Evertz Technologies Limited

Good day, ladies and gentlemen, and welcome to the E-VERTS first quarter 2020 conference call. As a reminder, today's conference is being recorded. It is Thursday, September 5th, 2019. At this time, I'd like to turn the conference over to Mr. Brian Campbell, Executive Vice President of Business Development. Please go ahead, Mr. Campbell.

Thank you, Cody. Good afternoon, everyone, and welcome to the E-VERTS Technologies conference call for our fiscal 2020 first quarter, ended July 31st, 2019. with Anthony Gridley, Ebert's Chief Financial Officer, and myself, Brian Campbell. Please note that our financial press release and MD&A will be available on CDAR. Anthony and I will comment on the financial results and then open the call to your questions. I would like to begin by providing a few highlights and then Anthony will go into greater detail. First off, I'm very pleased to report sales for the first quarter fiscal 2020 of $103.4 million, a modest increase compared to the first quarter of last year. Our sales base is well diversified with the top 10 customers accounting for approximately 43% of sales during the quarter and with no single customer over 6%. In fact, we had 142 customer orders of over $200,000. Gross margin in the quarter was $59.2 million, or 57.2%. Investment in research and development totaled $22.7 million, reinforcing EBRT's commitment to R&D. Debt earnings for the first quarter were $13.2 million, and fully diluted earnings per share were 17 cents in the quarter. Everett's working capital was approximately $280.1 million with $100.4 million in cash and marketable securities as at July 31st, 2019. The purchase order backlog was in excess of $103 million at the end of August and shipments during the month were $50 million, totaling a record high $153 million combined backlog and shipments. We attribute this solid quarterly performance to the ongoing technical transition in the industry, channel and video services proliferation, increasing global demand for high-quality video anywhere, anytime, and specifically to the growing adoption of Everett's IT-based software-defined video networking solutions, Everett's IT and virtualized cloud solutions, our immersive 4K Ultra HD solutions, and our state-of-the-art Dreamcatcher IP replay and production suite. Today, Ebert's Board of Directors has declared a quarterly dividend of 18 cents per share, payable on or about September 20th, 2019. Furthermore, Ebert's Board also declared a special dividend of 90 cents per share, also payable on September 20th. The special dividend reflects both the strong long-term operating performance of the company and its solid balance sheet, thereby enabling a distribution of cash over and above what is considered necessary to meet known commitments and maintain adequate reserves. I will now hand over to Anthony Gridley, Ebert's Chief Financial Officer, to cover our results in greater detail.

Thank you, Brian. Good afternoon. Sales were $103.4 million in the first quarter of fiscal 2020 compared to $103.1 million in the first quarter of fiscal 2019, an increase of $0.3 million. It's worth noting we also had approximately 10 million in orders that shipped in August that would have been expected to ship in July normally. This contributes to the $50 million shipment number in August, which is an all-time reportable high shipment load. The US-Canada region had sales for the quarter of 74 million compared to 75.2 million last year. The international region had sales for the quarter of 29.4 million compared to 27.9 million last year, an increase of 5%. Gross margin for the first quarter was approximately 57.2% compared to 57% in the prior year. Gross margin was within what the company considers to be an acceptable range. Selling and admin expenses were $16.3 million for the first quarter as compared to $15.9 million in the same period last year. Selling and admin expenses to revenue were 15.8% as compared to 15.4% in the same period last year. R&D expenses were $22.7 million for the first quarter, which represents a $1.4 million or 6% increase from the first quarter last year. Foreign exchange loss was $1.8 million as compared to foreign exchange gain in the prior year of $1.1 million. The loss was predominantly a result of the decrease in the value of the U.S. dollar as at July 31, 2019 compared to April 30, 2019. Turning to discussion liquidity of the company, cash and marketable securities at July 31, 2019 were $100.4 million as compared to $108.6 million at April 30, 2019. Working capital was 280.1 million at July 31st compared to 282.5 million at the end of 2019. The company generated cash in operations of 7.9 million, which is gross of a 10.6 million change in non-cash working capital and current taxes. The effects of the change in non-cash working capital and taxes are excluded. The company generated 18.5 million in cash from operations. The company acquired 1.7 million of capital assets. Company used cash from finance activities of $14.3 million, which predominantly consisted of the payment of the regular dividend of $13.8 million offset by the issuance of capital stock pursuant to a stock option program of $0.9 million. Shares outstanding were approximately $76.6 million, and options outstanding were $1.4 million as of July 31, 2019. Weighted average shares outstanding were $76.6 million, and weighted average fully diluted outstanding were $76.7 million for the quarter ended July 31, 2019. This brings to a conclusion the review of our financial results and position for the first quarter. Finally, I'd like to remind you that some of the statements presented today are forward-looking, subject to a number of risks and uncertainties, and refer you to the risk factors described in the annual information form and the official reports filed with the Canadian Securities Commission. Brian, back to you.