Evertz Technologies Limited

Good day and welcome to the Everts fourth quarter 2021 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Brian Campbell, Executive Vice President of Business and Development. Please go ahead, sir.

Thank you, Todd. Good afternoon, everyone, and welcome to the Everts Technologies conference call for our fourth quarter and April 30th, 2021 with Doug Moore, Everett's Chief Financial Officer, and myself, Brian Campbell. Please note that our financial press release and MD&A are now available on CDAR. Doug and I will comment on the financial results and then open the call to your questions. Turning now to Everett's results, I'll begin with a few annual and fourth quarter highlights, following which Doug will provide greater detail. First off, I'm pleased to report Sales for the fiscal year totaled 342.9 million, driven in part by the adoption of Everett's new technologies. Annual net earnings were 42 million, resulting in fully diluted earnings per share of 55 cents for fiscal 2021. Liquidity and capital resources remain robust with cash of $108.8 million as at April 30th, after the return of 41.2 million quarterly dividends to shareholders and special dividends. Investments in research and development totaled 80.2 million for fiscal 2021, further reinforcing Everett's commitment to R&D. Operational highlights for 2021 include, first, the acquisition of EaseLive, a direct-to-consumer interactive graphics company. Second, securing the ShotTracker $11 million financing led by Everts and Ryzen Ventures. The funding will support accelerated deployment across the NCAA basketball conferences, Expand remote live sports production in the cloud with 5G-enabled technology. And third, a strategic asset acquisition of the iconic Studer Audio brand technology and related assets from Harman International, a Samsung company. Moving on now to the fourth quarter, sales were $93.3 million. Gross margin for the quarter was $55.6 million, or 59.6 percent of sales. And foreign exchange for the fourth quarter was a loss of $5.1 million. Net earnings were $9.8 million, with fully diluted earnings per share of 13 cents in the quarter. As at April 30, 2021, Everett's working capital was $214 million, with 8.8 million cash. Purchase order backlog at the end of May was a record high of $139 million and shipments during the month of May were $27 million. We attribute Ebert's resilient quarterly performance and solid annual performance despite this unprecedented pandemic 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 IP-based software-defined video networking solutions, Everett's IT and virtualized cloud solutions, our immersive 4K Ultra HD solutions, and state-of-the-art Dreamcatcher IP replay and Bravo live production suite. Our sales base is well diversified with the top 10 customers accounting for approximately 40% of sales during the year with no single customer over 10%. In fact, we had 353 customer orders of over $200,000 during the year. Today, ERIT's Board of Directors declared a quarterly dividend of $0.18 per share, which will be paid on or about July 2, 2021. I'll now hand the call over to Doug Moore, ERIT's Chief Financial Officer, to cover our results in greater detail.

Thank you, Brian. Good afternoon, everyone. Starting with revenues, sales were $93.3 million in the fourth quarter of fiscal year. 2021 compared to 92.2 million in the fourth quarter of fiscal 2020. That represents an increase of 1.1 million or a percent. Sales for the 12 months ended April 30th, 2021 were 342.9 million compared to 436.6 million in the same period last year. This represents a decrease of approximately 93.7 million or 21%. A decrease of sales during the year was largely driven by projects put on hold or interrupted as a result of the COVID-19 pandemic. For regional revenues, the U.S.-Canadian region had sales for the fourth quarter of $63.6 million compared to $58.7 million last year, an increase of 8%. The international region had sales for the quarter of $29.7 million compared to $33.5 million last year, a decrease of 3.8 million or 11%. Back to the fiscal results for sales. Sales in the US-Canadian region were $222.7 million for the year ended April 30th, 2021 compared to $289 million in the same period last year. That represents a decrease of $66.3 million. Sales in the international region during the year were $120.2 million compared to $147.6 million in the same period last year, which represents a decrease of 27.4 million. The international segment represented 32% of total sales in the quarter and 35% of total sales in the year. That's compared to 36% and 34% in the same respective periods last year. Turning to margins, gross margin for the fourth quarter was approximately 59.6% compared to 56.5% in the fourth quarter of fiscal 2020. Gross margin for the year was 58.2%, compared to 56.9% in fiscal 2020. Both Q4 and fiscal 2020 gross margin rates were within the company's target range. For operating costs, selling and administrative expenses were $13 million for the fourth quarter, a decrease of $2.4 million from the same period last year. As a percentage of revenue, S&A expenses were approximately 13.9%, Selling administrative expenses were $49.4 million for the year ended April 30, 2021, a decrease of $18.2 million from fiscal 2020. For the year, selling administrative expenses as a percentage of revenue were approximately 14.4% compared to 15.5% last year. Research and development expenses were $22.5 million for the fourth quarter, which represents a $1.3 million increase from the fourth quarter last year. For the year, research and development expenses were $80.2 million, which represents a decrease of $10.6 million compared to the same period last year, the decrease being driven by assistance recorded as a reduction in costs. Foreign exchange for the fourth quarter was a loss of $5.1 million compared to a gain of $6.1 million the same period last year, The loss of $5.1 million was driven by a significant decrease in the value of the U.S. dollar against the Canadian dollar from January 31st to April 30th, 2021. And foreign exchange for the year ended April 30th, 2021 was a loss of $14.9 million compared to a gain of $3.5 million in the prior year. The loss again was driven by a significant decrease in the value of the U.S. dollar compared to the Canadian dollar over that period. Turning to a discussion liquidity of the company, cash as at April 30th, 2021 was 108.8 million as compared to 75 million as at April 30th, 2020. Working capital was 214.5 million as at April 30th, 2021 compared to 223.7 million at the end of April 30th, 2020. Regarding quarterly cash flows, the company generated cash from operations of $33.6 million, which includes a $21.2 million change in non-cash working capital and taxes. If the effects of the change in non-cash working capital and current taxes are excluded, the company generated $12.4 million in cash from operations during the quarter. The company used $4.1 million from investing activities, which was principally driven by capital asset purchases. And the company used cash for financing activities of $15.2 million, which was principally driven by dividends paid of $13.8 million in the quarter. Regarding fiscal cash flows, for the year, the company generated cash from operations of $101.0 million, which includes $42 million change in non-cash working capital and current taxes. If the effects of the change in non-cash working capital and current taxes are excluded, the company generated $59.0 million in cash from operations. Now during the year, the company paid approximately $41.6 million in total dividends, acquired $9.6 million in capital assets, and completed investments for $9.1 million which includes an investment in TD Sports or otherwise known as Shot Tracker for $7.8 million. Finally, I'll review our share capital position as at April 30th, 2021. Shares outstanding were approximately $76.3 million and options outstanding were approximately $5.9 million. Weighted average shares and weighted average fully diluted shares were both 76.4 million of standing at the year end. This brings to a conclusion the review of our fiscal results or financial results and position for the fourth quarter. Finally, I would like to remind you that some of the statements presented today are forward-looking, subject to a number of risks and uncertainties, and we refer you to the risk factors described in the annual information form and the official reports filed with the Canadian Securities Commission. Brian? yourself.