Release Date: September 11, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Evertz Technologies Ltd (EVTZF, Financial) reported a strong gross margin of 59.4%, up from 57.3% in the prior year.
- The company saw a significant increase in software and services revenue, which rose by 26% to $55.9 million.
- Evertz Technologies Ltd (EVTZF) has a robust purchase order backlog and shipments totaling over $335 million.
- The company closed the quarter with a strengthened cash position of $91 million, up from $48.9 million a year ago.
- Evertz Technologies Ltd (EVTZF) declared a quarterly dividend of $0.195 per share, reflecting confidence in its financial health.
Negative Points
- Total sales for the first quarter decreased to $111.6 million from $125.8 million in the same quarter of the previous year.
- Hardware revenue saw a significant decline from $81.4 million to $55.7 million quarter-over-quarter.
- There was a decrease in working capital, which stood at $197.7 million, down $3.7 million from the previous year.
- Selling and administrative expenses increased to $17.6 million, representing 15.8% of revenues compared to 13% last year.
- The company experienced a foreign exchange loss of $2.1 million in the first quarter of the previous year.
Q & A Highlights
Q: Can you clarify whether the revenue decline is due to industry dynamics, macro issues, or project timing?
A: Brian Campbell, Executive Vice President - Business Development, explained that the decline is primarily due to project timing. Despite the revenue dip, Evertz maintains a robust order backlog and solid shipment numbers, indicating strong underlying demand.
Q: Are there any notable operational expenses this quarter or upcoming?
A: Brian Campbell noted that travel and entertainment costs decreased due to the absence of the NAB event, but they expect an increase in Q2 due to the IBC event. Additionally, temporary elevated resource costs and co-op hires contributed to higher R&D expenses.
Q: Is there significant seasonality in software and services revenue?
A: Douglas Moore, Chief Financial Officer, stated that while there can be some seasonality due to license renewals, it is not a major factor. Revenue can fluctuate due to project milestones, as seen with a $6 million deferred revenue release this quarter.
Q: What is driving the high percentage of software and services revenue this quarter?
A: Brian Campbell attributed the increase to both lighter hardware revenues and a positive trend in software and services. The growth is broad-based rather than driven by a single program or region.
Q: What are the plans for the growing cash balance?
A: Douglas Moore mentioned that the Board is aware of the growing cash balance and considers options such as dividends, share buybacks, and acquisition opportunities. The company continues to generate strong cash flow.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
