Good morning and welcome to Quarterhill's Q2 2025 Financial Results Conference Call. On this morning's call, we have Chuck Myers, Chief Executive Officer, and David Charron, Chief Financial Officer. At this time, all participants are in a listen-only mode. Following management's presentation, we will conduct a question and answer session, during which analysts are invited to ask questions. To ask a question, please press star one on your touch-tone phone to register. Should you require any assistance during the call, please press star zero. Earlier this morning, Quarterhill issued a news release announcing its financial results for the three and six months ended June 30, 2025. This news release, along with the company's MD&A and financial statements, are available on Quarterhill's website and 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, Quarterhill will refer to adjusted EBITDA. Adjusted EBITDA does not have any standardized meaning prescribed by IFRS. Please refer to the company's Q2 2025 MD&A 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 US dollars unless otherwise specified. I will now turn the meeting over to Mr. Myers. Please go ahead, sir. Good morning, everyone, and thank you for joining us on today's call. Before I begin, I'd like to introduce David Charron as our new Chief Financial Officer. David brings more than 15 years of public company CFO experience and a proven track record of driving growth and operational excellence in global telecom businesses. David's technology, company experience, governance expertise, and proven M&A track record make him an ideal leader to help us navigate through our current environment and execute on our next phase of growth. He's been a great addition to the team so far. In terms of agenda, I'll discuss the highlights for the quarter, after which David will take a look at the key financial results. Following David, we'll open it up for questions. In our Q2 summary, looking now at the results for the quarter, we'll start with a review of the headline numbers. Q2 revenue was $43.1 million, and adjusted EBITDA was a -$2.7 million. Let me be direct with you. While Q2 results were below our expectations, we're not sitting still. We are taking decisive action now to put the plan on a path to exit this year with positive margins that we believe will continue to expand in the years ahead. How are we doing this? Through four targeted actions designed to generate sustainable, positive operating margins, improved cash flow, and a stronger balance sheet. One, our restructuring. We have right-sized our operations to improve efficiency and financial performance. As we announced on July 24th, this resulted in a reduction of approximately 100 positions, roughly 15% of our total headcount. The reduction affected both contract and full-time roles in roughly equal measure and were split geographically between North America and the rest of the world. With the recent completion of certain tolling implementations, we felt we had excess capacity in that unit, and we can quickly ramp up those resources as new business comes in. We've also right-sized our resources to more appropriately align with the economics of the two problem contracts that have been a drag on performance. Of note, we did not make cuts in our safety enforcement unit, which continues to perform very well, nor did we cut into the company sales and marketing, or new product development teams. In fact, we may reallocate some of the savings to add resources to the sales team. We expect this restructuring to save approximately $12 million per year in expenses, with benefits starting to flow through in Q3. I want to emphasize that we structured this carefully. Our service levels to customers will not be impacted, and it's about operational efficiency, not cutting corners on delivery. Two, we're making progress on our problem contracts. Since our Q1 call, we have made meaningful progress in resolving the two problem contracts. As part of the restructuring, we have substantially reduced our costs on these projects. For the larger of the two contracts, which have generated the majority of the combined monthly losses, we have reduced our costs by more than $650,000 a month. Second, we will be in mediation with this customer at the end of August in an effort to further resolve the situation going forward. On the second contract, we've reduced our losses by approximately $250,000 a month and will continue to pursue additional opportunities to mitigate those losses further. Three, we're growing our top line with higher margin business. We continue to win new business and are doing so at better margins. We've added $85 million in change orders and wins this year to date across both business units and recently received notification of an additional $25 million annual renewal for an existing contract post our second quarter. Our enforcement business continues to perform well and grew its top line in the quarter while delivering strong margins, growing from about 20% to over 40% gross margin over the last six quarters or so. Recent international wins in Djibouti, Thailand, and South Korea reflect the global demand for our enforcement solutions and our expanded international footprint. The Djibouti deployment marks our first entry into East Africa through a World Bank-funded infrastructure project, demonstrating our ability to customize solutions for diverse markets. Meanwhile, repeat orders from Thailand and South Korea confirm the proven reliability and performance of our Weigh-In-Motion technologies, reinforcing our reputation as a trusted partner for governments seeking to improve roadway safety and efficiency. I've spoken previously of our ITIA artificial intelligence vehicle classification system. ITIA continues to gain market traction with recent deployments in six U.S. states – Arizona, Minnesota, Mississippi, Nevada, North Dakota, and Wisconsin. These wins demonstrate growing demand for non-intrusive AI-driven solutions that provide real-time traffic data while prioritizing safety and privacy. The expansion includes both permanent installations for long-term infrastructure and portable systems for flexible deployment, showcasing ITIA's versatility. Finally, we recently won a $2.8 million contract with the Louisiana Department of Transportation for work on Weigh-In-Motion systems at two commercial vehicle enforcement facilities. This represents further repeat business with an existing customer. As I said in our last call, our overall pipeline remains robust at approximately $2 billion. We continue to have line of sight to a number of new opportunities for both the tolling and enforcement units. Importantly, every new contract we're bidding ensures positive cash flow through the implementation phase. This is a fundamental change from the historical practices that contributed to our current challenges. Fourth, we're investing in new generation technology. We continue to invest in our next-gen technology platform built on microservices-based and AI architecture. The goals are clear – generate a greater portion of our revenue from higher margin software, reduce development costs through our scalable platform approach, and enable expansion into new verticals. In the third quarter, we're planning to launch an exciting project for a new technology platform with an existing tolling customer. This platform represents a step forward in our evolution to a software-focused company, offering modular capabilities that can integrate with existing infrastructure or operate independently. The platform leverages AI-driven features like vehicle fingerprinting, predictive analytics, and anomaly detection to ensure accuracy, reduce revenue leakage, and accelerate issue resolution. By unifying data management with AI analysis, we're helping customers improve decision-making and operational efficiency while supporting incremental adoption that allows them to quickly gain value and scale as their needs evolve. I'm also pleased to announce recently we hired Darren Lehrman as our new Chief Technology Officer. Darren brings over 25 years of experience in technology leadership, including senior roles at Thales, HID Global, and Silicon Labs, where he led large-scale software development initiatives. Most recently, he served as CTO at several technology companies with particular expertise in cloud-native architectures and AI-driven solutions, exactly the capabilities we need to accelerate our technology transformation. Outside of that, our foundation remains strong. We are addressing legacy issues. I want to emphasize what hasn't changed, the underlying strength of our business: our people and their deep expertise in the specialized market, a diversified customer base with long-term relationships, strong technology development capabilities, and emerging opportunities for AI to transform our industry. Our outlook, our plan is straightforward: resolve the current problem contracts, realize the targeted cost savings, and continue building our higher margin business. I believe doing so will lead to top-line growth, margin expansion, positive cash flow, and growth in shareholder value. Success in building scale to organic and strategic M&A opportunities will further accelerate this creation. In conclusion, I'd like to thank our team for their dedication during this transition period. While the near-term results are challenging, we're building a stronger, more resilient business with the right leadership team to execute our strategy. We're confident in our path to operating profitability and our ability to deliver the expanding margins and prove performance our shareholders deserve. With that, I'll turn it over to David to discuss our financial results in more detail. Thank you. Thank you, Chuck, and good morning, everyone. Before I begin, I want to say how excited I am to be joining Quarterhill. I see tremendous potential in the business given our market-leading position, strong industry fundamentals, and our ability to leverage technology to drive meaningful transformation in the transportation sector. We have a clear plan to strengthen the company, and I look forward to lending my skills in operations, governance, and capital markets to help us achieve our objectives in driving growth, margin expansion, and shareholder value. With that, I'll start the financial review with a look at the revenue in the quarter and a reminder that all figures are in U.S. dollars. Q2 revenue was $43.1 million, up 4% from Q2 last year. This is also up 27% from Q1. The increase was primarily due to the strength in our safety and enforcement business, as Chuck mentioned earlier. This unit generated solid growth in both the quarter and in the year-to-date period. The tolling contracts that are in renegotiation contributed $2.8 million in revenue in the quarter. This revenue generates a significant negative contribution to operating margins, which is why we're pursuing the path to mediation. I'll touch on their margin impact in a moment. At quarter end, we continue to have a significant backlog of $463 million, providing good visibility into revenue for 2025 and the next several years. A large portion of the backlog is higher margin contracted maintenance revenue versus implementation revenue, which we expect will drive higher margins in the future. Gross margin percentage in Q2 was 15% compared to 21% in Q2 last year and up from 12% in Q1. The decrease to the year-ago quarter was primarily due to the poor margin on the two noted tolling projects, which was partially offset by continued strong margin performance from our safety and enforcement unit. Of note, the restructuring that was announced on July 24th should result in improved gross margins in Q3 and then another step up in Q4 thereafter as the benefit of the reductions take hold. It is important to recall that a majority of the cuts were made in the cost of sales line. Total operating expenses for Q2 were $12.9 million compared to $10.8 million in Q2 last year. The increase in the quarter and year to date is primarily due to the investments in leadership and resources for our project, bid, and product development teams. In addition to the restructuring, we see the potential to generate additional OpEx savings through rationalizations in certain third-party contracts, such as IT, as those agreements come up for renewal over the next 12 months. Q2 adjusted EBITDA was negative $2.7 million compared to positive $1.7 million in Q2 last year, but up from negative $3.4 million in Q1. As Chuck mentioned, the two problem contracts resulted in a reduction to Q2 adjusted EBITDA of $3.9 million. Excluding those two contracts, Q2 adjusted EBITDA would have been +$1.2 million. Of note, the safety enforcement unit continues to generate solid gross margins. As Chuck said in his section, we are laser-focused on driving stronger margins in the business, as evidenced by our recent restructuring. We expect our margin profile to improve in the second half of the year based on the restructuring alone. Beyond that, we expect to drive margins higher via additional cost savings in areas I just mentioned, along with better bid economics on new contracts. Turning now to the balance sheet, at quarter end, we had cash of $22.7 million compared to $31.9 million at year end. Also at quarter end, our long-term debt was reclassified to current liabilities as the company was not in compliance with its financial covenants at June 30th. However, subsequent to quarter end, we finalized an amendment to our credit agreement that provides us with additional financial flexibility and a waiver to our covenants through Q3 of this year. More details can be found in our MD&A. Due to the nature of our business, operating cash flows may vary significantly between periods due to changes in timing and working capital balances, specifically with collections and payments. Our outlook is for our cash situation to improve for the remainder of the year. We expect the cash burn to moderate, and we expect to achieve positive cash from operations in the second half of 2025. With that, I'll turn the call back to Chuck for his closing comments. Great. Thanks, David. In summary, we're making decisive progress on multiple fronts. Our restructuring is delivering cost savings. We're advancing towards resolution of the problem contracts, and our enforcement business continues to perform well with strong international growth. With our new leadership team in place and a clear action plan being executed, we're confident in our path to sustainable operating profitability and margin expansion. I want to thank our employees, our customers, our shareholders, and our analysts for their continued support. This concludes our formal remarks, and I'll now turn the call over to the operator for Q&A. Thank you. Ladies and gentlemen, we will now begin the question and answer session. To ask a question, you may press star followed by the number one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star two. With that, our first question comes from the line of Gavin Fairweather with Cormark Securities. Please go ahead. Oh, hey, good morning. Thanks for taking my questions. Maybe I'll just start with the tolling business and the two onerous contracts. We saw that the cost ticket, which will help profitability, in the script you talked about advancing progress on renegotiation. I guess from an external perspective, the update was kind of similar to what we saw in Q1. Maybe you can provide a bit more color on the tenor of those discussions and how they're kind of advancing under the hood. Okay. I'll talk with the biggest problem contract first. We have a mediation scheduled with a mediator selected for the end of this month. That project has taken a pretty big forward step from our perspective, with most of the development being done and bug fixes working off at this point. As this situation has progressed, as time has progressed, we've made much, much more product progress on the project. The other side of it is we've been asking for a request there to expand our call center capabilities, which we received a request from the customer to expand those with that being covered in payment. That was a $3 million request that we're currently negotiating. We're making good progress there. On the other contract, we are in negotiations. It's a much more friendly situation there. The program is implemented. We're collecting tolls. It's going well. It's really been payment issues, primarily between a prime contractor, the consultant, the customer, and us. We're making good progress on that. As a matter of fact, just this week, we have a financial team on site trying to work through those final financial issues so we get all caught up on payments on the implementation phase. Appreciate that color, Chuck. Is that mediation process usually pretty fast, or does it kind of drag on for a little while? The answer is yes, I expect it to be quite quick. Okay. Helpful. Maybe you can just discuss a little bit more of the new kind of tolling technology platform. You talked about vehicle fingerprinting and anomaly detection. I also wonder if there could be efficiencies in the call center and issue resolution with customers. Maybe you can expand on that a little bit and whether you can leverage that platform with some of the existing customers to improve gross margins or if that's mostly the case for new customers. No. I mean, I think that's why we talk about the microservices-based architecture, so that one of the issues with this business and why the consultants generate so much revenue is if you look at the way these contracts have been historically written, including the ones I've inherited here, these are contracts with three or four thousand requirements in them. The requirements were written because people understand that these implementations can be three years, two years, three years, four years, because they're big behemoth, database-driven implementations. With our new architecture, you can implement elements at a time. What happens instead of maybe implementing a big, huge contract, you can implement it in stages. Maybe it's your image review is the first phase. Maybe your transaction allocation and your bill collections are in another phase. What happens is it makes it much less risky. It makes it much less for a need for consultants on the project, or at least for them to spend much less, and allows far quicker implementation with our customers. We discussed our first pilot customer that we're in the process of launching later this year. They actually have an existing system of which we're a part of, but we're looking at implementing that in a sandbox. We call it a sandbox. We can replace elements at a time. It becomes much less risky for them, much quicker revenue generation for us, and a much higher margin. AI is incorporated really on three levels: vision models, which are usually transformer models, LLMs that are being used with generative AI, as well as data analytics. Appreciate that. I think I caught you say that you might reinvest a little bit of the savings from the recent cost ticket in sales. Maybe we can just discuss the size of the bid book, you know, what you're seeing in the pipeline that leads you to think that you might need a bit more sales capacity. I think right now we have a $2 billion pipeline, as I think the number that we quoted in there. We actually have an extraordinarily small sales team. If you look at our SG&A per se, we have a very small marketing team. Gavin, as you know, I've said in the past, I didn't want people bidding on things until we got our house in order. We feel like we've gotten our house in order, so we're being pretty aggressive on bids lately in terms of where we're bidding. We also will be submitting shortly, and we've been in a process. It's actually a particularly unusual process in Europe of doing our first European bid in the tolling space. We continue to move forward on that. We do think that we need to, with some of the changes, we want to bring in fresh eyes on our tolling bidding practices. We'll be looking to fill one or two senior positions there. As far as the development goes, our development team is in place. We recently brought in a PhD AI person specifically to be our Director of AI. We recently hired a senior person out of IBM. Our team is full. We don't expect any extraordinary costs on that team and don't expect any extraordinary R&D or development costs outside of where we've been. It's really that we're focused on it with a small, very nimble, very talented team. That's great. Lastly, for me, maybe for Dave, I might have missed it, but OpEx was up a little bit, even if we pull out the stock-based comp. Was there any one-timers in there that you would call out? No, I think it's just really along the lines that we said in the script, which was investment in people, and that's what's hit the books at that point. Thanks so much. I'll pass the line. Thanks, Gavin. Your next question comes from the line of Todd Coupland with CIBC Capital Markets. Please go ahead. Oh, yes. Good morning. I had a few financial questions to try and clean up my way of thinking about the company post-restructuring and with the violation of the debt covenant. First on the debt, if I do the math, you have $1,500,000 in quarterly interest expense. EBITDA was $1.2 million. You've done a restructuring that's supposed to save $12 million annualized. Is a run rate EBITDA adjusted for the restructuring, you know, in the $4 million range currently? I think the better way to think about it is, you know, we were losing, you know, roughly, you know, you see the last few quarters, $2.5 million a quarter on EBITDA. The restructuring, we're saving, you know, $1 million a month. The restructuring alone will get us to break even on an EBITDA level. There are additional things that we talked about that we're going to be implementing on the cost-saving side, Todd. Going forward, you know, we'll be improving our EBITDA in the second half beyond what is, you know, evident in the RIF that we announced. I don't know if that answers your question or not. Yeah, that does. You called out most of the savings are in cost of sales. What should be a gross margin goal in Q3 and Q4 post the restructuring? We're looking to get our gross margins back up to, you know, call it 20%+. We haven't given, you know, direct guidance on that. If you just look at the cost that we've taken out, all those cost savings are in the gross margin line. Okay. In terms of the waiver on the debt, can you just summarize what that change has been and where you would expect to get those ratios to? Thanks. Yeah. The waiver, it's in the MD&A and the statements, Todd, when you have a chance to look at it. Basically, the waiver applies to Q2, which we just announced, and Q3. The two covenants, the fixed charge coverage ratio and the leverage ratio, are waived for those two quarters, and it'll return to normal in Q4. That gives us a lot of runway to work through the two problem contracts, which are really affecting the ratios at this point. We've got a good line of sight to what we need to do to get those back on track. If we were to think about, you know, framing the business in 2026 with, you know, the pipeline and reset business model, what's a good target model to think about in terms of growth and EBITDA margin? We haven't provided specific targets, Todd, on that line, but I think, you know, when you listen to what Chuck said around, you know, with the RIF that we've done, the additional costs that we're driving out of the business, for us to get to double-digit EBITDA next year is within our sights. As far as a revenue growth one, we've got a very strong order backlog that will be rolling into revenue over the second half of 2025 and into 2026 and 2027, 2028. Our order book is very strong. With additional focus on new projects that Chuck described, we should be seeing some very nice top-line growth, but we haven't given specific numbers on that. Okay. Great. I appreciate that color. Thank you. Thanks, Chuck. Your next question comes from the line of Steven Li with Raymond James. Please go ahead. Thank you. Welcome to the board, Dave. I got a question for you. Just walk me through the problem contracts again. The drag in the quarter was $3.9 million, right, from the problem contracts? Yeah. If you've cut $900,000 a month, that would mean you're still losing $5 million a year on these two contracts, assuming nothing changes from the mediation? We said we're saving approximately $1 million a month on the RIF. You're seeing the two problem contracts at $3.9 million was in the quarter. We've taken most of the cost savings, you're right, come out of those two problem contracts, as we said, as Chuck described. There'll still be a small loss going forward on those two contracts, but we hope to make that up in growth in the other parts of the business. Okay. Got it. Then. Hang on. Stephen, on the other side of it, those contracts are nearing completion in their development. The overall cost of those will continue to drop over time. A successful mediation, Chuck, would that turn the contract profitable or just stop losing money? I don't know the answer to that. We feel we have a very strong case for recovering past losses, so that's why we're moving forward with that. Okay. Got it. There is just. It's a tough one to answer for me, right? Right. No, I understand. Dave, just one clarification on the restructuring. Saving $1 million a month, that's $12 million. That means the restructuring you announced earlier, essentially, it's just for the two problem contracts. There's nothing, there's no optimization in terms of quarterly or quarterly excluding those contracts. Is that how I should read? Most of it, as we said, was in tolling and the cost of sales line. There were a few other changes we made. We are restructuring the business just from an org structure perspective to make it more efficient, right? There are cost savings plus efficiencies we're driving. Okay, got it. All right, thanks. To go back to your $3.9 million loss, we've significantly reduced that on a go-forward basis. All right. Thank you. That concludes our question and answer session. I would like to turn it back to Mr. Myers for closing remarks. All right. Thank you very much. In closing, I continue to thank everybody that's been involved in the business. Thank you, everybody, for participating on the call. Thank you to our shareholders. We look forward to speaking with you again and keeping you informed of our progress in the coming months. Goodbye. Thank you, presenters. Ladies and gentlemen, this concludes today's conference call. Thank you all for joining. You may now disconnect.