Evertz Technologies Limited

Good day, and welcome to the Everts Q3 Investor Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Brian Campbell, Executive Vice President of Business Development. Please go ahead, sir.

Thank you, Justin. Good afternoon, everyone, and welcome to the Everts Technologies Conference Call for our fiscal 2022 third quarter, ended January 31, 2022. 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 and on the company's website. 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 by providing a few highlights and then Doug will go into more detail. First off, I'm very pleased to report that sales for the third quarter totaled $120.6 million, an increase of $27.8 million, up 30% compared to $92.8 million for the third quarter last year. Our base is well diversified, with the top 10 customers accounting for approximately 43% of sales during the quarter and with no single customer over 10%. In fact, we had 113 customer orders of over $200,000. Gross margin in the quarter was 69.2 million, or 57.4% for the quarter, which is within our gross margin target range. Net earnings for the third quarter were 21.6 million, up 108% from last year and fully diluted earnings per share was $0.28. Evert's working capital was $157.3 million with $29.8 million in cash as at January 31, 2020-2022. The purchase order backlog at the end of February was a record high of $176 million and shipments during the month of February were $25 million. We attribute this very 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 Everett's IP-based software-defined video networking solutions, Everett's IT and cloud solutions, our immersive 4K Ultra HD solutions, our state-of-the-art Dreamcatcher IP replay and live production suite, and Bravo Studios. Today, Everett's board of directors declared a dividend of $0.18 per share payable on or about March 24, 2022. I will now hand over to Doug Moore, EVIT's Chief Financial Officer, to cover our results in greater detail.

Thank you, Brian. Good afternoon, everyone. Looking at revenues, sales were $120.6 million in the third quarter of fiscal 2022, an increase of $27.8 million, or 30%, compared to $92.8 million in the third quarter of fiscal 2021. For the nine months ended January 31, 2022, sales were $324.9 million compared to $249.6 million in the same period last year. That represents an increase of approximately 30%. Looking at specific regions, the U.S.-Canadian region had sales for the quarter of $78.9 million, an increase of $22.6 million or 40% compared to $56.3 million in the same period last year. Sales in the U.S.-Canadian region were $221.5 million for the nine-month period ended January 31, 2022, compared to $159.1 million in the same period last year. That's an increase of $62.4 million, or 39%. The international region had sales for the quarter of $41.7 million, compared to $36.5 million last year, an increase of $5.2 million, or 14%. The international segment represented 35% of total sales this quarter, compared to 39% in the same period last year. Sales in the international region were $103.4 million for the nine months ended January 31, 2022, compared to $90.5 million in the same period last year. This represents an increase of $12.9 million, or 14%. Gross margin for the third quarter was approximately 57.4%, compared to 56%. in the third quarter last year and within our target range. Gross margin for the nine months ended January 31st was approximately 57.5% and also within the company's target range. For operating expenses, selling and administrative expenses were $16.0 million for the third quarter, an increase of $4.3 million from the same period last year. Selling and admin expenses as a percentage of revenue were approximately 13.3% as compared to 12.6% for the same period last year. For the nine months ended, January 31st, 2022, selling and administrative expenses were $44.7 million, an increase of $8.3 million compared to $36.4 million from the same period last year. For the nine months period, selling and administrative expenses as a percentage of revenue were approximately 13.8% compared to 14.6% for the same period last year. Turning to R&D, research and development expenses were 26.0 million for the third quarter, which represents a $4.6 million increase from the third quarter last year. R&D expenses as a percentage of revenue were approximately 21.5% over the period as compared to 23.1% for the same period last year. For the year, research and development expenses were $75.1 million, which represents an increase of $17.4 million over the same period last year. R&D expenses as a percentage of revenue were approximately 23.1% over the period, and that's consistent with the same period last year. Foreign exchange for the third quarter resulted in a gain of $1.7 million compared to a loss of 5.3 million in the same period last year. The current quarter gain was driven by an increase in the value of the U.S. dollar compared to Canadian between October 31st and January 31st. Foreign exchange for the nine-month period ended January 31st, resulted in a gain of 5.4 million as compared to a loss of 9.8 million in the same period last year. The nine-month gain is also driven by the increase in value of the U.S. dollar, but since April 30th, 2021. Turning to the discussion of liquidity of the company, cash as at January 31st, 2022 was $29.8 million as compared to $108.8 million as at April 30th, 2021. Working capital was $157.3 million as at January 31st compared to $214.5 million as at the end of April 30th, 2021. Looking now specifically at the cash flows for the quarter ended January 31st, The company generated cash from operations of $8.3 million, which is net of a $20.3 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 $28.6 million cash from operations for the quarter. The company used cash from investing activities of $0.7 million for the third quarter ended January 31, 2022. which was principally driven by the acquisition of capital assets of $1.2 million. The company used cash from financing activities of $15.7 million, which was principally driven by dividends paid of $13.7 million. Finally, reviewing our CR capital position as at January 31, 2022, shares outstanding were approximately $76.2 million and options outstanding were approximately $5.4 million. Lastly, the weighted average shares outstanding were 76.3 million, and weighted average fully diluted shares were 76.5 million. That brings to a conclusion the reviewer financial results and the position for the third 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 in the official reports filed with the Canadian Securities Commission. Brian, back to yourself.