Evertz Technologies Limited — Management Reports 2024

Dec 10, 2024

EVERY TECHNOLOGIES LIMITED

MANAGEMENT'S DISCUSSION AND ANALYSIS

For the Second Quarter ended October 31, 2024

The following Management’s Discussion and Analysis is a review of results of the operations and the liquidity and capital resources of the Company. It should be read in conjunction with the selected consolidated financial information and other data and the Company’s consolidated financial statements and the accompanying notes contained on SEDAR. The consolidated financial statements of the Company are prepared in accordance with International Financial Reporting Standards (“IFRS”) and are presented in Canadian dollars. The fiscal year of the Company ends on April 30 of each year. Certain information contained herein is forward-looking and based upon assumptions and anticipated results that are subject to risks, uncertainties and other factors. Should one or more of these uncertainties materialize or should the underlying assumptions prove incorrect, actual results may vary significantly from those expected.

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.

The report is based on information available to management on December 10, 2024.

OVERVIEW

Evertz is a leading solutions provider to the television broadcast, telecommunications and new-media industries. Founded in 1966, Evertz is a leading supplier of software, equipment and technology solutions to content creators, broadcasters, specialty channels and television service providers. Evertz designs, manufactures and markets video and audio infrastructure solutions for the production, post-production and transmission of television content. 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-definition television (“HDTV/Ultra HD”) 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”.

The Company made early research and development investments to establish itself as the leading supplier to the broadcast industry addressing the ongoing technical transition to IP and IT based production, workflow and distribution systems helping to create more efficient and agile workflows enabling the proliferation of high quality video emerging Ultra HD, High Dynamic range initiatives. The Company has maintained its track record of rapid innovation; is a leader in the expanding Internet Protocol Television (“IPTV”) market and a leader in Software Defined Video Network (“SDVN”) technology. The Company is committed to maintaining its leadership position, and as such, a significant portion of the Company’s

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024

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staff is focused on research and development to ensure that the Company’s products are at the forefront of the industry. This commitment contributes to the Company being consistently recognized as a leading broadcast and video networking industry innovator by its customers.

QUARTER END HIGHLIGHTS

Revenue was $125.3 million for the second quarter ended October 31, 2024; a decrease of $5.4 million, when compared to $130.7 million for the same period ended October 31, 2023.

For the second quarter ended October 31, 2024, net earnings were $15.9 million, a decrease from $22.3 million for the second quarter ended October 31, 2023. Fully diluted earnings per share were $0.21 a decrease from $0.29 in the second quarter ended October 31, 2023.

For the second quarter ended October 31, 2024, net earnings from operations were $21.4 million, a decrease from $32.2 million for the second quarter ended October 31, 2023. For the second quarter ended October 31, 2024, foreign exchange gain during the quarter was $0.8 million, compared to a foreign exchange gain of $2.9 million for the second quarter October 31, 2023.

Gross margin during the second quarter ended October 31, 2024 was 59.3% compared to 59.7% in the second quarter ended October 31, 2023.

Selling and administrative expenses for the second quarter ended October 31, 2024 was $18.4 million as compared to the second quarter ended October 31, 2023 of $17.5 million. As a percentage of revenue, selling and administrative expenses totaled 14.7% for the second quarter ended October 31, 2024 compared to 13.4% in the second quarter ended October 31, 2023.

Research and development expenses were $36.3 million for the second quarter ended October 31, 2024 as compared to $32.2 million for the second quarter ended October 31, 2023.

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024

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

Selected Consolidated Financial Information

	Three month period ended October 31,		Six month period ended October 31,
	2024	2023	2024	2023
Revenue	$ 125,259	$ 130,749	$ 236,902	$ 256,568
Cost of goods sold	50,999	52,730	96,380	106,513
Gross margin	74,260	78,019	140,522	150,055
Expenses
Selling and administrative	18,372	17,500	35,976	33,898
General	1,302	1,173	2,583	2,332
Research and development	36,279	32,167	73,653	64,157
Investment tax credits	(3,590)	(3,212)	(7,350)	(6,607)
Share based compensation	1,267	1,154	2,442	2,679
Foreign exchange gain	(761)	(2,913)	(782)	(861)
	52,869	45,869	106,522	95,598
Earnings before undernoted	21,391	32,150	34,000	54,457
Finance income	837	413	1,542	537
Finance costs	(374)	(341)	(683)	(585)
Net loss on investments through profit and loss	-	(2,492)	-	(2,704)
Other income and expenses	101	216	311	122
Earnings before income taxes	21,955	29,946	35,170	51,827
Provision for (recovery of) income taxes
Current	5,313	6,675	10,876	14,436
Deferred	705	1,020	(1,354)	(752)
	6,018	7,695	9,522	13,684
Net earnings for the period	$ 15,937	$ 22,251	$ 25,648	$ 38,143
Net earnings attributable to non-controlling interest	133	158	175	299
Net earnings attributable to shareholders	15,804	22,093	25,473	37,844
Net earnings for the period	$ 15,937	$ 22,251	$ 25,648	$ 38,143
Earnings per share
Basic	$ 0.21	$ 0.29	$ 0.33	$ 0.49
Diluted	$ 0.21	$ 0.29	$ 0.33	$ 0.49
Consolidated Balance Sheet Data			As At October 31, 2024	As At April 30, 2024
Cash and Cash Equivalents			$ 61,729	$ 86,325
Inventory			$ 206,599	$ 206,154
Working capital			$ 199,805	$ 201,437
Total assets			$ 451,165	$ 484,722
Shareholders' equity			$ 262,478	$ 263,267
Number of common shares outstanding:
Basic			75,968,926	76,164,322
Fully-diluted			81,497,151	81,614,447
Weighted average number of shares outstanding:
Basic			76,098,477	76,088,691
Fully-diluted			77,007,835	77,044,858

Evertz Technologies Limited - MD&A

Second quarter ended October 31, 2024

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Consolidated Statement of Operations Data
(in percentage except earnings per share and share data)

	Three month period ended October 31,		Six month period ended October 31,
	2024	2023	2024	2023
Revenue	100.0%	100.0%	100.0%	100.0%
Cost of goods sold	40.7%	40.3%	40.7%	41.5%
Gross margin	59.3%	59.7%	59.3%	58.5%
Expenses
Selling and administrative	14.7%	13.4%	15.2%	13.2%
General	1.0%	0.9%	1.1%	0.9%
Research and development	29.0%	24.6%	31.1%	25.0%
Investment tax credits	(2.9%)	(2.5%)	(3.1%)	(2.6%)
Share based compensation	1.0%	0.9%	1.00%	1.0%
Foreign exchange gain	(0.6%)	(2.2%)	(0.3%)	(0.3%)
	42.2%	35.1%	45.0%	37.2%
Earnings before undernoted	17.1%	24.6%	14.3%	21.3%
Finance income	0.7%	0.3%	0.7%	0.2%
Finance costs	(0.3%)	0.3%	(0.3%)	(0.2%)
Net loss on investments through profit and loss	-	(1.9%)	-	(1.1%)
Other income and expenses	0.1%	0.2%	0.1%	-
Earnings before income taxes	17.6%	22.9%	14.8%	20.2%
Provision for (recovery) of income taxes
Current	4.2%	5.1%	4.6%	5.6%
Deferred	0.6%	0.8%	(0.6%)	(0.3%)
	4.8%	5.9%	4.0%	5.3%
Net earnings for the period	12.8%	17.0%	10.8%	14.9%
Net earnings attributable to non-controlling interest	0.1%	0.1%	0.1%	0.1%
Net earnings attributable to shareholders	12.6%	16.9%	10.7%	14.8%
Net earnings for the period	12.7%	17.0%	10.8%	14.9%
Earnings per share:
Basic	$0.21	$0.29	$0.33	$0.49
Diluted	$0.21	$0.29	$0.33	$0.49

REVENUE AND EXPENSES

Revenue

The Company generates revenue principally from the sale of software, equipment, and technology solutions to content creators, broadcasters, specialty channels and television service providers.

The Company markets and sells its products and services through both direct and indirect sales strategies. The Company's direct sales efforts focus on large and complex end-user customers. These customers have long sales cycles typically ranging from four to eight months before an order may be received by the Company for fulfillment.

The Company monitors revenue performance in two main geographic regions: (i) United States/Canada and (ii) International.

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024

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The Company currently generates approximately 65% to 75% of its revenue in the United States/Canada. The Company recognizes the opportunity to more aggressively target markets in other geographic regions and intends to invest in personnel and infrastructure in those markets.

While a significant portion of the Company’s expenses are denominated in Canadian dollars, the Company collects substantially all of its revenues in currencies other than the Canadian dollar and therefore has significant exposure to fluctuations in foreign currencies, in particular the US dollar. Approximately 80% to 85% of the Company’s revenues are denominated in US dollars.

Revenue

(In thousands of Canadian dollars, except for percentages)	Three month period ended October 31,		% increase (decrease)	Six month period ended October 31,		% increase (decrease)
	2024	2023		2024	2023
United States/Canada	$ 94,850	$ 74,004	28%	$ 168,814	$ 161,025	5%
International	30,409	56,745	(46%)	68,088	95,543	(29%)
	$ 125,259	$ 130,749	(4%)	$ 236,902	$ 256,568	(8%)

Total revenue for the second quarter ended October 31, 2024, was $125.3 million, a decrease of $5.4 million or 4% as compared to revenue of $130.7 million for the second quarter ended October 31, 2023.

Total revenue for the six month period ended October 31, 2024 was $236.9 million, a decrease of $19.7 million or 8% as compared to revenue of $256.6 million for the six month period ended October 31, 2023.

Revenue in the United States/Canada region was $94.9 million for the second quarter ended October 31, 2024, an increase of $20.8 million or 28% when compared to revenue of $74.0 million for the second quarter ended October 31, 2023.

Revenue in the United States/Canada region was $168.8 million for the six month period ended October 31, 2024, an increase of $7.8 million or 5% when compared to revenue of $161.0 million for the six month period ended October 31, 2023.

Revenue in the International region was $30.4 million for the second quarter ended October 31, 2024, a decrease of $26.4 million or 46% as compared to revenue of $56.8 million for the second quarter ended October 31, 2023.

Revenue in the International region was $68.1 million for the six month period ended October 31, 2024, a decrease of $27.4 million or 29% as compared to revenue of $95.5 million for the six month period ended October 31, 2023.

Cost of Sales

Cost of sales consists primarily of costs of manufacturing and assembly of products. A substantial portion of these costs is represented by components and compensation costs for the manufacture and assembly of products as well as inventory obsolescence and write-offs. Cost of sales also includes related overhead, certain depreciation, final assembly, quality assurance, inventory management and support costs. Cost of sales also includes the costs of providing services to clients, primarily the cost of service-related personnel.

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024

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Gross Margin

(In thousands of Canadian dollars, except for percentages)	Three month period ended October 31,		% increase (decrease)	Six month period ended October 31,		% increase (decrease)
	2024	2023		2024	2023
Gross margin	$ 74,260	$ 78,019	(5%)	$ 140,522	$ 150,055	(6%)
Gross margin % of sales	59.3%	59.7%		59.3%	58.5%

Gross margin for the second quarter ended October 31, 2024 was $74.3 million, compared to $78.0 million for the second quarter ended October 31, 2023. As a percentage of revenue, the gross margin was 59.3% for the second quarter ended October 31, 2024 compared to 59.7% for the second quarter ended October 31, 2023.

Gross margin for the six month period ended October 31, 2024 was $140.5 million, compared to $150.1 million for the six month period ended October 31, 2023. As a percentage of revenue, the gross margin was 59.3% for the six month period ended October 31, 2024 compared to 58.5% for the six month period ended October 31, 2023.

The Company expects that it will continue to experience competitive pricing pressures and increased lead time of components. The Company continually seeks to build its products more efficiently and enhance the value of its product and service offerings in order to reduce the risk of declining gross margin associated with the competitive environment.

Operating Expenses

The Company’s operating expenses consist of: (i) selling, administrative and general; (ii) research and development and (iii) foreign exchange.

Selling expenses primarily relate to remuneration of sales and technical personnel. Other significant cost components include trade show costs, advertising and promotional activities, demonstration material and sales support. Administrative expenses relate primarily to remuneration costs of related personnel, legal and professional fees, occupancy and other corporate and overhead costs. The Company also records certain depreciation and amortization charges as general expenses. For the most part, selling, and administrative expenses are fixed in nature and do not fluctuate directly with revenue. The Company has certain selling expenses that tend to fluctuate in regards to the timing of trade shows.

The Company invests in research and development to maintain its position in the markets it currently serves and to enhance its product portfolio with new functionality and efficiencies. Although the Company’s research and development expenditures do not fluctuate directly with revenues, it monitors this spending in relation to revenues and adjusts expenditures when appropriate. Research and development expenditures consist primarily of personnel costs and material costs. Research and development expenses are presented on a gross basis (without deduction of research and development tax credits). Research and development tax credits associated with research and development expenditures are shown separately under research and development tax credits.

Selling and Administrative

(In thousands of Canadian dollars, except for percentages)	Three month period ended October 31,		% increase	Six month period ended October 31,		% increase
	2024	2023		2024	2023
Selling and administrative	$ 18,372	$ 17,500	5%	$ 35,976	$ 33,898	6%
Selling and administrative % of sales	14.7%	13.4%		15.2%	13.2%

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024

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Selling and administrative expenses excludes stock based compensation, depreciation and amortization of intangibles. Selling and administrative expenses for the second quarter ended October 31, 2024 were $18.4 million or 14.7% of revenue, as compared to selling and administrative expenses of $17.5 million or 13.4% of revenue for second quarter ended October 31, 2023. The increase of $0.9 million includes $0.6 million in increased salary and benefit costs, $0.3 million increase in trade show and promotion costs.

Selling and administrative expenses for the six month period ended October 31, 2024 were $36.0 million or 15.2% of revenue, as compared to selling and administrative expenses of $33.9 million or 13.2% of revenue for the six month period ended October 31, 2023. The increase of $2.1 million includes $1.6 million in increased salaries and benefits and $0.6 million in trade show and promotion costs.

Share Based Compensation

In June 2022, the Company adopted an equity based restricted share unit plan. During the six and three month period ended October 31, 2024, share based compensation expense associated with the plan was $2.3 million, and $1.2 million respectively. This is compared to $2.2 million and $1.0 million respectively in the prior year.

Research and Development (R&D)

(In thousands of Canadian dollars, except for percentages)	Three month period ended October 31,		% increase	Six month period ended October 31,		% increase
	2024	2023		2024	2023
Research and development expenses	$ 36,279	$ 32,167	13%	$ 73,653	$ 64,157	15%
Research and development % of sales	29.0%	24.6%		31.1%	25.0%

Research and development expenses exclude stock based compensation but includes depreciation. For the second quarter ended October 31, 2024, gross R&D expenses were $36.2 million, an increase of $4.1 million as compared to an expense of $32.2 million for the second quarter ended October 31, 2023. The increase of $4.1 million includes a $1.9 million increase in salary costs, $0.6 million increase in specialized services costs for updating a product line that was included in a prior acquisition and $0.9 million increase of software, prototype and materials costs.

For the six month period ended October 31, 2024, gross R&D expenses were $73.7 million, an increase of $9.5 million as compared to an expense of $64.2 million for the six month period ended October 31, 2023. The increase of $9.5 million includes a $4.7 million increase in North American salary costs due to increased head count, $1.2 million in overseas salaries, a $1.8 million increase in total software, materials and prototype costs and a $1.0 million increase in in specialized services costs.

Investment Tax Credits

For the second quarter ended October 31, 2024, investment tax credits were $3.5 million compared to $3.2 million for the second quarter ended October 31, 2023.

Foreign Exchange

For the second quarter ended October 31, 2024, the foreign exchange gain was $0.8 million, as compared to a foreign exchange gain for the second quarter ended October 31, 2023 of $2.9 million. The current period gain was predominantly driven by the translation of US dollar assets into Canadian dollars at a foreign exchange rate higher than the value of the US dollar against the Canadian dollar as at October 31, 2024.

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024

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For the six month period ended October 31, 2024, the foreign exchange gain was $0.8 million, as compared to a foreign exchange gain for the six month period ended October 31, 2023 of $0.9 million.

Investments, Finance Income, Finance Costs, Other Income and Expenses

For the second quarter ended October 31, 2024, finance income, investment losses, finance costs, other income and expenses netted to a gain of $0.6 million.

LIQUIDITY AND CAPITAL RESOURCES

Liquidity and Capital Resources
(in thousands of dollars except ratios)	As at		As at
Key Balance Sheet Amounts and Ratios:	October 31, 2024		April 30, 2024
Cash and cash equivalents	$	61,729	$ 86,325
Working capital	$	199,805	$ 201,437
Long-term assets	$	73,855	$ 77,266
Days sales outstanding in accounts receivable		50	60
Statement of Cash Flow Summary	Three month period ended October 31,		Six month period ended October 31,
	2024	2023	2024
Operating activities	$ (9,637)	$ 20,282	$ 12,630
Investing activities	$ (1,443)	$ 4,088	$ (3,443)
Financing activities	$ (18,716)	$ (16,967)	$ (35,538)
Net (decrease) increase in cash	$ (29,291)	$ 6,931	$ (24,596)

Operating Activities

For the second quarter ended October 31, 2024, the Company cash used from operations of $9.6 million, compared to $20.3 million cash generated for the second quarter ended October 31, 2023. Excluding the effects of the changes in non-cash working capital and current taxes, the Company generated cash from operations of $21.8 million for the second quarter ended October 31, 2024 compared to $30.9 million for the second quarter ended October 31, 2023.

For the six month period ended October 31, 2024, the Company generated cash for operations of $12.6 million, compared to $80.2 million for the six month period ended October 31, 2023. Excluding the effects of the changes in non-cash working capital and current taxes, the Company generated cash from operations of $35.2 million for the six month period ended October 31, 2024 compared to $50.8 million for the six month period ended October 31, 2023.

Investing Activities

From investing activities, the Company used $1.4 million for the second quarter ended October 31, 2024, which was principally driven by the acquisition of capital assets of $1.5 million.

The Company used $3.4 million for investing activities for the six month period ended October 31, 2024, which was principally driven by the acquisition of capital assets of $3.5 million.

Financing Activities

For the second quarter ended October 31, 2024, the Company used cash from financing activities of $18.7 million, which was principally driven by dividends paid of $14.8 million, and capital stock repurchased for $1.8 million.

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024

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For the six month period ended October 31, 2024, the Company used cash from financing activities of $35.5 million, which was principally driven by dividends paid of 29.7 million and capital stock repurchased for $2.4 million.

WORKING CAPITAL

As at October 31, 2024, the Company had cash and cash equivalents of $61.8 million, compared to $86.3 million at April 30, 2024.

The Company had working capital of $199.8 million as at October 31, 2024 compared to $201.4 million as at April 30, 2024.

The Company believes that the current balance in cash plus future cash flow from operations will be sufficient to finance growth and related investment and financing activities in the foreseeable future.

Day sales outstanding in accounts receivable were 50 days at October 31, 2024 as compared to 60 for April 30, 2024.

SHARE CAPITAL STRUCTURE

Authorized capital stock consists of an unlimited number of common and preferred shares.

| | As at
October 31, 2024 | As at
April 30, 2024 |
| --- | --- | --- |
| Common shares | 75,968,926 | 76,164,322 |
| Stock options granted and outstanding | 3,887,225 | 3,955,625 |
| Restricted share units granted and outstanding | 1,641,000 | 1,494,500 |

FINANCIAL INSTRUMENTS

The Company's financial instruments consist of cash and cash equivalents, trade and other receivables, trade and other payables and long-term debt. Unless otherwise noted, it is management's opinion that the Company is not exposed to significant interest or credit risks arising from these financial instruments. The Company estimates the fair value of these instruments approximates the carrying values as listed below.

Fair Values and Classification of Financial Instruments:

The following summarizes the significant methods and assumptions used in estimating the fair values of financial instruments:

I. Quoted prices (unadjusted) in active markets for identical assets or liabilities.
II. Inputs other than quoted prices included in level I that are observable for the asset or liability, either directly or indirectly. Cash and cash equivalents, trade and other receivables, trade and other payables and long-term debt fair value measurements have been measured within level II.
III. Inputs for the asset or liability that are not based on observable market data.

CONTRACTUAL OBLIGATIONS

The following table sets forth the Company's contractual obligations as at October 31, 2024:

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024

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Payments Due by Period
(In thousands)	Total	Less than 1 Year	2-3 Years	4-5 Years	Thereafter
Lease commitments	$ 21,384	$ 3,046	$ 9,767	$ 6,845	$ 1,726
Redemption Liabilities	3,823	3,823	-	-	-
	$ 25,207	$ 6,869	$ 9,767	$ 6,845	$ 1,726

OFF-BALANCE SHEET FINANCING

The Company does not have any off-balance sheet arrangements.

RELATED PARTY TRANSACTIONS

In the normal course of business, we may enter into transactions with related parties. These transactions occur under market terms consistent with the terms of transactions with unrelated arms-length second parties. The Company continues to lease a premise from a company in which two shareholders' each indirectly hold a 16% interest, continues to lease a facility from a company in which two shareholders each indirectly hold a 20% interest, continues to lease three facilities for manufacturing where two shareholders indirectly own 100% interest, continues to lease a facility from a company in which two shareholders each indirectly own a 35% interest, and continues to lease a facility where two shareholders each indirectly own 46.6%.

SELECTED CONSOLIDATED QUARTERLY FINANCIAL INFORMATION

The following table sets out selected consolidated financial information for each of the eight quarters ended October 31, 2024. In the opinion of management, this information has been prepared on the same basis as the audited consolidated financial statements. The operating results for any quarter should not be relied upon as any indication of results for any future period.

Quarter Ending
(In thousands)	2024				2023
	Oct 31	July 31	Apr 30	Jan 31	Oct 31	July 31	Apr 30	Jan 31
Hardware Revenue	$ 70,477	$ 55,711	$ 75,057	$ 82,840	$ 86,470	$ 81,378	$ 78,365	$ 70,685
Reoccurring Software, Services and Other Software Revenue	$ 54,783	55,932	47,713	52,438	44,279	44,441	50,554	40,188
Revenue	$125,260	$111,643	$ 122,770	$ 135,278	$ 130,749	$ 125,819	$ 128,920	$ 110,873
Cost of goods sold	50,999	45,381	50,115	55,545	52,730	53,783	52,274	45,262
Gross margin	$ 74,261	$ 66,262	$ 72,655	$ 79,733	$ 78,019	$ 72,036	$ 76,646	$ 65,611
Operating expenses	52,869	53,653	53,114	53,335	45,869	49,729	46,179	48,146
Earnings from operations	$ 21,392	$ 12,609	$ 19,541	$ 26,398	$ 32,150	$ 22,307	$ 30,467	$ 17,465
Non-operating income	564	606	28	(436)	(2,204)	(426)	4,547	(1,243)
Earnings before taxes	$ 21,955	$ 13,215	$ 19,569	$ 25,962	$ 29,946	$ 21,881	$ 25,921	$ 16,222
Net earnings	$ 15,804	$ 9,669	13,764	$ 18,722	$ 22,093	$ 15,593	$ 18,423	$ 11,951
Net earnings per share:
Basic	$ 0.21	$ 0.13	$ 0.18	$ 0.25	$ 0.29	$ 0.20	$ 0.24	$ 0.16
Diluted	$ 0.21	$ 0.13	$ 0.18	$ 0.24	$ 0.29	$ 0.20	$ 0.24	$ 0.16
Dividends per share:	$ 0.195	$ 0.195	$ 0.195	$ 0.195	$ 0.19	$ 0.19	$ 0.19	$ 0.19

The Company's revenue and corresponding earnings can vary from quarter to quarter depending on the delivery requirements of our customers. Our customers can be influenced by a variety of factors including upcoming sports or entertainment events as well as their access to capital. Net earnings represent net earnings attributable to shareholders.

Evertz Technologies Limited - MD&A
Second quarter ended October 31, 2024

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DISCLOSURE CONTROLS AND PROCEDURES

Management, including the Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in National Instrument 52-109 of the Canadian Securities Administrators) as of October 31, 2024.

Management has concluded that, as of October 31, 2024, the Company’s disclosure controls and procedures were effective to provide reasonable assurance that material information relating to the Company would be made known to them by others within the Company, particularly during the period in which this report was being prepared.

INTERNAL CONTROLS OVER FINANCIAL REPORTING

Management is responsible for and has designed internal controls over financial reporting, or caused it to be designed under management’s supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS. Management has concluded that, as of October 31, 2024, the Company’s internal controls over financial reporting were effective to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with IFRS.

CHANGES IN INTERNAL CONTROLS OVER FINANCIAL REPORTING

There have been no changes to the Company’s internal controls over financial reporting during the period ended October 31, 2024 that have materially affected, or reasonably likely to materially affect, its internal controls over financial reporting. Management is currently operating under the Committee of Sponsoring Organizations of the Treadway Commission Internal Control-Integrated Framework: 2013.

OUTLOOK

Management is encouraged with the Company’s revenue outlook, including within the cloud native technology and service business, as evidenced by the receipt of significant orders and increase in the Company’s backlog. Gross margin percentages may vary depending on the mix of products sold, the Company’s success in winning more complete projects, utilization of manufacturing capacity and the competitiveness of the pricing environment. R&D will continue to be a key focus as the Company continues to invest in new product developments.

RISKS AND UNCERTAINTIES

The Company risk factors are outlined in our AIF filed on SEDAR.

Evertz Technologies Limited – MD&A
Second quarter ended October 31, 2024