Evertz Technologies Limited

Good afternoon, ladies and gentlemen, and welcome to the Evertz Q1 investor call. At this time, all participant lines are in a listen-only mode. Following the presentation, we will conduct a question and answer session. And if at any time during this call you require immediate assistance, please press star zero for the operator. Also note that the call is being recorded on Tuesday, September 13, 2022. I now would like to turn the conference over to Brian Campbell, Executive Vice President, Business and Development. Please go ahead, sir.

Thank you, Sylvie. Good afternoon, everyone, and welcome to the Ebert Technologies Limited conference call for fiscal 2023 first quarter, ended July 31st, 2022, with Doug Moore, Ebert's Chief Financial Officer, and myself, Brian Campbell. Please note that our financial press release and MD&A will be available on CDARC. Doug and I will comment on the financial results and then open the call to your questions. Turning now to Everett's results, I would 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 $101.5 million, up 5% year-over-year, with strong performance in the US-Canada region, where sales increased 21% year-over-year to 78.2 million, driven to a large extent by the adoption of eBrit's new technologies and products. Our sales is well diversified, with the top 10 customers accounting for approximately 45% of sales during the quarter, with no single customer over 8%. In fact, we had 103 customer orders of over $200,000. Gross margin in the quarter was 58.5 million or 57.6%, which is within our target 56 to 60% range. Investment in research and development during the quarter totaled $28.3 million. Net earnings for the first quarter were 13.9 million, while fully diluted earnings per share were 18 cents in the quarter. Everett's working capital was $159.3 million, with $25.6 million in cash as of July 31, 2022. Purchase order backlog was $140 million at the end of August, and shipments during the month were $33 million. We attribute the solid quarterly 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 Ebert's IP-based software-defined video networking solutions, Ebert's IT and cloud solutions are immersive for an 8K Ultra HD solutions. and our state-of-the-art Dreamcatcher IP replay and Bravo studio live production suite. Today, Everett's board of directors has declared a quarterly dividend of 18 cents per share payable on or about September 29, 2022. I'll now hand the call over to Doug Moore, Everett's chief financial officer, to cover the results in greater detail.

Thank you, Brian, and good afternoon, everyone. Sales were $101.5 million for the first quarter of fiscal 2023 compared to $97.2 million in the first quarter of fiscal 2022, an increase of $4.3 million, or 5%. The U.S.-Canada region had sales for the quarter of $78.2 million compared to $64.4 million last year, an increase of 21%. The international region had sales for the quarter of $23.3 million compared to $32.8 million last year. Gross margin for the first quarter was approximately 57.6% compared with 58.3% in the prior year and within our target range. Selling and administrative expenses were $12.9 million for the first quarter compared to $14 million in the same period last year. Selling and amending expenses as a percentage of revenue, 12.7% compared to 14.4% in the same period last year. Research and development expenses were $28.3 million for the first quarter this year as compared to $24.7 million in the same period last year. $2.8 million of the increase is attributable to increased salary costs from increased headcount as well as wage increases. Research and development expenses as a percentage of revenue was 27.9% compared to 25.4% in the same period last year. Foreign exchange gain was $1 million compared to a foreign exchange gain in the prior year of $1.4 million. The gain in the current period is predominantly a result of the increase in the value of the U.S. dollar as at July 31, 2022, when compared to April 30, 2022, as well as a translation of U.S. assets into Canadian dollars at favorable exchange rates during the quarter. Turning to a discussion of liquidity of the company, cash as at July 31, 2022, was $25.6 million as compared to $33.9 million as at April 30, 2022. Working capital was $159.3 million as at July 31, 2022, compared to $158.9 million at the end of April 2022. The company generated cash and operations of $19.3 million, which is gross of a $1.6 million change in non-cash working capital and current taxes in the first quarter. If the effects of the change in non-cash working capital and taxes were excluded from the calculation, the company generated $17.7 million in cash from operations. During the quarter, the company acquired marketable securities of $11 million and $1.9 million of capital assets. The company used cash from financing activities of $15.1 million, which predominantly consisted of the payment of dividends of $13.7 million. Shares outstanding were approximately 76.2 million, and options outstanding were approximately 5 million as of July 31, 2022. Weighted average shares outstanding were 76.2 million, and weighted average fully diluted shares outstanding were 76.4 million for the quarter ended. This brings to a conclusion the review of our financial results and position for the first 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 our annual information form and the official reports filed with the Canadian Securities Commission. Brian, back to yourself.