Good afternoon, ladies and gentlemen, and welcome to the Evertz Q4 investor conference call. At this time, all lines are in a 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 star zero for the operator. Today's call is being recorded June 23, 2022, and I would now like to turn the call over to Mr. Brian Campbell, Executive Vice President of Business Development. Please go ahead, sir.
Thank you, Michelle. Good afternoon, everyone, and welcome to the Evertz Technologies conference call for our fourth quarter ended April 30, 2022, with Doug Moore, Evertz Chief Financial Officer, and myself, Brian Campbell. Please note that our financial press release and MD&A are now available on SEDAR. Doug and I will comment on the financial results and then open the call to your questions. Beginning with Evertz results, I'll begin with a few annual and fourth quarter highlights, following which Doug will provide more details. First off, I'm pleased to report sales for the fiscal quarter totaled CAD 441 million, driven in part by the adoption of Evertz new technologies. Annual net earnings were CAD 72.7 million, resulting in fully diluted earnings per share of CAD 0.94 for fiscal 2022.
Investment in research and development totaled CAD 102.4 million for fiscal 2022, further reinforcing Evertz commitments to R&D. Moving on to the fourth quarter financials. Sales in the quarter were CAD 116.1 million, up 24% year-over-year. Gross margin for the fourth quarter was CAD 68.3 million or 58.9% of sales, and foreign exchange for the quarter was a gain of CAD 1.1 million. Net earnings for the fourth quarter were CAD 19.2 million, with fully diluted earnings per share of CAD 0.25. At April 30, 2022, Evertz working capital was CAD 158.9 million, with CAD 33.9 million in cash.
The purchase order backlog at the end of May was in excess of CAD 148 million, and shipments during the month of May were CAD 26 million. We attribute our solid annual and quarterly performance to the ongoing technical transition in the industry, channel and video services proliferation, and the increasing global demand for high-quality video anywhere, anytime, and specifically to the growing adoption of Evertz IP-based software-defined video networking solutions, Evertz IT and cloud solutions, our immersive 4K Ultra HD solutions, and state-of-the-art DreamCatcher BRAVO live production suite. Our sales base is well diversified, with the top 10 customers accounting for approximately 40% of sales during the year, with no single customer over 6%.
In fact, we had 475 customer orders of over CAD 200,000, a 35% increase from the 353 customer orders of over CAD 200,000 received last year. Today, Evertz board of directors declared a quarterly dividend of CAD 0.18 per share, which will be paid on or about July 7th. I will now hand over the call to Doug Moore, Evertz Chief Financial Officer, to cover our results in greater detail.
Thank you, Brian. Good afternoon, everyone. Starting with revenues. Sales were CAD 116.1 million in the fourth quarter of fiscal 2022 compared to CAD 93.3 million in the fourth quarter of fiscal 2021, which represents an increase of CAD 22.8 million or 24%. Sales for the fiscal year ended April 30th, 2022 were CAD 441 million, compared to CAD 342.9 million in the same period last year. That represents an increase of approximately CAD 98.1 million or 29%. Regarding regional revenues, the U.S.-Canada region had sales for the fourth quarter of CAD 77.8 million, compared to CAD 63.6 million in Q4 last year. That's an increase of CAD 14.2 million or 22%.
International region had sales for the quarter of CAD 38.2 million compared to CAD 29.7 million last year, an increase of CAD 8.5 million or 29%. Back to fiscal results. Sales in the U.S.-Canadian region were CAD 299.4 million for the year ended April 30 compared to CAD 222.7 million in the same period last year. This represents an increase of CAD 76.7 million or 34%. Sales in the international region were CAD 141.7 million for the year ended April 30, 2022, compared to CAD 120.2 million in the same period last year, representing an increase of CAD 21.5 million or 18%.
Fortunately, the international segment represented 33% of total sales in the quarter and 32% of total sales in the year, compared to 32% and 35% in the respective period last year. Turning to gross margins. The gross margin for the quarter was approximately 58.9% compared to 59.6% in the fourth quarter of fiscal 2021. Gross margin for the year was 57.9% compared to 58.2% in fiscal 2021. Both the Q4 and fiscal 2022 gross margin rates were within the company's target range. For operating costs, selling and administrative expenses were CAD 16.1 million for the fourth quarter, an increase of CAD 3.1 million from the same period last year.
The increase is inclusive of a CAD 2.1 million increase in travel, promotion, and trade show costs when compared to Q4 of 2021. As a percentage of revenue, selling admin expenses were approximately 13.9%. Selling administrative expenses were CAD 60.9 million for the year ended April 30, 2022, an increase of CAD 11.5 million from the same period in fiscal 2021. For the year, selling administrative expenses as a percentage of revenue were approximately 13.8% compared to 14.4% last year. Turning to R&D. Research and development expenses were CAD 27.3 million for the fourth quarter, which represents a CAD 4.8 million increase from the fourth quarter last year. The increase in R&D expenses is driven by an increase in net salary costs.
Unlike in Q4 last year, in Q4 of 2022, there was no reduction in costs associated with government assistance. As a percentage of revenue, R&D was approximately 23.5% in the quarter as compared to 24% for the same period last year. For the year, research and development expenses were CAD 102.4 million, which represents an increase of CAD 22.2 million over the same period last year. R&D expenses as a percentage of revenue were approximately 23.2% for the year, compared to 23.4% last year. Foreign exchange for the fourth quarter resulted in a gain of CAD 1.1 million compared to a loss of CAD 5.1 million in the same period last year.
The gain of CAD 1.1 million was driven by the increase in the value of the U.S. dollar against the Canadian dollar between January 31st and April 30th, 2022. Foreign exchange for the year ended April 30th, 2022, resulted in a gain of CAD 6.5 million compared to a loss of CAD 14.9 million in the prior year. The gain was driven by an increase in the value of the U.S. dollar compared to Canadian dollar over that period. Turning to a discussion of liquidity of the company. Cash as of April 30th, 2022, was CAD 33.9 million, compared to CAD 108.8 million as of April 30th, 2021.
Working capital was CAD 158.9 million as of April 30, 2022, compared to CAD 214.5 million at the end of April 30, 2021. Regarding quarterly cash flows, the company generated cash from operations of CAD 21.5 million, which includes a CAD 2.4 million net change in non-cash working capital and current taxes. If the effects of the change of non-cash working capital and current taxes are excluded from that calculation, the company generated CAD 23.9 million cash from operations in the quarter. In the quarter, the company used CAD 1.3 million from investing activities, which was principally driven by capital asset purchases. The company used cash from financing activities of CAD 15 million, which was principally driven by the dividends paid of CAD 13.7 million.
Regarding fiscal cash flows, for the year, the company generated from operations cash of CAD 68.7 million, which is net of a CAD 24.3 million change in non-cash working capital and current taxes. The change in non-cash working capital was driven by a CAD 26 million increase in accounts receivable over the year. A CAD 25 million increase in inventory, partially offset by a CAD 16 million increase in deferred revenue over the year. If the effects of the change of non-cash working capital and current taxes are excluded, the company generated CAD 93 million cash from operations. Regarding financing activities, during the year, the company paid approximately CAD 131.4 million in dividends, which includes a special dividend of CAD 76.3 million.
Finally, looking at our share capital position as of April 30, 2022, shares outstanding were approximately 76.2 million, and options outstanding were approximately 5.1 million. Weighted average shares were 76.3 million, and weighted average fully diluted shares outstanding were approximately 76.6 million for the year ended. That brings to a conclusion the review of our financial results and position for the fourth quarter and fiscal year ends. Finally, I would like to remind you that some of the statements presented herein 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 in the official reports filed with the Canadian Securities Administrators. Brian, back to yourself.
Thank you, Doug. Michelle, we're now ready to open the call to questions.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. If you would like to ask a question, please press the star followed by the number one on your telephone keypad. If you would like to withdraw your question, please press the star followed by the number two. Please stand by while we compile the Q&A roster.
Your first question comes from Thanos Moschopoulos of BMO. Please go ahead.
Hi, good afternoon. Brian, there's certainly been a lot happening from a macro perspective, obviously given rising rates and inflation and the war in Ukraine and all that. From your perspective, as you look at your business and as you speak to your customers, how would you say the demand environment has evolved over the last few weeks?
Our demand environment still, you know, continues to be, you know, very robust. You know, we've got a very strong, you know, backlog, you know, heading into, you know, fiscal 2023. You know, we're quite optimistic about the outlook going forward. You know, we're very cognizant of the, you know, macroeconomics as are our customers. But we're, you know, well positioned with an extremely robust business model and a very large backlog for the next while.
Overall, it sounds like you haven't really seen much change in customer behavior over the past quarter. Is that fair?
Yes, that's correct.
Yeah. Now in terms of supply chain, any incremental updates there? Has the situation gotten any better or any worse? Obviously you had some advantage with your in-house manufacturing, but how would you characterize the supply chain dynamic over the last, you know, versus what it was previously?
Yeah, I'll comment on that. Yeah, I mean, sourcing parts continues to be a challenge, right? A significant challenge. It's one that we're doing our best to mitigate and, you know, can have effects on timing of certain shipments. There's, you know, quite frankly, I don't know that it's going away anytime soon, but we're doing our best to mitigate. You know, we just had a pretty strong quarter, around CAD 60 million. I think that's. While there's certainly challenges and, you know, I can't say there's been a significant change in the last two months, it's been going on for the past many months, but it doesn't seem like it's necessarily improving as of yet. I think we're doing our best to mitigate it.
Okay. The gross margin was obviously strong, you know, within your targeted range, but higher than some of the prior quarters. Anything to call out there?
It's really just driven by a product mix. I mean, we are seeing some part cost increases, of course, just given the supply chain issues. We've been able to mitigate those. Really it's just really been driven by the product mix itself.
Okay. Maybe just a last one for me. I mean, it's probably safe to assume that inventories will remain elevated for the next while, because clearly that's, you know, one of the ways in which you're addressing the supply chain constraints, right? We shouldn't expect to see inventory trends improve any time for the next while?
Yeah, that's exactly part of our strategy and mitigation, is we've increased raw materials quite substantially. I think we're up over CAD 20 million compared to last year. I would not expect to see a decrease. We've taken an approach where we're quite frankly stocking more than we did a year ago because we have to, given the constraints on lead times. They've gone a lot longer by suppliers, so we are forced to hold more inventory at the time.
All right. I'll pause for now. Thank you.
Ladies and gentlemen, as a reminder, if you would like to ask a question, please press star one now. Your next question comes from Rob Young of Canaccord. Please go ahead.
Hi, good evening. Maybe first question for me around the backlog down quarter-over-quarter, still up year-over-year. Seems as though it hasn't continued the recent trend, which has been inching up. Is there something that was different this quarter, or is there some kind of a seasonal factor in the quarter-over-quarter dip?
Rob, we're coming off of 2 record-high quarterly backlog numbers. You know, that said, we've you know this is at CAD 148 million, it's a you know very significant backlog for us. Much of it deliverable within the next 12 months, you know, predominantly. We don't see any you know real trends there in terms of the order intake. We have you know again we had good deliveries in this past quarter, which impacts the backlog.
Okay. Nothing out of the ordinary. Maybe second question, the deferred revenue growth in the quarter, is there anything to call out there, and any driver behind that?
I mean, the increase in deferred revenue is very much a trend in the past, right? There is a couple of customers that we have taken deposits from that are pretty large, but it's spread across a little bit broader than that. There's nothing really industry specific. Sorry, industry is the wrong word, but specific to highlight there other than it's somewhat of a trend given our business model, where we're taking more money up front and paying on milestone payments. I think it's not really one item to highlight.
Okay. Nothing to highlight around, like recurring revenue growth or anything like that or anything on subscription or software related?
No. In this case, it's not quarter-over-quarter. There's no substantial association with that. There is, quite frankly, again, a couple customers that put deposits on with the larger projects.
Okay. In the last, I guess even two years now, you've highlighted some difficulties getting access to sites and getting into even the geographies that you needed to do the work required. I was wondering if you could just update us on how that's developing now that it's, you know, everything's opening up a little more. Is that becoming easier?
It is becoming easier. We still do have those challenges in place, but again, we've been working through them for, you know, two years and things are getting better. We do have significant teams, you know, deployed in North America and some internationally as well too. That's par for the course. Yes, things are gradually getting better.
Yeah. Maybe the last question from me is just around, you know, are you seeing any pressure on, you know, wage inflation or return to travel? I know the NAB conference may be a little bigger than people thought it would be. Are you seeing, you know, a return to, you know, trade show expenses or anything, you know, to call out for, you know, the coming year?
Yeah, I think even in Q4, comparing year-over-year, for example, attending NAB. There's a cost associated with that. Our staff are traveling a lot more. There is some within R&D, you know, especially some salary costs associated with market adjustments or. Yeah, associated with S&A, for example, there is certainly the return to trade shows and attending more trade shows is a cost that I think we hope to continue to attend them, so I don't expect it to go away.
Yeah, we can't wait. We're thrilled to be able to attend and, you know, see in person the customers again, although we have been visiting them, you know, on site, where possible. The opening up of trade shows is, you know, definitely a positive for us and the industry.
Should we think of maybe expenses going up as a percentage of revenue in 2023, like operating expenses? Or do you think you can hold them relatively flat despite those extra costs?
They wouldn't be linear, right? If you're increasing revenue, it wouldn't narrowly proportionately go up. We would expect that with increased selling activity, some of the costs would indeed go up, increase.
Okay, thanks. Have a nice night.
There are no further questions from the phone lines. I would like to turn the conference back to Mr. Brian Campbell for closing remarks.
Thank you, Michelle. I'd like to thank our participants for the questions and add that we're encouraged by the company's strong performance in fiscal 2022, achieving sales of CAD 441 million, and in particular by strength in the important U.S.-Canada region, where sales rose 34%, delivering pre-tax earnings of CAD 97.9 million, 22.2% of sales, all while investing CAD 102.4 million in R&D to build for future growth. We optimistically enter the first half of fiscal 2023, fueled by a purchase order backlog in excess of CAD 148 million, plus CAD 26 million shipments in May, totaling in excess of CAD 174 million, up 5.5% year-over-year.
Fueled by the financial strength and flexibility of our pristine balance sheet and by the continued adoption and successful large scale deployments of Evertz software-defined IP, IT, and cloud-based video solutions, DreamCatcher BRAVO IP-based instant replay and live production suite. With our significant investments in software-defined IP, IT, and cloud technologies, industry-leading deployments, and the capabilities of our staff, Evertz is poised to build upon our leadership position in the broadcast and media technology sector. Thank you and good night.
Ladies and gentlemen, this does conclude your conference call for this afternoon. We would like to thank you all for participating and ask that you please disconnect your lines.