Evertz Technologies (TSX:ET) released fourth-quarter financial results and hosted an earnings call on Wednesday. Read the complete transcript below.

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Summary

Energy Transfer LP reported record annual sales of $515.8 million, with international revenues up 16% to $148 million. Recurring software services revenue increased 8% to $240.7 million.

Net earnings for the year were $64.4 million, with a fully diluted earnings per share of $0.83. The company maintained strong margin rates at 59.3%.

Operational highlights included winning awards at the National Association of Broadcasters Show and a strong presence in international markets, particularly Western Europe.

The company has a significant purchase order backlog of over $237 million, driven by increased global demand for video services and the transition to IP and cloud-based architectures.

Energy Transfer is optimistic about opportunities in the government and defense sectors, with recent partnerships and an office expansion in Colorado Springs.

Cash as of April 30 was $19.1 million, a decrease from the previous year due to significant dividend distributions.

The company declared a regular quarterly dividend of 20.5 cents per share, payable in July.

Management expressed confidence in maintaining margins despite component cost challenges and highlighted strategic investments in US manufacturing capacity.

Full Transcript

OPERATOR

Good afternoon, ladies and gentlemen, and welcome to the Energy Transfer LP Q4 Investor Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press *0 for the operator. This call is being recorded on June 24, 2026. I would like to turn the conference over to Brian Campbell, Executive Vice President of Business Development.

Please go ahead.

Brian Campbell, Executive Vice President of Business Development

Thank you, John. Good afternoon, everyone, and welcome to Energy Transfer LP's conference call for our 2026 fourth quarter and year ended April 30th, with Doug Moore, Energy Transfer's Chief Financial Officer, and myself, Brian Campbell. Please note that our financial press release and MDA will be available on SEDAR and on the company's investor website. Doug and I will comment on the financial results and then open the call to your questions. Turning now to Energy Transfer's results, I'll begin by providing a few highlights and then Doug will provide additional details.

First off, we had record annual sales in excess of a half a billion dollars, coming in at 515.8 million for the year. This includes revenue in the international region of 148 million, up 16% from the prior year. Recurring software services and other software revenue increased 8% year over year, totaling 240.7 million. Margin rates remain consistently strong, coming in at 59.3% versus 59.5% prior year and 58.8% two years ago. Total margin dollars were 306 million.

Net earnings were at 64.4 million, resulting in a fully diluted earnings per share of 83 cents. Our sales base is well diversified with the top 10 customers accounting for approximately 44% of sales, with no single customer accounting for more than 10% on a full-year basis. In fact, we had 87 customer orders of over $200,000. Turning to the fourth quarter, sales were up 3% year over year to 131.6 million. Recurring software services and other software was 65.8 million, an increase of 17% from the prior year.

Gross margin in the quarter was 78.1 million versus 78.9 million in the fourth quarter of the previous year. Net earnings in the quarter were 15.2 million as compared to 13 million in the corresponding period last year. Fully diluted earnings per share were $0.20, up from $0.17 in the previous fourth quarter. Operational highlights for the quarter included Energy Transfer's stellar presence at the National Association of Broadcasters NAB Show in Las Vegas, where Energy Transfer won prestigious Future Best of Show Awards distributed across the primary industry publications presented by TV Technology.

The Bravo Best of Show recognized for expanding multi-program live production capabilities of a single venture, an innovative media core specifically for hybrid IP and FDI facilities. Excalibur, a high-density encoding platform engineered for scalable media transport, the MMA and Nucleus Product won in the AV Technology area for IPMX Certified IP Gateway solution built to bridge pro, AV and broadcast environments with seamless IPMX and ST2110 integration.

At the end of May, Energy Transfer's purchase order backlog was more than $237 million, and shipments during the month of May were $33 million. We attribute the strong financial performance and robust combined shipments and purchase order backlog to channel and video services proliferation, increased global demand for high-quality video anywhere and anytime, the ongoing technical transition to IP, IT, and cloud-based architectures in the industry, and specifically to the growing adoption of Energy Transfer's IP-based software-defined video networking solutions, IT and 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, Energy Transfer's Board of Directors declared a regular quarterly dividend of 20.5 cents per share payable on or about July 13th. I'll now hand over to Doug Moore, Energy Transfer's Chief Financial Officer, to cover our results in greater detail.

Doug Moore, Chief Financial Officer

Thanks, Brian, and good afternoon. Looking at revenues, despite a relatively slow start to the quarter, sales were $131.6 million in the fourth quarter of fiscal 2026, a 3% increase compared to the 127.8 million in 4Q fiscal 2025. For the year ending April 30, 2026, sales were 515 million, up 14.2 million, or 2.8% from the prior year. Quarterly hardware revenue was 65.7 million, a decrease from 71.7 million the prior year, while software and services revenue increased to 65.8 million from 56.1 million in the prior year.

For the year, revenue from software and services represented approximately 50% of the total revenue in the quarter. Hardware revenues declined 1% to 275.1 million, while revenues from software and services increased 8% to 240.7 million from 222.6 million in the prior year. Annually, software and services revenue represented 47% of total revenue versus 44% in the prior year. Looking at regional revenues, quarterly revenues in the U.S. Canadian region were 94.2 million, a decline compared to 106.5 million in the prior year.

However, this was more than offset by a $16 million increase in quarterly revenues in the international region, which were 37.4 million compared to 21.3 million in the prior year. In the fourth quarter, the international segments represented 28% of total sales in the quarter as compared to 17% in the same period last year. For the year ended April 30, 2026, revenues in the Canadian US region were down 2% to 367.8 million, while international revenues increased 20.8 million, or 16%, to 148 million.

The increase in the year was driven by increased project deliveries in Western Europe. For the year ending April 30, international sales represented 29% of total sales compared to 25% in the same period last year. Gross margin for the quarter was 59.3% compared to 61.7% in the prior year. It's worth noting the prior year comparative quarter was higher than typical, and the current quarter is more in line with our target range of 56 to 60%. For the year, the gross margin was 59.3%, which was also within the company's 56 to 60% target range.

Turning to selling and administrative expenses, S&A was $20.7 million in the fourth quarter, relatively consistent with the same period last year. S&A expenses as a percentage of revenue were approximately 15.7% as compared to 16.2% for the same period last year. Sequentially, selling and admin expenses were up approximately 2 million from Q3. That increase was driven by increased trade show and travel costs, which in turn was driven by our participation at the NAB trade show in the fourth quarter.

For the year ending April 30, S&A expenses were 77 million, or 14.9% of sales, compared to 75.9 million, or 15.1% of sales the prior year. Research and development expenses were 37.7 million for the fourth quarter, representing an increase of 1.2 million from the prior year. As a percentage of revenue, R&D expenses were 28.7% compared to 28.6% in the prior year. For the year ending April 30, R&D expenses were 148.1 million, or 28.7% of sales, compared to 146.8 million for the same period last year, an increase of approximately 1% year over year.

Foreign exchange for the fourth quarter resulted in a gain of 400,000 as compared to a loss for the fourth quarter last year of 4.5 million. During the fourth quarter of the current year, the US dollar versus Canadian dollar declined modestly from 1.38 to 1.37 to 1, as opposed to the fourth quarter last year, where the US dollar declined more significantly from 1.44 to 1.4 to 1. For the year ending April 30, foreign exchange resulted in a loss of 0.4 million compared to a gain of 0.2 million last year.

Turning to the discussion of liquidity of the company, cash as of April 30 was 19.1 million, a decline compared to cash of 111.7 million as of April 30, 2025. The decline was primarily driven by the $136 million in dividends we distributed during the year, including the $75.5 million in special dividends that we paid during the third quarter. Working capital was 131.7 million as of April 30, 2026, compared to 206.9 million at the end of April 30, 2025.

Looking now at cash flows for the quarter, for the three months ended April 30, cash from operations was 18.4 million, compared to $33.3 million generated during the three months last year. If you exclude the changes in non-cash working capital and current taxes, cash from operations was 19.1 million for the fourth quarter this year, compared to 17.7 million for the same period last year. In the quarter, the company used $3.9 million for investing activities, particularly for the acquisition of property, plant, and equipment.

For the quarter, the company used $17.1 million for financing activities, $15.4 million of which was for the payment of dividends during the quarter. For the year, the company generated cash from operations of $76.2 million, which is net of a $10.2 million change in non-cash working capital, incurring taxes. If the effects of that change were excluded from the calculation, the company generated $86.4 million in cash from operations during the year.

The company used cash of $17.8 million for investing activities, principally driven by the acquisition of property, plant, and equipment of $18.7 million, including the land and building we've purchased outside Pennsylvania. The company used cash in financing activities of $147.1 million, which, as previously noted, was principally driven by dividends paid. Finally, looking at our share capital position as of April 30, 2026, shares outstanding were approximately 75.6 million, and options and shares based on our shoes outstanding were approximately 4.2 million.

Weighted average shares outstanding were 75.5 million, and weighted average fully diluted shares were 76.8 million. This concludes the review of our financial results and position for the fourth quarter and year-end. 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 refer you to the risk factors described in the annual information form in the official reports filed with the Canadian Securities Commission.

Brian, back to you.

Brian Campbell, Executive Vice President of Business Development

Thanks, John. We're now ready to open the call to questions.

OPERATOR

Thank you. We will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you're using a speakerphone, please lift the handset before pressing any keys. Our first question comes from the line of Thanos Moschapoulos from BMO Capital Markets.

Please go ahead.

Thanos Moschapoulos, BMO Capital Markets

Hi, good afternoon. There was a nice acceleration in the growth rate for your software business this quarter. Is there anything in particular that you would call out in that regard, or just sort of the ongoing trends and drivers that we've talked about in prior quarters?

Doug Moore, Chief Financial Officer

I could call it. There's a couple of larger project milestones that we met in the quarter that would have caused about 7 million to 8 million additional software and services revenue that was released from deferred revenue. There's ongoing releases and deferrals throughout the year, but that's a bit more substantial than typical. So if I had to call it something, there's two projects that made up between 7 and $8 million worth of software and service revenue releases.

Thanos Moschapoulos, BMO Capital Markets

Okay. Would that be one-time revenue or is that recurring revenue that's now coming online?

Doug Moore, Chief Financial Officer

It would be more of a project-based one-time milestone.

Thanos Moschapoulos, BMO Capital Markets

Okay, that's helpful. With respect to the hardware side of the business, I mean, obviously a lot of price inflation happening with components. We did see consistent margins this quarter, but going forward, how should we think about that dynamic? Would you expect to be able to pass through those costs and maintain margins, or what do you think on the component side?

Doug Moore, Chief Financial Officer

We are seeing some challenges, of course, in bringing in parts and increased costs, especially with memory and certain other aspects. The target range remains the same, the 56 to 60%. We manage pricing as we need to, but I can't directly say everything would be passed along. Our target range remains the same, and we're doing our best to mitigate those cost increases.

Thanos Moschapoulos, BMO Capital Markets

And last one for me, Brian, any update of note with respect to your government and defense opportunities on either side of the border?

Brian Campbell, Executive Vice President of Business Development

Yeah, so we are very encouraged by the US international and domestic opportunities that we see for much of it. Dual-purpose technologies where we have decades of domain knowledge and expertise demonstrated in live news and sports at the highest level. Those technologies are common criteria certified and NIAF listed for installation in secure facilities, and we have routing planning platforms that can handle top secret and other levels as well. So we're very well positioned to be able to grow in that area.

It's something that we do use. We have significant experience in some high-profile locations, which I can't necessarily speak to. But what we have done is increase our emphasis and awareness domestically and also internationally. We've opened up Energy Transfer's office in Colorado Springs and we have one in Ottawa as well. You may have seen that we participated with the Canadian delegation that included the Canadian Secretary of State for Defense Procurement and CEO of DIA into the Saha Defense and Aerospace Exposition in Istanbul.

That was quite a large event and contingent, and we were front and center there. So those initiatives we continue to work very strongly. I'll pass it over to Doug to add a little bit more financial color.

Doug Moore, Chief Financial Officer

Yeah, I mean, from a quantification perspective, we don't separately disclose sales to government military in our financial statements. However, I could comment that over the past year, sales to government military, aerospace customers combined to be over 50 million in a year and also over 10% of revenue. Just to give you some kind of context of the scope.

Thanos Moschapoulos, BMO Capital Markets

That's very helpful. I appreciate it. I'll pass it on. Thank you.

OPERATOR

Your next question comes from the line of Robert Young from Fan Core Genuity. Please go ahead.

Robert Young, Fan Core Genuity

Hi. Great to hear the context around the defense sector. I was wondering if you can go a little bit deeper there just to talk about how you're going to market. Are you doing that with a partner? Are you building out any partner relationships specific to defense? Are you pursuing any specific opportunities in defense currently with partners?

Brian Campbell, Executive Vice President of Business Development

You talk about the go-to-market. So the answer is yes to all of the above. We've been, we have in the past done so like that many of the large installations that we have in the US or NATO areas have been through US or international large prime contractors. So Energy Transfer is providing very meaningful subsystems and solutions in secure environments. There's more public context around that. So you may have seen recently that Energy Transfer joined THORA as a foundational partner advancing sovereign Canadian defense interoperability.

This is led by Calion, and Energy Transfer brings real-time operational infrastructure, secure networking, data transport, and data transport expertise to these next-generation defense modernization opportunities that we're seeing domestically in Canada. Similarly, Energy Transfer has joined Babcock's Team Inspire to provide next-generation strategic communications for the Canadian Armed Forces. Babcock is a UK-based prime contractor that we have experience with as well.

So those are a couple of the recent public domain relationships that we're very much leaning into and are significantly contributing to these opportunities.

Robert Young, Fan Core Genuity

Great to hear about all those efforts. That $50 million revenue number you shared, how would that compare with the last five years? For example, are you seeing a meaningful increase in opportunities or any increase in deal size or anything to put context around how much of that defense spend or defense opportunity is new and how much has already been a part of Energy Transfer's business?

Doug Moore, Chief Financial Officer

So that would be roughly a 12% increase over the prior year. It's been lumpy because of big projects in the past, and we would foresee it to be like that in the future. But we are looking at large programs. Those don't happen instantaneously. As you know, you often go through an RFI stage, RFP, and then contracting definitely takes time, but we're really encouraged by the opportunities we see in front of us.

Robert Young, Fan Core Genuity

Yes, maybe the last question for me would be around the Kuzma renegotiations. You still manufacture the bulk of your product in Canada, and I'm curious about, you know, what you might have done to prepare for any change in that. I know the North American revenue base has declined the last two quarters, and I'm curious if that's a function of upcoming Kuzma or if there's some other factor, and then I'll pass on.

Doug Moore, Chief Financial Officer

Yeah, I mean, I can comment that we continue to ramp up capacity outside of Pittsburgh. During the year, we spent between 7 and 8 million dollars, and I think 3 or 4 million was associated with land and building but also additional equipment and leasehold improvements to ramp up our ability to manufacture just outside Pittsburgh there in Indiana. But currently, the vast majority of what we're selling is USMCA compliant and not being subjected to tariffs.

So, you know, it's something we'll have to monitor and address. But as of this time, it's not a huge, at least a clear impact.

Robert Young, Fan Core Genuity

Well, I guess the question I'm trying to ask is if the negotiations were to yield like an end to that agreement, what would. How should investors be thinking about how well Energy Transfer is prepared?

Doug Moore, Chief Financial Officer

Yeah, so I mean, we will have to add additional capacity to our United States facility, but we will have six months to fully address those plans properly.

Robert Young, Fan Core Genuity

Okay, thanks.

OPERATOR

Your next question comes from the line of Paul Tiber from RBT Capital Markets. Please go ahead.

Paul Tiber, RBT Capital Markets

Good afternoon. Thanks for the detail on the defense business. Just another one if I may. On defense, is defense revenue skewed more towards hardware or recurring software, or does it match the mix of the entire company?

Doug Moore, Chief Financial Officer

So it would be more skewed towards hardware. Software is a large component of the modernization issues, and it is part of those sales to that sector. We do not have the analysis to tell you currently what the product mix is. We're not disclosing that at this time.

Paul Tiber, RBT Capital Markets

Okay, that's helpful. Second question is this on the international revenue growth. You mentioned there's a degree of lumpiness due to project timing. Was it related to those two project milestones that you hit? Were those in Europe?

Doug Moore, Chief Financial Officer

No, actually, they were in North America. They're not correlated in this case. This is just project deliveries that happened to be in Q4 in the international region. So they're not related in this case.

Paul Tiber, RBT Capital Markets

Okay. And when you look forward to international, I mean, do you see that momentum, that growth in international sustained? Is that segment going through a period of stronger growth here?

Doug Moore, Chief Financial Officer

We did significantly release. We had an improvement in Western Europe for sure. So there's still a fair amount of political unrest in certain jurisdictions. But year over year, there was definitely an improvement in the UK and Western Europe.

Paul Tiber, RBT Capital Markets

Okay. And then just lastly, just during the quarter and obviously there's the conflict in the Middle East. There's also the World Cup in North America. With all those large events going on, were there any. Did the conflict have any impact on procurement discussions, what you've seen through the quarter? And then conversely, the World Cup, was there a benefit from the World Cup in the quarter?

Doug Moore, Chief Financial Officer

Benefit for the World Cup would happen in prior quarters as infrastructures updated their facilities well in advance of the actual events. Similar to the way the Olympics and other events happen. So not directly into Q4.

Paul Tiber, RBT Capital Markets

Okay. So there's no late catch-up of those deployments? Okay. Thanks for taking the questions.

OPERATOR

There are no further questions at this time. I will now turn the call over to Brian Campbell. Please continue, sir.

Brian Campbell, Executive Vice President of Business Development

Thank you, John. I'd like to thank the participants for their questions and to add that we are pleased with the company's performance during fiscal 2026, which saw record sales of $515.8 million, including $240.7 million in software and services revenue, solid gross margins of 59.3% for the year, which together with Energy Transfer's disciplined expense management yielded earnings per share of $0.85. We are entering into fiscal 2027 with significant momentum fueled by over 33 million of shipments in May with a combined purchase order backlog plus shipments totaling in excess of $270 million.

By the continued operator adoption of and successful large-scale deployments of Energy Transfer's IP-based software-defined video, networking, and cloud solutions by the largest broadcast new media service providers and enterprises in the industry. By the continuing success of DreamCatcher Bravo and our state-of-the-art IP replay suite, and we're very encouraged by the opportunities in the government, defense, and aerospace sector. With Energy Transfer's significant investments in Software Defined IP, IT, and Cloud Technologies, the over 600 industry-leading SDN deployments, and our capabilities of the staff, Energy Transfer is poised to build upon our leadership position in the sector. Thank you and good night.

OPERATOR

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.

Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.