Evertz Technologies Limited — Interim / Quarterly Report 2022

Dec 8, 2021

Attention Business/Financial Editors:

Evertz Technologies reports Second Quarter results for the quarter ended October 31, 2021.

Burlington, December 8, 2021, Evertz Technologies Limited (TSX:ET), the leader in Software Defined Video Network (“SDVN”) technology, today reported its results for the second quarter ended October 31, 2021.

Second Quarter 2022 Highlights

• Quarterly revenue of $107.2 million, an increase of $6.7 million from the prior year

• US/Canada quarterly revenue up 17% from the prior year

• Net earnings of $17.2 million for the quarter

• Fully diluted earnings per share of $0.22 for the quarter

Selected Financial Information

Consolidated Statement of Earnings Data

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

RevenueGross marginEarnings from operationsNet earningsFully-diluted earnings per shareFully-diluted shares	Q2' 22Q2' 21107,199$ 100,482$ 61,07759,65923,70028,67217,18421,1880.22$ 0.28$ 76,561,48076,488,271

Selected Financial Information

Consolidated Balance Sheet Data (in thousands of dollars)

Cash and cash equivalentsWorking capitalTotal assetsShareholders' equity	Q2' 22YE'2137,666$ 108,771$ 144,918214,515405,587451,793221,164292,734

Revenue

For the quarter ended October 31, 2021, revenues were $107.2 million an increase of $6.7 million compared to revenues of $100.5 million for the quarter ended October 31, 2020. For the quarter, revenues in the United States/Canada region were $78.2 million an increase of 17% compared to $66.9 million in the same quarter last year. The International region had revenues of $29.0 million compared to $33.6 million in the same quarter last year.

Evertz Technologies Limited – Press Release

Quarter Ended October 31, 2021

Gross Margin

For the quarter ended October 31, 2021, gross margin was $61.1 million as compared to $59.7 million in the same quarter last year. Gross margin percentage was approximately 57.0% as compared to 59.4% in the quarter ended October 31, 2020.

Earnings

For the quarter ended October 31, 2021, net earnings were $17.2 million as compared to $21.2 million in the corresponding period last year.

For the quarter ended October 31, 2021, earnings per share on a fully-diluted basis were $0.22 as compared to $0.28 in the corresponding period last year.

Operating Expenses

For the quarter ended October 31, 2021, selling and administrative expenses were $14.8 million as compared to $12.8 million for the quarter ended October 31, 2020.

For the quarter ended October 31, 2021, gross research and development expenses were $24.4 million as compared to $19.7 million for the quarter ended October 31, 2020.

Liquidity and Capital Resources

The Company’s working capital as at October 31, 2021 was $144.9 million as compared to $214.7 million on April 30, 2021.

Cash was $37.7 million as at October 31, 2021 as compared to $108.7 million on April 30, 2021.

Cash generated from operations was $0.9 million for the quarter ended October 31, 2021 as compared to $20.8 million cash used for the quarter ended October 31, 2020. Before taking into account taxes and the changes in non-cash working capital and current taxes, the Company generated $23.1 million from operations for the quarter ended October 31, 2021 compared to $26.1 million for the same period last year.

For the quarter, the Company used $1.8 million for investing activities.

For the quarter ended, the Company used cash in financing activities of $91.7 million which was principally a result of the payment of dividends of $90.3 million, including a special dividend of $76.3 million.

Shipments and Backlog

At the end of November 2021, purchase order backlog was in excess of $162 million and shipments during the month of November 2021 were $39 million.

Dividend Declared

Evertz Board of Directors declared a regular quarterly dividend on December 8, 2021 of $0.18 per share.

The dividend is payable to shareholders of record on December 16, 2021 and will be paid on or about December 23, 2021.

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Evertz Technologies Limited – Press Release

Quarter Ended October 31, 2021

Selected Consolidated Financial Information

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

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----- Start of picture text ----- Three month period ended Six month period endedOctober 31, October 31,2021 2020 2021 2020Revenue $ 107,199 $ 100,482 $ 204,364 $ 156,819Cost of goods sold 46,122 40,823 86,601 64,936Gross margin 61,077 59,659 117,763 91,883Expenses Selling and administrative 14,773 12,773 28,730 24,692 General 1,259 897 2,370 1,792 Research and development 24,441 19,667 49,121 36,244 Investment tax credits (2,862) (4,684) (5,806) (6,169) Share based compensation 1,970 1,036 2,968 1,310 Foreign exchange (gain) loss (2,204) 1,297 (3,633) 4,40637,377 30,986 73,750 62,275Earnings before undernoted 23,700 28,673 44,013 29,608Finance income 137 597 220 690Finance costs (322) (371) (640) (722)- -Share of net loss from Investment in Associate, net of taxes (268) (598)Other income and expenses 174 (781) 186 (673)Earnings before income taxes 23,421 28,118 43,181 28,903Provision for (recovery of) income taxes Current 5,841 7,080 13,642 8,487 Deferred 396 (150) (2,333) (1,347)6,237 6,930 11,309 7,140Net earnings for the period $ 17,184 $ 21,188 $ 31,872 $ 21,763Net earnings attributable to non-controlling interest 193 140 334 230Net earnings attributable to shareholders 16,991 21,048 31,538 21,533Net earnings for the period $ 17,184 $ 21,188 $ 31,872 $ 21,763Earnings per shareBasic $ 0.22 $ 0.28 $ 0.41 $ 0.28Diluted $ 0.22 $ 0.28 $ 0.41 $ 0.28Consolidated Balance Sheet Data As at As atOctober 31, 2021 April 30, 2021Cash and cash equivalents $ 37,666 $ 108,771Inventory $ 163,965 $ 152,699Working capital $ 144,918 $ 214,515Total assets $ 405,587 $ 451,793Shareholders' equity $ 221,164 $ 292,734Number of common shares outstanding: Basic 76,284,366 76,284,366 Fully-diluted 81,818,866 82,169,366Weighted average number of shares outstanding: Basic 76,284,366 76,357,895 Fully-diluted 76,561,480 76,403,894----- End of picture text -----

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Evertz Technologies Limited – Press Release

Quarter Ended October 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 December 8, 2021 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 647-7921240 or toll-free (North America) 1-800-437-2398, access code 8697480.

For those unable to listen to the live call, a rebroadcast will also be available until January 8, 2021. The rebroadcast can be accessed at 647-436-0148 or toll-free 1-888-203-1112. The pass code for the rebroadcast is 8697480.

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 October 31, 2021