- Sales reach US$56.0 million
(book-to-bill ratio of 1.03)
- Gross margin amounts to 62.2% of sales
- Adjusted EBITDA totals US$2.3
million
QUEBEC CITY,
Jan. 8, 2014 /CNW Telbec/ - EXFO Inc.
(NASDAQ: EXFO; TSX: EXF) reported today financial results for the
first quarter ended November 30,
2013.
Sales reached US$56.0
million in the first quarter of fiscal 2014 compared to
US$59.8 million in the first quarter
of 2013 and US$60.9 million in the
fourth quarter of 2013.
Bookings attained US$57.9
million in the first quarter of fiscal 2014 compared to
US$64.3 million in the same period
last year and US$54.0 million in the
fourth quarter of 2013. The company's book-to-bill ratio was 1.03
in the first quarter of 2014.
Gross margin* amounted to 62.2% of
sales in the first quarter of fiscal 2014 compared to 60.5% in the
first quarter of 2013 and 62.9% in the fourth quarter of
2013.
IFRS net loss in the first quarter of fiscal
2014 totaled US$0.7 million, or
US$0.01 per share, compared to a net
loss of US$1.6 million, or
US$0.03 per share, in the same period
last year and net earnings of US$3.8 million, or US$0.06 per diluted share, in the fourth quarter
of 2013. IFRS net loss in the first quarter of 2014 included
US$1.1 million in after-tax
amortization of intangible assets, a foreign exchange gain of
US$0.8 million and US$0.5 million in stock-based compensation
costs.
Adjusted EBITDA** totaled
US$2.3 million, or 4.1% of sales, in
the first quarter of fiscal 2014 compared to US$2.7 million, or 4.5% of sales, in the
first quarter of 2013 and US$7.1
million, or 11.6% of sales, in the fourth quarter of
2013.
"Both EMEA and A-PAC delivered year-over-year
revenue growth. We witnessed lower bookings and revenues than
expected in the Americas due to order delays and lower spending
levels, especially among key customers. Our growth in EMEA and
A-PAC, together with much stronger engagement with Americas'
largest operators, demonstrates that our portfolio of innovative
solutions is ideally positioned to help resolve the most critical
deployment, turn-up and operation issues related to investments in
next-generation 4G/LTE, small cell and 100G networks that will
assuredly take place," said Germain
Lamonde, EXFO's Chairman, President and CEO.
Selected Financial Information
(In thousands of US dollars)
| |
|
|
|
|
|
|
| |
Q1 2014 |
|
Q4 2013 |
|
Q1 2013 |
| |
|
|
|
|
|
|
|
|
| Sales |
$ |
56,003 |
|
$ |
60,888 |
|
$ |
59,821 |
| |
|
|
|
|
|
|
|
|
| Gross margin* |
$ |
34,818 |
|
$ |
38,314 |
|
$ |
36,164 |
| |
|
62.2% |
|
|
62.9% |
|
|
60.5% |
| |
|
|
|
|
|
|
|
|
| Other selected
information: |
|
|
|
|
|
|
|
|
| |
IFRS net earnings (loss) |
$ |
(747) |
|
$ |
3,802 |
|
$ |
(1,638) |
| |
Amortization of intangible assets |
$ |
1,182 |
|
$ |
1,173 |
|
$ |
1,962 |
| |
Stock-based compensation costs |
$ |
463 |
|
$ |
437 |
|
$ |
448 |
| |
Net income tax effect of the above items |
$ |
(67) |
|
$ |
(64) |
|
$ |
(67) |
| |
Foreign exchange gain |
$ |
802 |
|
$ |
1,312 |
|
$ |
756 |
| |
Adjusted EBITDA** |
$ |
2,292 |
|
$ |
7,052 |
|
$ |
2,720 |
Operating Expenses
Selling and administrative expenses totaled US$21.7 million, or 38.8% of sales in the first
quarter of fiscal 2014 compared to US$22.3
million, or 37.3% of sales, in the same period last year and
US$21.4 million, or 35.1%
of sales, in the fourth quarter of 2013.
Gross research and development expenses amounted
to US$13.3 million, or 23.8% of
sales, in the first quarter of fiscal 2014 compared to
US$13.9 million, or 23.2% of sales,
in the first quarter of 2013 and US$12.5
million, or 20.6% of sales, in the fourth quarter of
2013.
Net R&D expenses totaled US$11.3 million, or 20.1% of sales, in the first
quarter of fiscal 2014 compared to US$11.6 million, or 19.4% of sales, in the same
period last year and US$10.3 million,
or 16.9% of sales, in the fourth quarter of 2013.
First-Quarter Highlights
- Sales. EXFO's sales improved year-over-year in Europe, Middle
East and Africa (EMEA) and
Asia-Pacific regions in the first
quarter of 2014, but decreased in the Americas. Global sales
originated 51% from the Americas, 29% from EMEA, and 20% from
Asia-Pacific. EXFO's top customer
accounted for 4.9% of sales in the first quarter, while the top
three represented 12.5%.
- Profitability. EXFO generated adjusted EBITDA of US$2.3 million, or 4.1% of sales, in the first
quarter of 2014. The company also delivered US$3.3 million in cash flows from operating
activities. EXFO had a cash position of US$52.6 million and no debt as at November 30, 2013.
- Innovation. EXFO launched nine new products in the first
quarter, including among others an all-in-one optical and Ethernet
test module that accelerates the deployment and troubleshooting of
wireless backhaul, small cell and metro Ethernet networks; a
tablet-based OTDR series that simplifies and speeds up testing in
fixed and mobile networks; a software application that transforms
an Android-based phone into a mobile probe to monitor quality of
experience in public venues like stadiums and malls; and a
next-generation fiber inspection probe that eliminates error risks
while accelerating connector certification time by more than 50%.
The company also expanded the capabilities of its Power Blazer,
making it the industry's only multi-service, field test module
covering all transmission rates from 10 Mbit/s to
100 Gbit/s.
Business Outlook
EXFO forecasts sales between US$53.0 million
and US$58.0 million for the second quarter of fiscal 2014,
while IFRS net loss is expected to range between -US$0.05 and -US$0.01 per share. Net loss includes US$0.02 per share in after-tax amortization of
intangible assets and stock-based compensation costs.
This guidance was established by management
based on existing backlog as of the date of this press release,
seasonality, expected bookings for the remaining of the quarter, as
well as exchange rates as of the day of this press release.
Conference Call and Webcast
EXFO will host a conference call today at 5
p.m. (Eastern time) to review its financial results for the
first quarter of fiscal 2014. To listen to the conference call and
participate in the question period via telephone, dial
1-416-641-6700. Germain Lamonde,
Chairman, President and CEO, and Pierre
Plamondon, CPA, CA, Vice-President of Finance and Chief
Financial Officer, will participate in the call. An audio replay of
the conference call will be available one hour after the event
until 7 p.m. on January 15, 2014. The replay number is
1-402-977-9141 and the reservation number is 21693946. The
audio Webcast and replay of the conference call will also be
available on EXFO's Website at www.EXFO.com, under the
Investors section.
About EXFO
Listed on the NASDAQ and TSX stock exchanges, EXFO is among the
leading providers of next-generation test and service assurance
solutions for wireline and wireless network operators and equipment
manufacturers in the global telecommunications industry. The
company offers innovative solutions for the development,
installation, management and maintenance of converged, IP fixed and
mobile networks—from the core to the edge. Key technologies
supported include 3G, 4G/LTE, IMS, Ethernet, OTN, FTTx, VDSL2,
ADSL2+ and various optical technologies accounting for more than
35% of the portable fiber-optic test market. EXFO has a staff of
approximately 1600 people in 25 countries, supporting more than
2000 customers worldwide. For more information, visit www.EXFO.com
and follow us on the EXFO Blog, Twitter, LinkedIn, Facebook,
Google+ and YouTube.
Forward-Looking Statements
This press release contains forward-looking statements within the
meaning of the U.S. Private Securities Litigation Reform Act of
1995, and we intend that such forward-looking statements be subject
to the safe harbors created thereby. Forward-looking statements are
statements other than historical information or statements
of current condition. Words such as may, will, expect,
believe, anticipate, intend, could, estimate, continue,
or the negative or comparable terminology are intended to
identify forward-looking statements. In addition,
any statements that refer to expectations, projections or
other characterizations of future events and circumstances are
considered forward-looking statements. They are not guarantees of
future performance and involve risks and uncertainties. Actual
results may differ materially from those in forward-looking
statements due to various factors including macro-economic
uncertainty as well as capital spending and network deployment
levels in the telecommunications industry (including our ability to
quickly adapt cost structures with anticipated levels of business
and our ability to manage inventory levels with market demand);
future economic, competitive, financial and market conditions;
consolidation in the global telecommunications test and
service assurance industry and increased competition among vendors;
limited visibility with regards to customer orders and the timing
of such orders; fluctuating exchange rates; concentration of sales;
timely release and market acceptance of our new products and other
upcoming products; our ability to successfully integrate our
acquired and to-be-acquired businesses; our ability to successfully
expand international operations; and the retention of key technical
and management personnel. Assumptions relating
to the foregoing involve judgments and risks, all of
which are difficult or impossible to predict and many of which are
beyond our control. Other risk factors that may affect our future
performance and operations are detailed in our Annual
Report, on Form 20-F, and our other filings with the
U.S. Securities and Exchange Commission and the Canadian
securities commissions. We believe that the expectations reflected
in the forward-looking statements are reasonable based on
information currently available to us, but we cannot assure you
that the expectations will prove to have been correct.
Accordingly, you should not place undue reliance on these
forward-looking statements. These statements speak only as of the
date of this document. Unless required
by law or applicable regulations, we undertake no
obligation to revise or update any of them to reflect events
or circumstances that occur after the date
of this document.
Non-IFRS Measures
EXFO provides non-IFRS measures (gross margin* and adjusted
EBITDA**) as supplemental information regarding its operational
performance. The company uses these measures for the purpose of
evaluating historical and prospective financial performance, as
well as its performance relative to competitors.
These measures also help the company to plan and forecast for
future periods as well as to make operational and strategic
decisions. EXFO believes that providing this information, in
addition to IFRS measures, allows investors to see the company's
results through the eyes of management, and to better understand
its historical and future financial performance.
The presentation of this additional information
is not prepared in accordance with IFRS. Therefore, the information
may not necessarily be comparable to that of other companies and
should be considered as a supplement
to, not a substitute for, the corresponding measures
calculated in accordance with IFRS.
| * |
Gross margin represents sales less cost of sales, excluding
depreciation and amortization. |
| |
|
| ** |
Adjusted EBITDA represents net earnings (loss) before interest,
income taxes, depreciation and amortization, stock-based
compensation costs and foreign exchange gain. |
The following table summarizes the
reconciliation of adjusted EBITDA to IFRS net earnings (loss), in
thousands of US dollars:
Adjusted EBITDA
| |
Q1 2014 |
|
Q4 2013 |
|
Q1 2013 |
| |
|
|
|
|
|
|
|
|
| IFRS net earnings (loss) for the period |
$ |
(747) |
|
$ |
3,802 |
|
$ |
(1,638) |
| |
|
|
|
|
|
|
|
|
| Add (deduct): |
|
|
|
|
|
|
|
|
| |
|
|
|
|
|
|
|
|
| Depreciation of property, plant and equipment |
|
1,275 |
|
|
1,446 |
|
|
1,605 |
| Amortization of intangible assets |
|
1,182 |
|
|
1,173 |
|
|
1,962 |
| Interest income |
|
(27) |
|
|
(37) |
|
|
(33) |
| Income taxes |
|
948 |
|
|
1,543 |
|
|
1,132 |
| Stock-based compensation costs |
|
463 |
|
|
437 |
|
|
448 |
| Foreign exchange gain |
|
(802) |
|
|
(1,312) |
|
|
(756) |
| Adjusted EBITDA for the period |
$ |
2,292 |
|
$ |
7,052 |
|
$ |
2,720 |
| |
|
|
|
|
|
|
|
|
| Adjusted EBITDA in percentage of sales |
|
4.1% |
|
|
11.6% |
|
|
4.5% |
EXFO Inc.
Condensed Unaudited Interim Consolidated Balance Sheets
(in thousands of US dollars)
| |
As at
November 30,
2013 |
|
As at
August 31,
2013 |
| Assets |
|
|
|
|
|
| |
|
|
|
|
|
| Current assets |
|
|
|
|
|
| Cash |
$ |
47,765 |
|
$ |
45,386 |
| Short-term investments |
|
4,837 |
|
|
4,868 |
| Accounts receivable |
|
|
|
|
|
| |
Trade |
|
51,417 |
|
|
50,117 |
| |
Other |
|
2,765 |
|
|
2,778 |
| Income taxes and tax credits
recoverable |
|
4,821 |
|
|
6,525 |
| Inventories |
|
37,653 |
|
|
35,705 |
| Prepaid expenses |
|
2,367 |
|
|
2,561 |
| |
|
151,625 |
|
|
147,940 |
| |
|
|
|
|
|
| Tax credits recoverable |
|
41,924 |
|
|
41,719 |
| Property, plant and
equipment |
|
44,834 |
|
|
45,523 |
| Intangible assets |
|
6,787 |
|
|
7,543 |
| Goodwill |
|
27,082 |
|
|
27,313 |
| Deferred income taxes |
|
10,539 |
|
|
10,807 |
| Other assets |
|
681 |
|
|
693 |
| |
|
|
|
|
|
| |
$ |
283,472 |
|
$ |
281,538 |
| Liabilities |
|
|
|
|
|
| |
|
|
|
|
|
| Current liabilities |
|
|
|
|
|
| Accounts payable and accrued
liabilities |
$ |
32,306 |
|
$ |
26,253 |
| Provisions |
|
728 |
|
|
756 |
| Income taxes payable |
|
331 |
|
|
679 |
| Current portion of long-term debt |
|
304 |
|
|
296 |
| Deferred revenue |
|
7,869 |
|
|
9,467 |
| |
|
41,538 |
|
|
37,451 |
| |
|
|
|
|
|
| Deferred revenue |
|
3,703 |
|
|
3,932 |
| Deferred income taxes |
|
3,525 |
|
|
3,226 |
| Other liabilities |
|
474 |
|
|
477 |
| |
|
49,240 |
|
|
45,086 |
| |
|
|
|
|
|
| Shareholders' equity |
|
|
|
|
|
| Share capital |
|
111,378 |
|
|
109,837 |
| Contributed surplus |
|
16,168 |
|
|
17,186 |
| Retained earnings |
|
112,105 |
|
|
112,852 |
| Accumulated other comprehensive
loss |
|
(5,419) |
|
|
(3,423) |
| |
|
|
|
|
|
| |
|
234,232 |
|
|
236,452 |
| |
|
|
|
|
|
| |
$ |
283,472 |
|
$ |
281,538 |
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of
Earnings
(in thousands of US dollars, except share and per
share data)
| |
Three
months ended
November 30, |
| |
|
2013 |
|
|
2012 |
| |
|
|
|
|
|
| Sales |
$ |
56,003 |
|
$ |
59,821 |
| |
|
|
|
|
|
| Cost of sales (1) |
|
21,185 |
|
|
23,657 |
| Selling and administrative |
|
21,708 |
|
|
22,290 |
| Net research and development |
|
11,281 |
|
|
11,602 |
| Depreciation of property, plant and equipment |
|
1,275 |
|
|
1,605 |
| Amortization of intangible assets |
|
1,182 |
|
|
1,962 |
| Interest income |
|
(27) |
|
|
(33) |
| Foreign exchange gain |
|
(802) |
|
|
(756) |
| |
|
|
|
|
|
| Earnings (loss) before income taxes |
|
201 |
|
|
(506) |
| |
|
|
|
|
|
| Income taxes |
|
948 |
|
|
1,132 |
| |
|
|
|
|
|
| Net loss for the period |
$ |
(747) |
|
$ |
(1,638) |
| |
|
|
|
|
|
| Basic and diluted net loss per share |
$ |
(0.01) |
|
$ |
(0.03) |
| |
|
|
|
|
|
| Basic and diluted weighted average number of
shares outstanding (000's) |
|
60,217 |
|
|
60,389 |
| |
|
|
|
|
|
| (1) The cost of sales is exclusive of depreciation and
amortization, shown separately. |
|
|
|
|
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of
Comprehensive Loss
(in thousands of US dollars)
| |
Three
months ended
November 30, |
| |
|
2013 |
|
|
2012 |
| |
|
|
|
|
|
| Net loss for the period |
$ |
(747) |
|
$ |
(1,638) |
| Other comprehensive income (loss), net
of income taxes |
|
|
|
|
|
| Items that will not be reclassified
subsequently to net earnings |
|
|
|
|
|
| |
Foreign currency translation adjustment |
|
(1,948) |
|
|
(1,708) |
| Items that may be reclassified
subsequently to net earnings |
|
|
|
|
|
| |
Unrealized gains/losses on forward exchange
contracts |
|
(240) |
|
|
(83) |
| |
Reclassification of realized gains/losses on
forward exchange contracts in net loss |
|
174 |
|
|
(199) |
| |
Deferred income tax effect of gains/losses on
forward exchange contracts |
|
18 |
|
|
76 |
| Other comprehensive loss |
|
(1,996) |
|
|
(1,914) |
| |
|
|
|
|
|
| Comprehensive loss for the
period |
$ |
(2,743) |
|
$ |
(3,552) |
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Changes
in Shareholders' Equity
(in thousands of US dollars)
| |
Three months ended November 30,
2012 |
| |
Share
Capital |
|
Contributed
Surplus |
|
Retained
earnings |
|
Accumulated
other
comprehensive
income |
|
Total
shareholders'
equity |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as at September 1, 2012 |
$ |
110,965 |
|
$ |
17,298 |
|
$ |
111,511 |
|
$ |
13,507 |
|
$ |
253,281 |
| Exercise of stock options |
|
51 |
|
|
- |
|
|
- |
|
|
- |
|
|
51 |
| Redemption of share capital |
|
(793) |
|
|
(180) |
|
|
- |
|
|
- |
|
|
(973) |
| Reclassification of stock-based
compensation costs |
|
612 |
|
|
(612) |
|
|
- |
|
|
- |
|
|
- |
| Stock-based compensation costs |
|
- |
|
|
444 |
|
|
- |
|
|
- |
|
|
444 |
| Net loss for the period |
|
- |
|
|
- |
|
|
(1,638) |
|
|
- |
|
|
(1,638) |
| Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign currency translation
adjustment |
|
- |
|
|
- |
|
|
- |
|
|
(1,708) |
|
|
(1,708) |
| |
Changes in unrealized gains on
forward exchange contracts, net of deferred income taxes of
$76 |
|
- |
|
|
- |
|
|
- |
|
|
(206) |
|
|
(206) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive loss for the
period |
|
- |
|
|
- |
|
|
(1,638) |
|
|
(1,914) |
|
|
(3,552) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as at November 30, 2012 |
$ |
110,835 |
|
$ |
16,950 |
|
$ |
109,873 |
|
$ |
11,593 |
|
$ |
249,251 |
| |
| |
| |
Three months ended November 30, 2013 |
| |
Share
Capital |
|
Contributed
Surplus |
|
Retained
earnings |
|
Accumulated
other
comprehensive
loss |
|
Total
shareholders'
equity |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as at September 1, 2013 |
$ |
109,837 |
|
$ |
17,186 |
|
$ |
112,852 |
|
$ |
(3,423) |
|
$ |
236,452 |
| Exercise of stock options |
|
106 |
|
|
- |
|
|
- |
|
|
- |
|
|
106 |
| Reclassification of stock-based
compensation costs |
|
1,435 |
|
|
(1,435) |
|
|
- |
|
|
- |
|
|
- |
| Stock-based compensation costs |
|
- |
|
|
417 |
|
|
- |
|
|
- |
|
|
417 |
| Net loss for the period |
|
- |
|
|
- |
|
|
(747) |
|
|
- |
|
|
(747) |
| Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| |
Foreign currency translation
adjustment |
|
- |
|
|
- |
|
|
- |
|
|
(1,948) |
|
|
(1,948) |
| |
Changes in unrealized losses on
forward exchange contracts, net of deferred income taxes of
$18 |
|
- |
|
|
- |
|
|
- |
|
|
(48) |
|
|
(48) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Total comprehensive loss for the
period |
|
- |
|
|
- |
|
|
(747) |
|
|
(1,996) |
|
|
(2,743) |
| |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| Balance as at November 30, 2013 |
$ |
111,378 |
|
$ |
16,168 |
|
$ |
112,105 |
|
$ |
(5,419) |
|
$ |
234,232 |
EXFO Inc.
Condensed Unaudited Interim Consolidated Statements of Cash
Flows
(in thousands of US dollars)
| |
Three months ended
November 30, |
| |
|
2013 |
|
|
2012 |
| |
|
|
|
|
|
| Cash flows from operating
activities |
|
|
|
|
|
| Net loss for the period |
$ |
(747) |
|
$ |
(1,638) |
| Add (deduct) items not affecting
cash |
|
|
|
|
|
| |
Changes in discount on short-term investments |
|
- |
|
|
2 |
| |
Stock-based compensation costs |
|
463 |
|
|
448 |
| |
Depreciation and amortization |
|
2,457 |
|
|
3,567 |
| |
Deferred revenue |
|
(1,752) |
|
|
(1,531) |
| |
Deferred income taxes |
|
625 |
|
|
733 |
| |
Changes in foreign exchange gain/loss |
|
(108) |
|
|
(23) |
| |
|
938 |
|
|
1,558 |
| |
|
|
|
|
|
| Changes in non-cash operating
items |
|
|
|
|
|
| |
Accounts receivable |
|
(1,657) |
|
|
(8,104) |
| |
Income taxes and tax credits |
|
743 |
|
|
(1,873) |
| |
Inventories |
|
(2,312) |
|
|
(160) |
| |
Prepaid expenses |
|
171 |
|
|
359 |
| |
Other assets |
|
6 |
|
|
- |
| |
Accounts payable, accrued liabilities and
provisions |
|
5,485 |
|
|
3,637 |
| |
Other liabilities |
|
(26) |
|
|
(195) |
| |
|
3,348 |
|
|
(4,778) |
| Cash flows from investing
activities |
|
|
|
|
|
| Additions to short-term
investments |
|
(9,781) |
|
|
(24,533) |
| Proceeds from disposal
and maturity of short-term investments |
|
9,772 |
|
|
24,527 |
| Additions to capital assets |
|
(701) |
|
|
(1,989) |
| |
|
(710) |
|
|
(1,995) |
| Cash flows from financing
activities |
|
|
|
|
|
| Exercise of stock options |
|
106 |
|
|
51 |
| Redemption of share capital |
|
- |
|
|
(973) |
| |
|
106 |
|
|
(922) |
| |
|
|
|
|
|
| Effect of foreign exchange rate
changes on cash |
|
(365) |
|
|
(355) |
| |
|
|
|
|
|
| Change in cash |
|
2,379 |
|
|
(8,050) |
| Cash - Beginning of the
period |
|
45,386 |
|
|
58,868 |
| Cash - End of the period |
$ |
47,765 |
|
$ |
50,818 |
SOURCE EXFO inc.