Bret Kidd, executive]

Steven, thanks for joining. What I'll say is that the -- we did announce the strategic review and the process is underway. But WiLAN is being run as the strong business that it is. So we'll continue to seek licenses and work the business as we always have historically.

[Steven Li, analyst]

All right. That's good to hear. And on ITS, so EBITDA margin in the quarter was -- with a full quarter of ETC was high single digit. Given the number of new contract wins and your prepared remarks about lower margins early on. So is that high-single digit? Is that a good margin level for the entire year or you still expect quarterly progression through the year?

[Bret Kidd, executive]

Yes. We do think that the numbers that you see in Q4 on the margin side are probably indicative for the overall year. There's a couple of things that relate to that. One is that with the new wins, we do have a much higher proportion of implementation revenue in the ITS business, which as we indicated is -- tends to be lower in margin. And then there are still some of those headwinds that we're looking at on the supply chain side and or wage inflation. Over time, as we were talking about, we see 15% EBITDA margins is the right target and expectation in the coming years and as those contracts mature.

[Operator]

Your next question comes from Gavin Fairweather with Cormark.

[Gavin Fairweather, analyst]

I thought I'd start out just on the infrastructure bill. I guess it's been about 100 days since that was passed. Curious to what extent that's changing your conversations with customers, whether it's changing any activity in the pipeline? Just curious for how that's influencing the demand picture there?

[Bret Kidd, executive]

Yes. Kevin, the -- it is starting to work its way through as you might expect, these sorts of bills do take time to reach the ultimate states, although some of the states that we've talked to already had provisions in place, plans ready to go and ready to move out of the door. So I think especially on the IRD side of the business, we're seeing more activity as it relates to it because the funds are now more available. The ETC pipeline was already very strong prior to the infrastructure bill and is -- will just be reinforced by the activity that's underway.

[Gavin Fairweather, analyst]

Got it. And then maybe on ETC on the new contracts, obviously, $160 million is a big number. How should we think about, number one, the revenue ramp of these new contracts and the timing of revenue starting to flow? And secondly, to what extent is their front-end loading on these contracts related to implementation services? I think if I did the math right, if it was steady across all years, it would be $20 million a year, but I suspect that the early years will be a bit higher.

[Bret Kidd, executive]

Yes. It's a good question and there are actually -- there's variability amongst the contracts on the revenue profile. Generally speaking, you will see some amount of front loading over the first couple of years around implementation, but there are times that programs and the implementation itself will be spread across several years if we're talking about multiple roadways or different phases of the project.

So it will vary a bit but I think the average that you're talking about there over time is probably the right one to think about. And given some of the variability in the programs, probably not a bad assumption. We are working through as it relates to timing and ramp up. There are always some things there to manage, but we've got notice of proceeding on all those contracts and are getting underway with each.

[Gavin Fairweather, analyst]

And then lastly for me, obviously, with the strategic review of WiLAN and becoming an ITS pure play, the plan is to reduce the corporate office and kind of dissolve that holdco structure. Have you quantified the cost reductions that you'd be looking to achieve as that plays through there?

[Bret Kidd, executive]

We haven't yet. I think what I can say is that we'll be looking to reduce the size of actual dollars, but also even more so the percentage of revenue as the ITS businesses grow organically and as we continue to do M&A there. I think we will see perhaps some modest dollar reduction in 2022. But given that we will -- assuming a successful result on the WiLAN process, which we expect that we will still hold them for a good portion of the year. And so a number of things that still have to take place as a result of that.

And plus, we're still underway on the implementation -- or sorry, the integration planning side to quantify some of the other areas, which will also -- some of those will take some time, especially if you're looking at different kinds of support contracts and things like that, that would be renegotiated. So I don't have numbers to share yet for '23. But for '22, we would expect to see, again, some modest declines in the overall cost. And then what we'll be doing from an integration standpoint is looking across, obviously, all the components and trying to optimize and have the right degree of support and overhead across all the units. So that will include looking beyond the corporate structure and into the units and how they operate as well.

[Operator]

Your next question comes from Doug Taylor with Canaccord.

[Doug Taylor, analyst]

One primary question for me. I'm just trying to understand your comments about the margins in the ITS business relative to the original expectations for ETC to contribute, I believe, it was $95 million to $120 million in revenue and $12.5 million to $15 million in adjusted EBITDA. Are you signaling here that with the recent contract wins, perhaps revenue is maybe higher than your original expectations, but margin is lower, given the mix of new contracts and implementation work. Can you help me with that?

[Bret Kidd, executive]

Yes, it's a good question. And I think probably a good way to say it, I think, that we feel good, we feel good about the growth that we're going to see, as we indicated in the upfront comments, we would expect some modest growth off of the -- off of an annualized version of Q4 in 2021 related to the new contracts that are being signed. And then as it relates to EBITDA, the yes, that mix combined with some of the other areas that I referred to on supply chain and wages are performing a little bit more of a constraint on the margin side. Does that help?

[Doug Taylor, analyst]

Yes, it does. So are you saying that still possible that ETC will generate $12.5 million to $15 million, but it will be a different margin profile than what might have been laid out at the outset?

[Bret Kidd, executive]

I really don't want to get into specific guidance along those lines because of the -- some of the moving parts that we talked about before in terms of the timing of ramp-up and then some of the other variables that are coming in. But I just go back to the kind of modest growth off of the annualized Q4 and then similar margin profile.

[Doug Taylor, analyst]

So then taking the Q4 kind of run rate that you've established here, I mean, would you still expect seasonally stronger Q3 -- or Q2, Q3 in terms of the IRD business and -- so to use this as a baseline and a little bit stronger through the middle of the year, but arriving at the same margin profile and then expanding in the years to come after that. Is that the right way to think about it?

[Bret Kidd, executive]

Well, I have to get back to you on the seasonality piece for IRD. I need to take a closer look at some of the incoming deals and the time frame associated with it. So I don't know if there's necessarily a pattern to interpret there, at least for this year and given the amount of signings that they had as well. So I'm not sure if I could confirm that, but we can get a better sense to you from a closer look at the deals that we signed in the backlog.

[Operator]

Your next question comes from Todd Coupland with CIBC.

[Thomas Ingham, analyst]

I just follow up on that margin question, if I could. And then I had a couple of follow-ups. When you say similar margin profile, what is that actually referring to?

[Bret Kidd, executive]

To what we achieved in Q4.

[Thomas Ingham, analyst]

I see. So you're saying modest growth of the $51 million annualized and a relatively comparable margin, given inflation, supply chain, et cetera. That's essentially the message?

[Bret Kidd, executive]

Yes, that's right.

[Thomas Ingham, analyst]

Okay, okay. And that includes all these new contracts that you've spoken about as well, whether it's $20 million a year or spread out or front-end load or anything like that, that's all embedded in that discussion?

[Bret Kidd, executive]

Yes, that's right.

[Thomas Ingham, analyst]

Okay. In terms of the balance sheet for all acquisitions and capital activities, is it up to date as of the end of the year. Are there any pro forma adjustments or cash and debt as presented that's essentially where it is now?

[Bret Kidd, executive]

I'll let Steve jump in on this, but what I will say just from a balance sheet standpoint and kind of capacity as it relates to M&A, we feel good about the position that we're in. We've got strong balance sheet overall and then we've got cash and debt facility and other things that we can do to act on the pipeline that we have. And then I'll let in Steve, kind of, refer to the detailed parts of the questions.

[Stephen Thompson, executive]

Yes. Todd, it's relatively the same right now as the structure you're seeing at 2021. There's been no major material events in that area.

[Thomas Ingham, analyst]

Okay. That's great. Appreciate that color. And then just on WiLAN and strategic review. It sounds like you've had some interest in the business. So our takeaway should be -- you feel pretty good about the chances of selling that business at a price you deem to be fair. Is that the messaging on strategic review?

[Bret Kidd, executive]

Yes. So I mean we -- since we announced in December, we've had a very nice inbound interest in it and in the conversations we had in the selection of an adviser, we've got a lot of good insights from them and especially staff as to the attractiveness of the business. So we do feel good about a positive outcome there for lots of different reasons. Just again, WiLAN has a track record of performance. They're one of the best licensing companies in the industry and have a history of generating very, very nice financial returns.

So when you look at that, the processes they have, of course, the portfolio of patents that they have and the team that's in place, we just believe that there's a lot to like in that business. And then look at the broader market activity as well, the money that's looking for attractive assets like that. And in this particular IP space, we just think it lines up well for a successful outcome.

[Thomas Ingham, analyst]

Okay. This is by no means, this is more of a sort of editorial observation as opposed to drawing the parallel, specifically to WiLAN. But I thought the BlackBerry patent sale, I wouldn't have necessarily described that as a pristine outcome. It was fairly slow and dragged out and the price was just okay. So this seems like you're getting a lot better interest than they ended up getting or at least that's my perception of what happened at BlackBerry. So take that for what it's worth. But appreciate your answers here.

[Bret Kidd, executive]

Yes. And I will say -- yes, thank you too. I appreciate your joining. And -- yes and the one thing to stress there and kind of relative to BlackBerry is that you have WiLAN, a complete business with team and strong portfolio and processes and methodology for optimizing returns. So -- but yes, certainly appreciate the questions there.

[Thomas Ingham, analyst]

Yes. That's a good point on the business being established if PE or other types of financial firms are considering it. That's certainly a very important point.

[Operator]

As we have no further questions at this time, I will turn the call over to Mr. Kidd for closing comments.

[Bret Kidd, executive]

Okay. Thank you very much, and thanks, everyone, for joining and for the questions today. Again, just want to reiterate some things that I said before about the attractiveness of the space that we're moving into and as it relates to ITS and this transition to a pure play in that regard.

As I mentioned before, I just don't think there's been a better time to be in ITS and having seen a number of different industry verticals over time, rarely see anything as attractive as what we're seeing here in terms of the tailwinds on the market side and really undeniable trends that we just don't see changing. And then we've got some great platforms to build from that have very strong momentum in the market, strong technology and strong teams as well.

And then we will expect to see some growth here in '22 as we were talking about before, related to the new business signings that both IRD and ETC have had, and then margins on the ITS business, similar to what we're seeing on the Q4 ITS margins as well. So we see a lot of momentum going into this year in ITS and just even bigger and better things to come down the road.

So I appreciate everybody joining, again, today and look forward to talking to you again very soon.

[Operator]

Ladies and gentlemen, this concludes your conference call for today. We thank you for participating and ask that you please disconnect your lines. Have a great day.