Evertz Technologies Limited

Good afternoon, ladies and gentlemen, and welcome to the eBirds Q4 Investor Conference 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 Par 0 for the operator. These calls may be recorded on June 24, 2026. I would now like to turn the conference over to Brian Campbell, Executive Vice President of Business Development. Please go ahead.

Thank you, John. Good afternoon, everyone, and welcome to Ebertz Technologies' conference call for our 2026 fourth quarter and year-ended April 30th with Doug Moore, Ebertz 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 the year's results, I'll begin by providing a few highlights and then Doug will provide additional details. First off, we had record annual sales in excess of a half a billion dollars coming in at $515.8 million for the year. This includes revenue in the international region of $148 million, up 16% from the prior year. reoccurring software services and other software revenue increased percent year over year totaling 240.7 million a year. Margin rates remain consistently strong coming in at 59.3 versus 59.5% prior year and 58.8% two years ago. Total margin dollars were net earnings were at $64.4 million resulting in a fully diluted earnings per share of $0.83. Our sales base is well diversified with the top 10 customers accounting for approximately 44% of sales with no single customer accounting for more than 10% on a full year basis. In fact, we had 87 customer orders of over $200,000. During the fourth quarter, sales were up 3% year-over-year to $131.6 million. Reoccurring software, services, and other software was $65.8 million, an increase of 17% from the prior year. Gross margin in the quarter was $78.1 million versus $78.9 million in the fourth quarter previous year. Net earnings in the quarter were $15.2 million as compared to $13 million in the corresponding period last year. Fully diluted earnings per share were $0.20 up from $0.17 in the previous fourth quarter. Operational highlights for the quarter included Hebert's stellar presence at the National Association of Broadcasters NAB show in Las Vegas where Hebert's won prestigious future Best of Show awards distributed across the primary industry publications presented by TV Technology. The Bravo Best of Late recognized for expanding multi-program live production capabilities of a single event. ENX, an innovative media core specifically for hybrid IP and SDI facilities. Excalibur, a high-density encoding platform engineered for scalable media transport. The MMA and Nucleus product, one in the AV technology area for IPMX-certified IP gateway solution built to bridge Pro-AD and broadcast environments with seamless IPMX and ST2110 integration. At the end of May, Evert's purchase order backlog was more than $237 million, and shipments during the month of May were $33 million. We attribute the strong financial performance and robust combined shipments of purchase order backlog to channel and video services proliferation, increased global demand for high-quality video anywhere and anytime, the ongoing technical transition to IP, IT, and cloud-based architectures in the industry, 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, 8K ultra-high definition solutions, our state-of-the-art screen capture IP replay and live production with Bravo Studio featuring the iconic Studer audio. Today, ERIT's Florida directors declared a regular quarterly dividend of 20.5 cents per share, payable on or above July 13th. I'll now hand over to Doug Moore, ERIT's Chief Financial Officer, to cover our results in greater detail.

Thanks, Brian, and good afternoon. Looking at revenues, despite a relatively slow start to the quarter, sales were $131.6 million in the fourth quarter of fiscal 2026, 3% increase compared to the $127.8 million in the fourth quarter of fiscal 2025. While for the year ending April 30th, 2026, sales were $515 million, up $14.2 million or 2.8% from the prior year. Quarterly hardware revenue was $65.7 million. That's a decrease from $71.7 million the prior year. While software and services revenue increased to $65.8 million, from $56.1 million in the prior year. Revenue from software and services represented approximately 50% of the total revenue in the quarter. For the year, hardware revenues declined 1% to $275.1 million, while revenues from software and services increased 8% to $222.6 million in the prior year. Software services revenue represented 47% of total revenue versus 44% in the prior year. Looking at regional revenues, quarterly revenues in the U.S. Canadian region were 94.2 million. That's a decline compared to 106.5 million in the prior year. However, this is more than offset by a $16 million increase in quarterly revenues in the international region, which were 37.4 million compared to 21.3 million in the prior year fourth quarter. The international segments represented 28% of total sales in the quarter, as compared to 17% in the same period last year. For the year ended April 30th, 2026, revenues in the Canadian U.S. region were down 2% to $367.8 million, while international revenues increased $20.8 million, or 16%, to $148 million. The increase in the year was driven by increased project deliveries in Western Europe in particular. For the year ending April 30th, international sales represented 29% of total sales compared to 25% in the same period last year. Gross margin for the quarter was 59.3% compared to 61.7% in the prior year. It's worth noting the prior year comparative quarter was higher than typical and the current quarter is more in line with their target range of 56 to 60%. For the year, The gross margin was 59.3%, which was also within the company's 56 to 60% target range. Turning to selling and administrative expenses, S&A was $20.7 million in the fourth quarter. That's relatively consistent with the same period last year. The S&A expenses as a percentage of revenue were approximately 15.7% as compared to 16.2% for the same period last year. Sequentially, Selling and amending expenses were up approximately $2 million from Q3. That increase was driven by increased trade show and travel costs, which in turn was driven by our participation at the NAV trade show in the fourth quarter. For the year ending April 30th, selling and amending expenses were $77 million or 14.9% of sales. That's compared to $75.9 million or 15.1% of sales in the prior year. Restriction development expenses were $37.7 million for the fourth quarter. That represents an increase of $1.2 million for the prior year. As a percentage of revenue, R&D expenses were 28.7% compared to 28.6% in the prior year. For the year ending April 30th, R&D expenses were $148.1 million, or 28.7% sales. as compared to $146.8 million for January last year, an increase of approximately 1% year over year. Foreign exchange for the fourth quarter resulted in the gain of $400,000 as compared to a loss for the fourth quarter last year of $4.5 million. During the fourth quarter of the current year, U.S. dollar versus Canadian dollar declined modestly from 1.38 to 1.37 to 1. as opposed to the fourth quarter last year with a U.S. dollar decline more significantly from 1.44 to 1.41. For the year ending April 30th, poor exchange resulted in a loss of $0.4 million compared to a gain of $0.2 million last year. Turning to the discussion of liquidity of the company, cash as of April 30th was $19.1 million. a decline compared to cash of $111.7 million as of April 30th, 2025. The decline was primarily driven by the $136 million in dividends we distributed during the year, including the $75.5 million in special dividends that we paid during the third quarter. Working capital was $131.7 million as of April 30th, 2026, compared to $206.9 million at the end of April 30th, 2025. Looking now at cash flows for the quarter, for the three months ended April 30th, cash from operations were $18.4 million. That's compared to $33.3 million generated during the three months last year. If you exclude the changes in non-cash working capital and current taxes, cash from operations were $19.1 million for the fourth quarter this year compared to $17.7 million for the same period last year. In the quarter, the company used $3.9 million for investing activities. That's particularly for the acquisition of property, plant, and equipment. And for the quarter, the company used $17.1 million for financing activities, $15.4 million of which was for the payment of dividends during the quarter. For the year, the company generated cash from operations of $76.2 million, which is a net of a $10.2 million change in non-cash, working capital, and current taxes. The effects of that change were excluded from the calculation. The company generated $86.4 million in cash from operations during the year. The company used cash of $17.8 million for vesting activities, which is principally driven by the acquisition of property, plants, and equipment of $18.7 million, including the land and building we've purchased outside Pennsylvania. And the company used cash in financing activities of $147.1 million, which as previously noted was principally driven by dividends paid. Finally, look at our share capital position as of April 30, 2026. Shares outstanding were approximately $75.6 million, and options and shares based are assumed outstanding were approximately $4.2 million. Weighted average shares outstanding were $75.5 million, and weighted average fully diluted shares were $76.8 million. This concludes the review of our financial results and position for the fourth quarter and year-end. And 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 refer you to the risk factors described in the annual information form in the official reports filed with the Canadian Securities Commission. And Brian, back to yourself.