Evertz Technologies Limited — Interim / Quarterly Report 2021

Mar 3, 2021

Attention Business/Financial Editors:

Evertz Technologies reports Third Quarter results for the quarter ended January 31, 2021.

Burlington, March 3, 2021, Evertz Technologies Limited (TSX:ET), the leader in Software Defined Video Network (“SDVN”) technology, today reported its results for the third quarter ended January 31, 2021.

Third Quarter 2021 Highlights

• Quarterly revenue of $92.8 million

• Earnings from operations before foreign exchange of $19.7 million

• Net earnings of $10.4 million for the quarter

• Fully diluted earnings per share of $0.13 for the quarter

• Completed investment in DD Sports, Inc. (ShotTracker) for $8.0 million

• Announced strategic asset acquisition of the iconic Studer audio brand, technology and related assets from HARMAN International, subsequently closed on February 9, 2021

Selected Financial Information Consolidated Statement of Earnings Data

(in thousands of dollars, except earnings per share and share data)

Revenue Gross margin Earnings from operations before foreign exchange Earnings from operations Net earnings Fully-diluted earnings per share Fully-diluted shares	Q3' 21 Q3' 20 92,776 $ 121,226 $ 51,983 67,849 19,668 25,936 14,324 26,206 10,388 19,401 0.13 $ 0.25 $ 76,406,390 76,780,796

Selected Financial Information

Consolidated Balance Sheet Data (in thousands of dollars)

Cash and cash equivalents Working capital Total assets Shareholders' equity	Q3' 21 YE'20 94,063 $ 75,025 $ 221,587 223,720 455,420 443,673 298,727 295,012

Evertz Technologies Limited – Press Release

Quarter Ended January 31, 2021

Revenue

For the quarter ended January 31, 2021, revenues were $92.8 million compared to revenues of $121.2 million for the quarter ended January 31, 2020. For the quarter, revenues in the United States/Canada region were $56.3 million compared to $69.5 million in the same quarter last year. The International region had revenues of $36.5 million compared to $51.7 million in the same quarter last year.

Gross Margin

For the quarter ended January 31, 2021, gross margin was $52.0 million as compared to $67.8 million in the same quarter last year. Gross margin percentage was approximately 56.0% as compared to 56.0% in the quarter ended January 31, 2020.

Earnings

For the quarter ended January 31, 2021, net earnings were $10.4 million as compared to $19.4 million in the corresponding period last year.

For the quarter ended January 31, 2021, earnings per share on a fully-diluted basis were $0.13 as compared to $0.25 in the corresponding period last year.

Operating Expenses

For the quarter ended January 31, 2021, selling and administrative expenses were $11.7 million as compared to $17.9 million for the quarter ended January 31, 2020.

For the quarter ended January 31, 2021, gross research and development expenses were $21.4 million as compared to $24.0 million for the quarter ended January 31, 2020.

Liquidity and Capital Resources

The Company’s working capital as at January 31, 2021 was $221.6 million as compared to $223.7 million on April 30, 2020.

Cash was $94.1 million as at January 31, 2021 as compared to $75.0 million on April 30, 2020.

Cash generated from operations was $10.3 million for the quarter ended January 31, 2021 as compared to $67.3 million cash generated for the quarter ended January 31, 2020. Before taking into account taxes and the changes in non-cash working capital and current taxes, the Company generated $16.4 million from operations for the quarter ended January 31, 2021 compared to $23.7 million for the same period last year.

For the quarter, the Company used $10.0 million for investing activities, including $8.0 million in the investment in DD Sports, Inc. (ShotTracker).

For the quarter ended, the Company used cash in financing activities of $15.5 million which was principally a result of the payment of dividends of $13.7 million.

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Evertz Technologies Limited – Press Release

Quarter Ended January 31, 2021

Shipments and Backlog

At the end of February 2021, purchase order backlog was in excess of $125 million and shipments during the month of February 2021 were $25 million.

Dividend Declared

Evertz Board of Directors declared a regular quarterly dividend on March 3, 2021 of $0.18 per share.

The dividend is payable to shareholders of record on March 19, 2021 and will be paid on or about March 25, 2021.

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Evertz Technologies Limited – Press Release

Quarter Ended January 31, 2021

Selected Consolidated Financial Information

(in thousands of dollars, except earnings per share and percentages)

	Three month	Three month	period ended	period ended		Nine month	period ended	period ended
		January 31,				January		31,
		2021		2020		2021		2020
Revenue	$	92,776	$	121,226	$	249,595	$	344,425
Cost of goods sold		40,793		53,377		105,729		148,102
Gross margin		51,983		67,849		143,866		196,323
Expenses
Selling and administrative		11,734		17,863		36,426		52,197
General		817		927		2,609		2,685
Research and development		21,427		23,993		57,671		69,625
Investment tax credits		(3,931)		(2,056)		(10,100)		(6,037)
Share based compensation		2,268		1,186		3,578		4,058
Foreign exchange loss (gain)		5,344		(270)		9,750		2,637
		37,659		41,643		99,934		125,165
Earnings before undernoted		14,324		26,206		43,932		71,158
Finance income		77		84		621		896
Finance costs		(471)		(511)		(1,193)		(1,375)
Other income and expenses		96		162		(431)		303
Earnings before income taxes		14,026		25,941		42,929		70,982
Provision for (recovery of) income taxes
Current		2,423		6,798		10,910		18,072
Deferred		1,215		(258)		(132)		(224)
		3,638		6,540		10,778		17,848
Net earnings for theperiod	$	10,388	$	19,401	$	32,151	$	53,134
Net earnings attributable to non-controlling interest		116		143		346		427
Net earnings attributable to shareholders		10,272		19,258		31,805		52,707
Net earnings for theperiod	$	10,388	$	19,401	$	32,151	$	53,134
Earnings per share
Basic	$	0.13	$	0.25	$	0.42	$	0.69
Diluted	$	0.13	$	0.25	$	0.42	$	0.69
Consolidated Balance Sheet Data					As at			As at
				**January 31, **	2021		April 30, 2020
Cash and cash equivalents			$	94,063		$		75,025
Inventory			$	156,811		$		161,985
Working capital			$	221,587		$		223,720
Total assets			$	455,420		$		443,673
Shareholders' equity			$	298,727		$		295,012
Number of common shares outstanding:
Basic				76,284,366				76,449,446
Fully-diluted				82,201,366				78,077,946
Weighted average number of shares outstanding:
Basic				76,381,605				76,624,706
Fully-diluted				76,431,308				76,642,787

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Evertz Technologies Limited – Press Release

Quarter Ended January 31, 2021

Forward-Looking Statements

The report contains forward-looking statements reflecting Evertz’s objectives, estimates and expectations. Such forward looking statements use words such as “may”, “will”, “expect”, “believe”, “anticipate”, “plan”, “intend”, “project”, “continue” and other similar terminology of a forward-looking nature or negatives of those terms.

Although management of the Company believes that the expectations reflected in such forward-looking statements are reasonable, all forward-looking statements address matters that involve known and unknown risks, uncertainties and other factors. Accordingly, there are or will be a number of significant factors which could cause the Company’s actual results, performance or achievements, or industry results to be materially different from any future results performance or achievements expressed or implied by such forward-looking statements.

Conference Call

The Company will hold a conference call with financial analysts to discuss the results on March 3 at 5:00 p.m. (EDT). Media and other interested parties are invited to join the conference call in listen-only mode. The conference call may be accessed by dialing 647-792-1240 or toll-free (North America) 1-800-437-2398, access code 1237007.

For those unable to listen to the live call, a rebroadcast will also be available until April 2, 2021. The rebroadcast can be accessed at 647-436-0148 or toll-free 1-888-203-1112. The pass code for the rebroadcast is 1237007.

About Evertz

Evertz Technologies Limited (TSX: ET) designs, manufactures and markets video and audio infrastructure solutions for the television, telecommunications and new-media industries. The Company’s solutions are purchased by content creators, broadcasters, specialty channels and television service providers to support their increasingly complex multi-channel digital, and high and ultra-high definition television (“HDTV” and “UHD”) and next generation high bandwidth low latency IP network environments and by telecommunications and new-media companies. The Company’s products allow its customers to generate additional revenue while reducing costs through efficient signal routing, distribution, monitoring and management of content as well as the automation and orchestration of more streamlined and agile workflow processes on premise and in the “Cloud”.

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Evertz Technologies Limited – Press Release

Quarter Ended January 31, 2021