Evertz Technologies Limited

Good afternoon, ladies and gentlemen, and welcome to Evert's Q1 investor call. At this time, all lines are in listen-only mode. Following the presentation, we'll conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. I would now like to turn the conference over to Ryan Campbell, Executive Vice President of Mistains Development. Please go ahead.

Thank you, Sergio. Good afternoon, everyone, and welcome to the Eberts Technologies Limited conference call for our fiscal 2024 first quarter ended July 31st, 2023, with Doug Moore, Eberts 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 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 $125.8 million, up 23.9% from the first quarter last year. Our sales space is well diversified, with the top 10 customers accounting for approximately 54% of the sales during the quarter, with one customer accounting for approximately 14% of sales and a second customer at 11%. In fact, we had 112 orders of over $200,000. Gross margin in the quarter was $72 million, or 57.3%, which is within our target range. Investment in research and development during the quarter totaled $31.9 million, Net earnings for the first quarter were $15.9 million, while fully diluted earnings per share were 20 cents in the quarter. Everett's working capital was $173.4 million with $48.9 million in cash as of July 31, 2023. The purchase order backlog was over $343 million at the end of August, and shipments during the month were $49 million. We attribute the solid 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, our immersive Ultra HD solutions, our state-of-the-art Dreamcatcher IP replay and live production suite, and Bravo Studio featuring the iconic Scooter Audio. Today, Ebert's board of directors has declared a quarterly dividend of $0.19 per share and will honor about September 29, 2023. I will now hand over to Doug Moore, Chief Financial Officer, to cover our results in greater detail.

All right. Thank you, Brian, and good afternoon, everyone. Sales were $125.8 million in the first quarter of fiscal 2024. That's compared to $101.5 million in the first quarter of fiscal 2023, an increase of $24.3 million, or 23.9%. The U.S.-Canadian region had sales for the quarter of $87 million compared to $78.2 million last year. That's an increase of 11.3%. The international region had sales for the quarter of $38.8 million. That's an increase of $15.5 million compared to $23.3 million last year. Gross margin for the quarter was approximately 57.3% compared with 57.6% in the prior year and within our target range. Selling and administrative expenses were $16.4 million for the first quarter. That's compared to $12.9 million in the same period last year. Selling and admin expenses as a percentage of revenue were 13% compared to 12.7% in the same period last year. It's worth noting the prior year expenses included a $3.8 million recovery that did not reoccur in the current year. Research and development expenses were $31.9 million for the first quarter. That's compared to $28.3 million in the same period last year. Research and development expenses as percentage of revenue were 25.4% compared to 27.9% in the same period last year. We had a foreign exchange loss of $2 million. That's compared to a foreign exchange gain in the prior year of $1 million. the loss being predominantly a result of a 3% decrease in the value of the U.S. dollar as at July 31, 2023, when comparing it to April 30, 2023. Turning to discussion of liquidity of the company, cash as at July 31, 2023 was $48.9 million. That's compared to $12.5 million as at April 30, 2023. Working capital was $173.4 million as at July 31, 2023. compared to $171.4 million at the end of April 2023. The company generated cash and operations of $60 million, which is gross of $40.1 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 $19.9 million in cash from operations. During the first quarter this year, deferred revenue increased by approximately $23 million, and accounts receivables decreased by $23 million as well. That results in a combined $46 million in increased cash from working capital in the quarter. During the quarter, the company acquired $3.2 million of capital assets, and the company used cash from financing activities of $17.2 million, net of $5.9 million that was previously presented as bank indebtedness, That predominantly consisted of the payment of dividends of $14.5 million. Shares outstanding were approximately 76.1 million and options and equity-based restricted share units outstanding were approximately 6.2 million as at July 31st, 2023. Weighted average shares outstanding were 76.1 million and weighted average fully diluted shares outstanding were 76.5 million for the quarter ended July 31st, 2023. That brings to a conclusion the review of financial results and position for the first quarter. 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.