Evertz Technologies Limited

Good afternoon, ladies and gentlemen, and welcome to Evert's first quarter investor call. At this time, all lines are in listen-only mode. Following the presentation, we will 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 Brian Campbell, Executive Vice President of Business Development. Please go ahead.

Thank you, Konstantin. Good afternoon, everyone, and welcome to Everett's Technologies conference call for our fiscal 2025 first quarter, ended July 31st, 2024, 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 investor website. Doug and I will comment on the financial results and then open the call to your questions. Turning now to Ebert's results, I'll begin by providing a few highlights, and then Doug will provide additional detail. First off, sales for the first quarter totaled $111.6 million, including $55.9 million in software and services revenue. Our sales base is well diversified, with the top 10 customers accounting for approximately 50% of sales during the quarter, with one customer accounting for approximately 14% of sales and a second customer at 11%. In fact, we had 94 customer orders of over $200,000. Gross margin in the quarter was $45.4 million, or 59.4%, up from 57.3% in the prior year. Net earnings were $9.7 million, resulting in fully diluted earnings per share of $0.13 for the quarter. Investment in research and development totaled $37.3 million. Year over year, our cash position strengthened, closing Q1 2025 with $91 million in cash and in cash equivalents. compared to $48.9 million a year ago, and up $4.7 million in the quarter. Everett's working capital was $197.7 million as of July 31, 2024, down $3.7 million from July 2023. At the end of August, Everett's purchase order backlog was more than $302 million, and shipments during the month of August were $33 million. The solid financial performance, including the robust purchase order backlog and shipments, continues to be driven by channel and video services proliferation, the ongoing technical transition in the industry, increasing global demand for high-quality video anywhere, anytime, and specifically by the adoption of Everett's solutions, such as Everett's IP-based software-defined video networking solutions, Everett's IT and cloud-native solutions, our immersive 4K ultra-high-definition solutions, and our state-of-the-art Dreamcatcher IP replay and live production with Bravo Studio featuring the iconic Studer audio. Today, Everett's board of directors declared a quarterly dividend of $0.195 per share payable on or about September 17th. I will now hand over to Doug Moore, Evert's Chief Financial Officer, to cover the results in greater detail.

Thanks, Brian. Good afternoon. Starting with revenues, sales were $111.6 million in the first quarter of fiscal 2025 compared to $125.8 million in the first quarter of fiscal 2024. Hardware revenue declined quarter over quarter from $81.4 million to $55.7 million, while software services revenue increased 26% to $55.9 million. Revenue from the software services portion represented approximately half the total revenue in the quarter. Looking at regional revenue, quarterly revenues in the U.S.-Canadian region were $73.9 million compared to $87 million in the prior year, while quarterly revenues in the international region were $37.7 million compared to $38.8 million in the prior year. International segments represented approximately 34% of total sales in the quarter compared to 31% in the prior year. Gross margin for the quarter was 59.4% as compared to 57.3% in the prior year and within our target range. Looking at selling administrative expenses, S&A was $17.6 million in the first quarter. That's an increase of $1.2 million from the same period last year. and represented approximately 15.8% of revenues as compared to 13% last year. Research and development expenses were $37.3 million for the first quarter, which represents a $5.4 million increase over the same period last year and $600,000 sequentially, approximately $600,000. Year over year, the increase includes $3.2 million in increased salary costs within North America and $800,000 in increased salary costs internationally. ITCs for the quarter were $3.8 million compared to credits of $3.4 million in the prior year, first quarter of last year. Foreign exchange for the first quarter was a gain of less than $100,000 compared to a foreign exchange loss of $2.1 million in the first quarter of last year. Looking at liquidity of the company, cash as of July 31st, 2024 was $91 million as compared to cash of $86.4 million as of April 30th, working capital was $197.7 million as of July 31st, 2024, compared to $201.4 million at the end of April 30th, 2024. Looking at cash flows for the quarter ended July 31st, the company generated cash from operations of $22.5 million, and that is net of $8.9 million change in non-working capital and current taxes. Though the effects of the change in non-working capital and current taxes are excluded, the company generated $13.6 million in cash from operations during the quarter. The company used cash of $2.3 million for investing activities, which was principally driven by the acquisition of capital assets. The company used cash in financing activities of $16.8 million, which was principally driven by dividends paid of $14.9 million. Finally, looking at our share capital position as at July 31st, 2024, shares outstanding were approximately 76.1 million, and options and share-based restricted insurance outstanding were approximately 5.6 million. Weighted average shares outstanding were 76.1 million, and weighted average fully diluted shares was 77.3 million at the period end of July 31st. That concludes the review of 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 the annual information form in the official reports filed within the Canadian Securities Commission. Brian, back to yourself.