Evertz Technologies Limited

Ladies and gentlemen, and welcome to eBirds Q1 at Fiscal 2027 Investor Call. At this time, online turn and 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. This call is being recorded on Monday, September 14, 2026. I would now like to turn the conference over to Brian Campbell. Please go ahead.

Good afternoon, everyone, and welcome to eREITs Technologies conference call for our fiscal 2027 first quarter ended July 31st, 2026 with Doug Moore, eREITs 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, the sales for the first quarter totaled $118.3 million, up 5.5%, including $58.9 million in software and services revenue, which represents 49.8% of the total revenue. International revenue in the quarter was $38.3 million, up $4.6 million, or 17.5% from the prior year. Our sales base is well diversified, with the top 10 customers accounting for approximately 49% of sales during the quarter, with no one customer accounting for more than 10% of sales. In fact, we had 87 customer orders of over $200,000. The gross margin in the quarter was $69.3 million or 58.6% down from 61.4% in the prior year. Net earnings were $8 million resulting in fully diluted earnings per share of $0.10 for the quarter. Investment in Research and Development totaled $38.5 million. Evert's working capital was $131.4 million, including cash of $2.5 million as of July 31, 2026. At the end of August, Evert's purchase order backlog was more than $259 million, and shipments during the month of August were $30 million. We attribute this strong financial performance and robust combined shipments and purchase order backlog to channel and video services proliferation, increasing global demand for high-quality video anywhere, anytime, the ongoing technical transition to IP, IT, and cloud-based architectures in the industry, and specifically to the growing adoption of Uber's IP-based software-defined video networking solutions Evertz IT and Cloud Solutions, our immersive 4K, 8K, ultra-high-definition solutions, our state-of-the-art DreamCatcher IP replay and live production with Bravo Studio featuring the iconic Studer Audio. Today, Evertz Board of Directors declared a regular quarterly dividend of 20.5 cents per share payable on or about October 1st. I'll now hand over to Doug Moore, Evers Chief Financial Officer, to cover our results in greater detail.

All right. Thanks, Brian. Hey, good afternoon, everyone. Starting with revenue, after a slower start in May of 2026, sales were up just over 5% to $118.3 million in the first quarter of fiscal 2027, compared to the $112 million in the first quarter of fiscal 2026. Hardware revenue declines slightly quarter over quarter from $60.5 million to $59.3 million, while software and services revenue increased 14% from $51.6 million to $58.9 million in the current quarter. Revenue from software and services represented approximately 50% of the total revenue in the quarter. Looking regionally, quarterly revenues in the U.S.-Canadian region were $79.9 million, compared to $79.5 million in the prior year. While quarterly revenues in the international region were $38.3 million, an increase of $4.6 million or 17% compared to $32.7 million in the prior year. The international segment represented 32% of the total sales in the quarter. Gross margin for the quarter was $58.6 million. That's compared to $61.4 million in the prior year, and this quarter was within our target range. have all down year over year. The gross margin, as I said, was within a target range. While our software and services revenue represented almost 50% of revenue, I'll note there was an increase in international revenue that counterbalanced that a bit. It's also worth noting that at this time, we aren't being materially impacted by additional tariff costs. Turning to selling and mint expenses, S&A was $19.9 million in the first quarter. That's an increase of $0.9 million from the same period last year. And selling and amending expenses as a percentage of revenue for approximately 16.8% compared to 16.9% for the same period last year. Year-over-year, increase in S&A expenses included around $300,000 in additional trade show and travel costs as we've attended more trade shows in the quarter or year-over-year, particularly within the government and military sector. Sequentially, S&A is down about $0.8 million from Q4. That's just as a reminder, the largest driver there is the non-reoccurrence of NAV that happened in April of the prior year. Research and development expenses were $38.5 million in the first quarter. That represented a $1.5 million increase over the same period last year. As a percentage of revenue, R&D expenses were 32.5% compared to 33% in the prior year. The increase in R&D expenses was driven by salaries of around $700,000 and also some patent related professional fees for around $300,000. Investment tax credits for the quarter were $3.7 million as compared to credits of $3.3 million the prior year. And stock compensation expense, while it's up less than $100,000 sequentially to $2.4 million, but it's up $1.3 million year over year. That increase year-over-year is driven by the equity-based RSU and share options we issued in December of 2025 that are being recognized over the vesting period since issuance. Foreign exchange for the first quarter was a loss of $500,000 as compared to a foreign exchange gain of $0.7 million in the first quarter last year. Now turning to liquidity of the company, cash ahead of bank indebtedness as of July 31st, 2026 was $2.5 million. That's a large decline compared to cash of $19.1 million as of April 30th, 2026. And that decrease is mostly driven by a sharp increase in raw materials inventory that we ended up bringing in during the quarter. Working capital was $215.1 million as of July 31st, 2026, compared to $200.2 million at the end of April 30th, 2026. Looking at cash flows for the quarter. The company generated cash from operations of $0.8 million, which is net of a $16 million negative change in non-cash working capital and current taxes. If the effects of the change in non-cash working capital and current taxes were excluded from the calculation, the company generated $16.8 million in cash from operations during the quarter, compared to $16.8 million in the first quarter of fiscal 2026. As noted, the use of cash was driven by a large increase in raw materials inventory We brought in approximately $20 million of raw materials in the quarter, largely consisting of memory, storage, and servers, driven by some of the supply chain increased lead times. The company used cash of $2.1 million for investing activities. That was principally driven by the acquisition of capital assets of $1.8 million and business acquisitions of $0.3 million. During the quarter, we acquired a small AV integrator in the Ottawa region. The company used cash in financing activities of $16.8 million, which was principally driven by dividends paid of $15.5 million. Finally, looking at our share capital position as of July 31st, shares outstanding were approximately $75.7 million, and options and share-based RSUs outstanding were approximately $4 million. Weighted average shares outstanding were $75.6 million, and weighted average fully diluted shares were $77.6 million. for the period ending July 31st. That concludes the review of our 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 the annual information form and the official reports filed with the Canadian Securities Commission. Brian, back to you.