Evertz Technologies Limited

Good day, and welcome to the Everts Q1 2022 conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Mr. Brian Campbell, Executive Vice President of Business Development. Please go ahead, sir.

Thank you, Bobby. Good afternoon, everyone, and welcome to the Everts Technologies Limited conference call for our fiscal 2022 first quarter, ended July 31st, 2021, with Doug Moore, Everett's Chief Financial Officer, and myself, Brian Campbell. Please note that our financial press release and MD&A will be 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'd like to begin by providing a few highlights, and then Doug will go into greater detail. First off, I'm pleased to report sales for the first quarter totaled $97.2 million, up 72% from the first quarter last year. This strong rebound from our first fiscal quarter of 2021 was experienced across all geographic regions and was driven predominantly by the adoption of Everett's new technologies and products. Our sales base is well diversified with the top 10 customers accounting for approximately 42% of sales during the quarter and with no single customer over 9%. In fact, we had 134 customer orders of over $200,000. Gross margin in the quarter was $56.7 million or 58.3% of sales. which is in the upper half of our target range. Investment in research and development during the quarter totaled $24.7 million. Net earnings for the first quarter were $14.7 million, while fully diluted earnings per share were $0.19 in the quarter. Everett's working capital was $217 million, with $136 million 31.6 million in cash as at July 31st, 2021. The purchase order backlog was a record high, $151 million at the end of August and shipments during the month were $40 million. We attribute this strong financial performance and robust combined shipments and purchase order backlog 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 Evert's IP-based software-defined video networking solutions, Evert's IT and cloud solutions, our immersive 4K, 8K UHD solutions, our state-of-the-art Dreamcatcher IP replay and live production suite, and Bravo Studio. Today, ERIT's Board of Directors has declared a quarterly dividend of $0.18 per share payable on or about October 5, 2021. Furthermore, ERIT's Board of Directors also declared a special dividend of $1 per share, also payable on October 5. 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 to maintain adequate reserves. I will now hand over to Doug Moore, Evert's Chief Financial Officer, to cover our results in greater detail.

Thank you, Brian, and good afternoon, everyone. Sales were $97.2 million in the first quarter of fiscal 2022 compared to $56.3 million in the first quarter of fiscal 2021. an increase of $40.9 million or 72%. The U.S.-Canada region had sales for the quarter of $64.4 million compared to $35.9 million last year, an increase of 79%. The international region had sales for the quarter of $32.8 million compared to $20.4 million last year, an increase of 60%. Gross margin for the first quarter was approximately 58.3% compared to 57.2% in the prior year. Gross margin was within the company's target range. Selling and administrative expenses were $14 million for the first quarter as compared to $11.9 million in the same period last year. Selling and admin expenses as a percentage of revenue was 14.4% compared to 21.2% in the same period last year. Research and development expenses were $24.7 million for the first quarter as compared to $16.6 million in the same period last year. Research and development expenses as a percentage of revenue was 25.4% compared to 29.4% in the same period last year. Foreign exchange gain was $1.4 million as compared to a foreign exchange loss in the prior year of $3.1 million. The gain in the quarter was predominantly a result of the increase in the value of the U.S. dollar as at July 31st when compared to April 30th. Turning to a discussion of liquidity of the company, cash as at July 31st, 2021 was $131.6 million compared to $108.8 million as at April 30th, 2021. Working capital was $217 million as at July 31st, compared to $214.5 million at the end of April. The company generated cash in operations of $38 million, which is gross of a $20.7 million change in non-cash working capital and current taxes in the quarter. If the effects of the change in non-cash working capital and taxes were excluded from the calculation, the company generated $17.3 million in cash from operations. The company acquired $1.1 million of capital assets and the company used cash from financing activities of $15.1 million, which predominantly consisted of a payment of dividends of $13.7 million. Shares outstanding were approximately $76.3 million, and options outstanding were approximately $5.7 million, as at July 31st, while weighted average shares outstanding were $76.3 million, and weighted average fully diluted shares outstanding were $76.8 million for the quarter ended July 31st, That brings to conclusion the review of our financial results and the position for the first quarter ended July 31st, 2021. 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 our annual information form in the official reports filed with the Canadian Securities Commission. Brian, back to yourself.