Thank you, John. Good afternoon, everyone, and welcome to Evertz Technologies conference call for our fiscal 2026 third quarter ended January 31st, 2026, with Doug Moore, Evertz Chief Financial Officer, and myself, Brian Campbell.

Please note that our financial press release and MD&A will be available on SEDAR and on the company investor website. Doug and I will comment on the financial results, and then open the call to your questions.

Turning now to Evertz results, I'll begin by providing a few highlights, and then Doug will provide additional detail. First off, sales for the third quarter totaled a record $139.3 million, up 5% sequentially from the prior quarter.

This includes revenue in the international region of $43.7 million, up 27.7% sequentially. Recurring software, services, and other software revenue increased 12.3% year-over-year, totaling $62.5 million in the quarter.

Our sales base is well diversified, with the top 10 customers accounting for approximately 44% of sales during the quarter, with no single customer accounting for more than 16% of sales. In fact, we had 107 customer orders of over $200,000.

Gross margin in the quarter was $81.2 million, or 58.3%, compared to 57.8% in the third quarter of the prior year. Net earnings were $18.7 million, resulting in fully diluted earnings per share of 24 cents for the quarter.

Investment in research and development totaled $36.7 million. Evertz working capital was $133.2 million, including cash of $24.8 million as at January 31st, 2026.

At the end of February, Evertz purchase order backlog was more than $246 million, and shipments during the month of February were $32 million. We attribute this strong financial performance and solid 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 Evertz IP-based software-defined video networking solutions, Evertz IT 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, the board of directors declared a regular quarterly dividend of 20.5 cents per share payable on or about March 20th. I will now hand over to Doug Moore, Evertz Chief Financial Officer, to cover our results in greater detail.

All right. Thanks, Brian, and good afternoon, everyone.

Sales were $139.3 million in the third quarter of fiscal 2026. That's a 2% increase compared to $136.9 million in the third quarter of fiscal 2025.

For the nine months ending January 31st, 2026, sales were $384.2 million, up $10.4 million or 3% for the nine-month period ending January 31st, 2025. Quarterly hardware revenue was $76.8 million, a decrease from $81.2 million in the prior year, while software and services revenue increased to $62.5 million from $55.7 million in the prior year.

Revenues from software and services represented approximately 45% of the total revenue in the quarter. Year to date, hardware revenue is up 1% year-over-year to $209.3 million for the nine months ending January 31st, 2026, while revenues from software and services is up 5% to $174.9 million from $166.4 million in the prior year.

Year to date, software and service revenue represented approximately 46% of total revenue over the period. Looking at regional revenue, quarterly revenues in the US-Canadian region declined 3% to $95.6 million compared to $99.1 million in the prior year.

This was more than offset by a 15% increase in quarterly revenues in the international region, which were $43.7 million compared to $37.8 million in the prior year. The international segment represented 31% of total sales in the quarter compared to 28% in the same period last year.

For the nine months ending January 31st, revenues in the Canadian-US region were up 2% to $273.6 million, while international revenue increased 3% to $110.6 million compared to $105.9 million in the same period last year. For the nine-month period ending January 31st, international sales represented 29% of total sales compared to 28% in the same period last year.

Gross margin for the quarter was 58.3%, as compared to 57.8% in the prior year. Then for the nine months ending January 31st, the gross margin was 59.3%.

Both the quarter-end and year-end gross margin percentages were within the company's 56% to 60% target range. Looking at S&A expenses, S&A was $18.6 million in the third quarter, a decline of $0.6 million or 3% for the same period last year.

Selling and admin expenses as a percentage of revenue were approximately 13.3% compared to 14% for the same period last year. Sequentially, selling and admin is down approximately $0.5 million from Q2.

That decline is primarily driven by the timing of trade show and promotions costs, which decreased about $900,000 as in Q2 we attended our IBC trade show last quarter. For the nine months ending January 31st, selling and admin expenses were $56.3 million, or 14.7% of sales.

That's compared to $55.2 million, or 14.7% of sales, for the same period last year. Research and development expenses were $36.7 million for the third quarter.

That represents a $0.1 million increase over the same period last year. As a percentage of revenue, R&D expenses were 26.4% compared to 26.7% in the prior year.

For the nine months ending January 31st, R&D expenses were $110.4 million, or 28.7% of sales. That's compared to $110.2 million for the same period last year.

ITCs for the quarter were $4.8 million. That's compared to ITCs of $3.6 million in the prior year third quarter.

Foreign exchange for the third quarter resulted in a loss of $2.3 million as compared to a gain for the third quarter ended January 31st, 2025 of $3.9 million. The largest driver behind the current period loss was a translation of US dollar assets into Canadian dollars given a decline of the US dollar versus the Canadian dollar over the quarterly period.

We had closed October 31st at approximately 1.401, US to Canadian, and that dropped to approximately 1.361 as at January 31st. For the nine months ended January 31st, foreign exchange resulted in a loss of $0.8 million compared to a gain of $4.7 million in the same period last year.

Turning to the discussion of liquidity of the company, cash as at January 31st, 2026 was $24.8 million, a decline compared to cash of $111.7 million as at April 30th, 2025. The decline was primarily due to $91 million in dividends distributed in the quarter, including $75.5 million in special dividends paid during Q3.

Working capital was $133.2 million as at January 31st compared to $206.9 million at the end of April 30th, 2025. Looking at cash flows for the quarter, the company generated cash from operations of $29.3 million, which is net of a $4.4 million change in non-cash working capital and current taxes.

If the effects of changes in non-cash working capital and current taxes were excluded from the calculation, the company generated $24.9 million in cash from operations during the quarter. It's worth noting we did use about $10 million in cash in inventory in the quarter as we purchased some last-time buy products and also securing parts for planned production, we increased raw materials.

The company used cash of $7 million for investing activities, which was principally driven by the acquisition of capital assets in the quarter, including the acquisition of an airplane for $4.4 million, replacing aircraft previously sold during the year. The company used cash in financing activities of $92.4 million, which, as noted, was principally driven by dividends paid of $91 million, including the special dividend of $75.5 million.

Finally, looking at our share capital position at January 31st, 2026, shares outstanding were approximately 75.5 million, and options and share-based RSUs outstanding were approximately 4.5 million. Weighted average shares outstanding were 75.5 million, and weighted average fully diluted shares were 76.7 million as at January 31st.

That concludes the review of our financial results and position for the third quarter. Finally, 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 yourself.

Thank you, Doug. John, we're now ready to open the call to questions.

Hi. Good afternoon.

North American growth was clearly a little bit slower, recognizing that you had strong growth internationally. With respect to North America, anything you'd call out as far as what you're seeing in the environment, or is that just reflective of project timing, which, as we know, can be sometimes lumpy?

Thanos, it's Brian. I'm actually on a remote cell phone here in Ottawa at a defense conference event, and that you were breaking up a little bit there.

Could you repeat the question for us?

Sure. I was just asking about the slower growth in North America during the quarter, whether you've seen any change in the end markets or whether that's just reflective of project timing and lumpiness.

I would advise that it's more reflective of timing and lumpiness. We haven't seen a significant change, and we are heading into the NAB event the tail end of April, where we're going to be connecting again directly with many customers on site.

We're quite excited about that.

Okay. Clearly, defense is topical, maybe on each side of the border.

We've seen Canada focusing on ramping up domestic procurement, and in the US, you've obviously been investing in building out your operations. Can you update us in terms of what you're seeing with respect to defense opportunities?

We're definitely encouraged by the steps that are being taken on multiple fronts, whether that's government initiatives, the mandate, the defense and Canadian defense sector, and the internal people as well, too. That tends to be a longer-term sales cycle, but it's all quite encouraging.

We're very intent on devoting sufficient resources to help the Canadian government as they're moving forward. As we have had successes over the years in the US and with NATO partners.

Great. Then maybe one last one for me.

OpEx has been relatively stable in recent quarters, which is good to see that expense discipline. Any puts and takes as we think about near-term OpEx trajectory, or should this be representative of the run rate near-term?

No, the big thing to call out there is while Q2 had IBC, Q4 has NAB. That is a pretty significant show for us.

Just from a Q3 to Q4 perspective, I would expect an increase of $1.5 million to $2 million. On the Q4 front as we ramp up for that show.

A little bit harder to forecast, but we do often have some increases in R&D materials and prototypes, which is historically last couple years anyway, been about an extra half-million in Q4. Then beyond Q4, there's nothing specific to call out other than inflationary manners.

Great. I'll pass the line.

Thank you.

Hi, Brian. I think you noted you were attending the Ottawa Conference on Security and Defence earlier in the call.

I think I heard that. Could you talk about what you're showing at the conference, what are the products that you're displaying to a defense customer?

What are the areas where you think Evertz can be meaningful in supplying the Canadian defence establishment?

It isn't as much a trade show as you're familiar with the NAB and IBC. It's more attended and conference, but we're definitely continuing to reinforce and make strong relationships on multiple fronts.

It is monitoring command and control solutions, our transport. As core elements of our key technologies are Common Criteria and NIAP-certified, and that plays very well to the direction that's being taken by much of the new spending initiatives.

No specific product areas that you're in a sales motion at this conference. Is there anything worth highlighting?

You understand you're highlighting products that you have certifications related to, but what product areas would you highlight as particularly relevant to a defense customer?

Rob, other than the ones I articulated previously, which is command and control-relevant ones, which are multiviewers, signal processing, the DreamCatcher live production solutions, that whole family of our technical operations center, live production, replay, storage solutions and transport all fall into categories that would be of demand. Of course, the RF solutions, of which we have many, and were at the forefront of the DIFI push, which is the digitization of IF and RF solutions.

Great. That's great color.

Also noted you added SOC 2 to the Evertz.io product, which maybe gives us a sense of what that opens up for Evertz? Is that a meaningful addressable market change?

It's very early days. I don't have anything to add there.

Okay. Then know the backlog ticked up for the first time in quarter-over-quarter, sequentially it ticked up for the first time in in a while.

Maybe is is that driven by like maybe a weaker level of February shipments, or is it is there another factor to call out there?

Doug, do you want to handle that?

Sure. It's just, again, there's some lumpiness in projects, whether we deliver or they come in, some significant orders come in at a time.

It's just a reflection of strong demand. You are correct that the February shipments are a bit light.

That's fair. The growth in backlog, up, I think, $6 million quarter-over-quarter, is very positive.

I think it's not directly attributable to one item, I would say. It's just strong demand.

Okay. Maybe last question.

You noted the inventory build in the quarter. Is that driven by anything in the pipeline or any maybe unannounced programs that you won?

Oh,

it's more driven by procurement realities with certain components like memory on allocation, where basically you have to secure parts to guarantee our ability to ship. It's more driven by the procurement side and seeing there's certain products on allocation or potential coming shortages that we're using some of the cash to stockpile.

Okay.

I think that's it for me. I'll pass the line.

thanks so much, and good afternoon. Just a question on recurring software and services revenue.

It was strong again this quarter. Is there anything to call out in terms of either unusuals or project completion, or do you see it as continuing to grow in these sort of low double digits here?

I think you have to track it over the last eight quarters because there's been a strong trend in growth. There's not a milestone of achieved a $10 million or something like that.

There's always some volatility based on project completion and milestone completion. It's not a specific one contract to point to, but there'll be continue to some peaks going forward.

You'll see over the past eight 8-plus quarters, or more really, 12 quarters, it's been growing as a trend,

so. That's helpful.

Then international, the strength in international, it's the highest quarterly level in a number of years. Has anything changed in terms of your momentum there and the drivers of that growth?

What's driving that?

A lot of the growth in the current quarter, at least compared to the prior years, was a couple projects in Europe that we completed. I don't know that that's really a macro thing to call out necessarily than the lumpiness and volatility.

In this case, helping us in the quarter. Then

just lastly, just on gross margins, ticked down a little bit sequentially. Does that relate to international or some of these larger projects, the mix may have a lower gross margin than the past?

The main driver, of course, is the product mix. In this case, there is some drag due to international margins being a bit tighter than elsewhere.

It's still well within the range. It's still a strong margin.

There'll be volatility even going forward. There's a bit of a drag in the quarter with the international sales.

Then

just lastly, just on the topic of gross margins, with memory costs going up, how will that impact gross margins? Is it relatively small portion of your BOM that it's basically immaterial from a consolidated point of view?

What we do is we analyze BOMs on an individual level. If there's marketable cost increases, we may have to address that through pricing.

In the current quarter hasn't affected margins necessarily. It's really just having to use cash to basically acquire inventory so we have it there to ship, basically, when we need it.

It hasn't really been a drain on margins, but it is causing us to react with procurement.

Okay. Thanks for taking the questions.

I'd like to thank the participants for their questions and to add that we are pleased with the company's performance during Q3 of fiscal 2026, which saw record sales of $139.3 million, including $62.5 million in software and services revenue, solid gross margins of 58.3% in the quarter, which, together with Evertz disciplined expense management, yielded quarterly earnings of 24 cents per share, despite a foreign exchange loss of $2.3 million in the quarter. We're entering into the last quarter of fiscal 2026 with significant momentum fueled by over $32 million of shipments in the month of February, with a combined purchase order backlog plus February shipments totaling in excess of $278 million, and by the continuing adoption and successful large-scale deployments of Evertz IP-based software-defined video networking and cloud solutions by the largest broadcast, new media service provider, and enterprises in the industry, and by the continuing success of DreamCatcher, BRAVO, our state-of-the-art IP replay production suite.

With Evertz significant investment in software-defined, IP, IT, and cloud technologies, the over 600 industry-leading IP SDN deployments, and the capabilities of our staff, Evertz is poised to build upon our leadership position in the broadcast and media technology sector while further penetrating government and defense. Thank you, and good night.