- Sales reached US$71.5
million
- Bookings attained US$69.0
million
- IFRS net earnings totaled US$3.6
million, US$0.06 per
share
- Adjusted EBITDA amounted to US$9.9
million, 13.9% of sales
QUEBEC CITY, Jan. 12, 2021 /CNW Telbec/ - EXFO Inc.
(NASDAQ: EXFO) (TSX: EXF), the communications industry's test,
monitoring and analytics experts, reported today financial results
for the first quarter ended November 30,
2020.
"EXFO delivered a strong first-quarter
performance in fiscal 2021 as compared to a coronavirus-free
opening quarter in 2020," said EXFO's CEO Philippe Morin. "Robust sales and earnings
results confirm market acceptance of our highly differentiated
solutions related to fiber, cloud-native and 5G network deployments
as we continue to develop new ways to engage and serve our global
customer base in this virtualized environment. We're particularly
pleased with our SASS offering's penetration into new accounts
through the recently announced fiber monitoring deal with BT's
subsidiary, Openreach, and five service assurance contracts secured
in the fourth quarter of 2020."
First-Quarter Highlights
- Sales. Sales decreased 2.8% year-over-year in the first quarter
of 2021 mainly due to the impact of the coronavirus pandemic, which
was partially offset by stronger year-end calendar spending on the
part of communications service providers. Test and Measurement
(T&M) sales dropped 9.8% from a record US$55.9 million in first quarter of 2020, while
Service Assurance, Systems and Services (SASS) sales increased
18.6% year-over-year. Sales in Europe, Middle
East and Africa (EMEA) and
Asia-Pacific improved 23.3% and
9.2% year-over-year, respectively, while sales in the Americas fell
20.4%. EXFO's top customer accounted for 4.3% of sales, while the
top three represented 12.6%.
- Profitability. IFRS net earnings totaled US$3.6 million, or US$0.06 per share, in the first quarter of 2021,
while adjusted EBITDA amounted to US$9.9
million, or 13.9% of sales. Net earnings included an
after-tax wage subsidy of US$1.4
million under the Canada
emergency wage subsidy program to help qualifying businesses
alleviate the effects of the pandemic, as well as an after-tax
insurance recovery of US$2.5 million
related to the loss of assets.
Selected Financial
Information
|
|
|
(In thousands of
US dollars)
|
|
|
|
Three months
ended
November 30,
|
|
2020
|
|
2019
|
|
|
|
|
|
Test and measurement
sales
|
$
|
50,473
|
|
$
|
55,947
|
Service assurance,
systems and services sales
|
|
21,046
|
|
17,749
|
Foreign exchange
losses on forward exchange contracts
|
|
(7)
|
|
(145)
|
Total
sales
|
$
|
71,512
|
|
$
|
73,551
|
|
|
|
|
|
Test and measurement
bookings
|
$
|
51,248
|
|
$
|
55,009
|
Service assurance,
systems and services bookings
|
|
17,802
|
|
15,049
|
Foreign exchange
losses on forward exchange contracts
|
|
(7)
|
|
(145)
|
Total
bookings
|
$
|
69,043
|
|
$
|
69,913
|
Book-to-bill ratio
(bookings/sales)
|
|
0.97
|
|
0.95
|
Gross margin before
depreciation and amortization*
|
$
|
41,643
|
|
$
|
43,310
|
|
|
58.2%
|
|
58.9%
|
|
|
|
|
|
Other selected
information:
|
|
|
|
|
IFRS net earnings
(loss)
|
$
|
3,554
|
|
$
|
(63)
|
Amortization of
intangible assets
|
$
|
2,549
|
|
$
|
1,632
|
Stock-based
compensation costs
|
$
|
568
|
|
$
|
487
|
Restructuring
charges
|
$
|
543
|
|
$
|
–
|
Net income tax effect
of the above items
|
$
|
(530)
|
|
$
|
(249)
|
Foreign exchange
loss
|
$
|
246
|
|
$
|
126
|
Adjusted
EBITDA*
|
$
|
9,949
|
|
$
|
7,544
|
Quarterly Overview
Sales decreased 2.8%
to US$71.5 million in the first quarter of fiscal 2021
from US$73.6 million in the first quarter of 2020.
Bookings dropped 1.2% to US$69.0
million in the first quarter of fiscal 2021 from US$69.9 million for the same period in
2020. The company's book-to-bill ratio was 0.97 in the first
quarter of 2021.
Gross margin before depreciation and amortization* amounted to
58.2% of sales in the first quarter of fiscal 2021 compared to
58.9% in the first quarter of 2020.
Selling and administrative expenses totaled US$21.6
million, or 30.2% of sales in the first quarter of fiscal 2021
compared to US$24.5 million, or 33.3% of sales, in the first
quarter of 2020.
Net R&D expenses amounted to US$11.2 million, or 15.7%
of sales, in the first quarter of fiscal 2021 compared
to US$11.7 million, or 16.0% of sales, in the same period
last year.
IFRS net earnings totaled US$3.6 million,
or US$0.06 per share, in the first quarter of fiscal 2021
compared to a net loss of US$0.1 million, or US$0.00 per
share, in the first quarter of 2020. IFRS net earnings in the
first quarter of 2021 included US$2.0 million in after-tax amortization of
intangible assets, US$0.6 million in stock-based compensation
costs, US$0.5 million in after-tax
restructuring charges and a foreign exchange loss of US$0.2 million. IFRS net earnings also included
an after-tax wage subsidy of US$1.4
million under the Canada
emergency wage subsidy program to help qualifying businesses
alleviate the effects of the coronavirus pandemic, as well as an
after-tax insurance recovery of US$2.5
million related to the loss of assets.
For the first quarter of 2020, net loss included US$1.4 million in after-tax amortization of
intangible assets, US$0.5 million in
stock-based compensation costs and a foreign exchange loss of
US$0.1 million.
Adjusted EBITDA* amounted to US$9.9
million, or 13.9% of sales, in the first quarter of fiscal
2021 compared to US$7.5 million, or 10.3% of sales, in
the first quarter of 2020.
Conference Call and Webcast
EXFO will host a
conference call today at 5 p.m. (Eastern
time) to review first-quarter results for fiscal 2021. To
listen to the conference call and participate in the question
period via telephone, dial 1-323-289-6576. Please take note the
following participant passcode will be required: 2900379. Executive
Chairman Germain Lamonde, CEO
Philippe Morin and Pierre Plamondon, CPA, Chief Financial Officer
and Vice-President of Finance, will participate in the call. An
audio replay of the conference call will be available two hours
after the event until 8 p.m. on
January 19, 2021. The replay number
is 1-719-457-0820 and the participant passcode is 2900379. 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
EXFO (NASDAQ: EXFO) (TSX: EXF) develops
smarter test, monitoring and analytics solutions for fixed and
mobile network operators, webscale companies and equipment
manufacturers in the global communications industry. Our customers
count on us to deliver superior network performance, service
reliability and subscriber insights. They count on our unique blend
of equipment, software and services to accelerate digital
transformations related to fiber, 4G/LTE and 5G deployments. They
count on our expertise with automation, real-time troubleshooting
and big data analytics, which are critical to their business
performance. We've spent over 30 years earning this trust, and
today 1,900 EXFO employees in over 25 countries work side by
side with our customers in the lab, field, data center and
beyond.
Forward-Looking Statements
This news 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, expect, believe, plan, anticipate, intend, could,
estimate, continue, or similar expressions or the negative of such
expressions 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, but not limited to,
macroeconomic uncertainty, namely the impact of the coronavirus
pandemic on our employees, customers and global operations,
including the ability of our suppliers to fulfil raw material
requirements and services and our ability to manufacture and
deliver our products and services to our customers; the effects of
emergency measures related to isolation periods for individuals in
affected areas, lockdown restrictions imposed by national
governments on businesses in countries where we operate and have
employees, and limitations on travel to attract new customers and
serve existing ones; deteriorating financial and market conditions
as well as a potential recession; trade wars, and our ability to
successfully integrate businesses that we acquire; capital spending
and network deployment levels in the communications industry
(including our ability to quickly adapt cost structures to
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 communications
test, monitoring and analytics solutions markets and increased
competition among vendors; capacity to adapt our future product
offering to future technological changes; limited visibility with
regard to the timing and nature of customer orders; delay in
revenue recognition due to longer sales cycles for complex systems
involving customers' acceptance; fluctuating exchange rates;
concentration of sales; timely release and market acceptance of our
new products and other upcoming products; our ability to
successfully expand international operations and to conduct
business internationally; 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 before depreciation and amortization and adjusted
EBITDA) as supplemental information regarding its operational
performance. Gross margin before depreciation and amortization
represents sales, less cost of sales, excluding depreciation and
amortization. Adjusted EBITDA represents net earnings (loss) before
interest and other income/expenses, income taxes, depreciation and
amortization, stock-based compensation costs, restructuring charges
and foreign exchange loss.
These non-IFRS measures eliminate the effect on IFRS results of
non-cash statement of earnings elements, restructuring charges as
well as elements subject to significant volatility such as foreign
exchange gain or loss. EXFO uses these measures for evaluating
its historical and prospective financial performance, as well
as its performance relative to competitors. These
non-IFRS measures are also used by financial analysts who evaluate
and compare EXFO's performance against that of competitors and
industry players in the sector.
Finally, these measures help EXFO to plan and forecast future
periods as well as make operational and strategic decisions. EXFO
believes that providing this information to investors, in addition
to IFRS measures, allows them to see the company's
results through the eyes of management, and to better understand
historical and future financial performance. More importantly, it
enables the comparison of EXFO's performance on a relatively
similar basis against that of other public and private companies in
the industry worldwide.
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.
The following table summarizes the reconciliation of adjusted
EBITDA to IFRS net earnings (loss) loss in thousands
of US dollars:
Adjusted EBITDA
|
Three months
ended
November
30,
|
|
2020
|
|
2019
|
|
|
|
|
IFRS net earnings
(loss) for the period
|
$
|
3,554
|
|
$
|
(63)
|
|
|
|
|
Add
(deduct):
|
|
|
|
|
|
|
|
Depreciation and
amortization
|
4,723
|
|
3,926
|
Interest and other
(income) expenses
|
(1,866)
|
|
399
|
Income
taxes
|
2,181
|
|
2,669
|
Stock-based
compensation costs
|
568
|
|
487
|
Restructuring
charges
|
543
|
|
–
|
Foreign exchange
loss
|
246
|
|
126
|
Adjusted EBITDA for
the period
|
$
|
9,949
|
|
$
|
7,544
|
|
|
|
|
Adjusted EBITDA in
percentage of sales
|
13.9%
|
|
10.3%
|
EXFO
Inc.
|
Condensed
Unaudited Interim Consolidated Balance Sheets
|
|
(in thousands of US
dollars)
|
|
|
As
at
November
30,
2020
|
|
As
at
August
31,
2020
|
|
|
|
|
Assets
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
Cash
|
$
|
15,392
|
|
$
|
32,818
|
Short-term
investments
|
1,106
|
|
919
|
Accounts
receivable
|
|
|
|
Trade
|
55,541
|
|
56,291
|
Other
|
6,090
|
|
4,055
|
Income taxes and tax
credits recoverable
|
2,337
|
|
4,203
|
Inventories
|
41,769
|
|
38,865
|
Prepaid
expenses
|
5,422
|
|
5,631
|
Other
assets
|
4,009
|
|
5,493
|
|
131,666
|
|
148,275
|
|
|
|
|
Tax credits
recoverable
|
49,961
|
|
48,812
|
Property, plant
and equipment
|
39,303
|
|
39,722
|
Lease right-of-use
assets
|
9,228
|
|
10,758
|
Intangible
assets
|
15,481
|
|
17,616
|
Goodwill
|
40,451
|
|
40,290
|
Deferred income
tax assets
|
4,147
|
|
3,633
|
Other
assets
|
1,521
|
|
1,548
|
|
$
|
291,758
|
|
$
|
310,654
|
Liabilities
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
Bank loan
|
$
|
16,314
|
|
$
|
32,737
|
Accounts payable and
accrued liabilities
|
39,405
|
|
41,348
|
Provisions
|
2,333
|
|
3,792
|
Income taxes
payable
|
242
|
|
43
|
Deferred
revenue
|
24,345
|
|
25,785
|
Other
liabilities
|
4,040
|
|
4,032
|
Current portion of
lease liabilities
|
2,870
|
|
3,249
|
Current portion of
long-term debt
|
1,880
|
|
2,076
|
|
91,429
|
|
113,062
|
|
|
|
|
Provisions
|
2,784
|
|
2,782
|
Deferred
revenue
|
8,887
|
|
8,858
|
Lease
liabilities
|
6,715
|
|
7,334
|
Long-term
debt
|
1,759
|
|
2,144
|
Deferred income
tax liabilities
|
2,925
|
|
3,760
|
Other
liabilities
|
144
|
|
151
|
|
114,643
|
|
138,091
|
|
|
|
|
Shareholders'
equity
|
|
|
|
Share
capital
|
94,190
|
|
94,024
|
Contributed
surplus
|
19,724
|
|
19,680
|
Retained
earnings
|
106,187
|
|
102,633
|
Accumulated other
comprehensive loss
|
(42,986)
|
|
(43,774)
|
|
177,115
|
|
172,563
|
|
|
|
|
|
$
|
291,758
|
|
$
|
310,654
|
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,
|
|
2020
|
|
2019
|
|
|
|
|
Sales
|
$
|
71,512
|
|
$
|
73,551
|
|
|
|
|
Cost of
sales (1)
|
29,869
|
|
30,241
|
Selling and
administrative
|
21,606
|
|
24,504
|
Net research and
development
|
11,199
|
|
11,749
|
Depreciation of
property, plant and equipment
|
1,341
|
|
1,443
|
Depreciation of lease
right-of-use assets
|
833
|
|
851
|
Amortization of
intangible assets
|
2,549
|
|
1,632
|
Interest and other
(income) expense
|
(1,866)
|
|
399
|
Foreign exchange
loss
|
246
|
|
126
|
|
|
|
|
Earnings before
income taxes
|
5,735
|
|
2,606
|
|
|
|
|
Income
taxes
|
2,181
|
|
2,669
|
|
|
|
|
Net earnings
(loss) for the period
|
$
|
3,554
|
|
$
|
(63)
|
|
|
|
|
Basic and diluted
net earnings (loss) per share
|
$
|
0.06
|
|
$
|
(0.00)
|
|
|
|
|
Basic weighted
average number of shares outstanding (000's)
|
55,749
|
|
55,439
|
|
|
|
|
Diluted weighted
average number of shares outstanding (000's)
|
57,023
|
|
55,439
|
|
(1) The cost of
sales is exclusive of depreciation and amortization, shown
separately.
|
EXFO
Inc.
|
Condensed
Unaudited Interim Consolidated Statements of Comprehensive
Income
|
|
(in thousands of US
dollars)
|
|
|
Three months
ended
November
30,
|
|
2020
|
|
2019
|
|
|
|
|
Net earnings
(loss) for the period
|
$
|
3,554
|
|
$
|
(63)
|
Other comprehensive
income (loss), net of income taxes
|
|
|
|
Items that may be
reclassified subsequently to net earnings (loss)
|
|
|
|
Foreign currency
translation adjustment
|
722
|
|
561
|
Unrealized
gains/losses on forward exchange contracts
|
256
|
|
(35)
|
Reclassification of
realized gains/losses on forward exchange contracts
in net earnings (loss)
|
(156)
|
|
183
|
Deferred income tax
effect of gains/losses on forward exchange contracts
|
(34)
|
|
(30)
|
|
|
|
|
Other comprehensive
income
|
788
|
|
679
|
|
|
|
|
Comprehensive
income for the period
|
$
|
4,342
|
|
$
|
616
|
EXFO
Inc.
|
Condensed
Unaudited Interim Consolidated Statements of Changes in
Shareholders' Equity
|
|
(in thousands of US
dollars)
|
|
|
Three months ended
November 30, 2019
|
|
Share capital
|
|
Contributed
surplus
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive
loss
|
|
Total shareholders'
equity
|
|
|
|
|
|
|
|
|
|
|
Balance as at
September 1, 2019
|
$
|
92,706
|
|
$
|
19,196
|
|
$
|
112,173
|
|
$
|
(51,511)
|
|
$
|
172,564
|
Reclassification of
stock-based compensation costs
|
861
|
|
(861)
|
|
–
|
|
–
|
|
–
|
Redemption of share
capital
|
(212)
|
|
(13)
|
|
–
|
|
–
|
|
(225)
|
Stock-based
compensation costs
|
–
|
|
494
|
|
–
|
|
–
|
|
494
|
Net loss for the
period
|
–
|
|
–
|
|
(63)
|
|
–
|
|
(63)
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
–
|
|
–
|
|
–
|
|
561
|
|
561
|
Changes in unrealized
gains/losses on forward exchange contracts, net of deferred income
taxes of $30
|
–
|
|
–
|
|
–
|
|
118
|
|
118
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income for the period
|
|
|
|
|
|
|
|
|
616
|
|
|
|
|
|
|
|
|
|
|
Balance as at
November 30, 2019
|
$
|
93,355
|
|
$
|
18,816
|
|
$
|
112,110
|
|
$
|
(50,832)
|
|
$
|
173,449
|
|
|
|
|
|
Three months ended
November 30, 2020
|
|
Share capital
|
|
Contributed
surplus
|
|
Retained
earnings
|
|
Accumulated
other
comprehensive
loss
|
|
Total shareholders'
equity
|
|
|
|
|
|
|
|
|
|
|
Balance as at
September 1, 2020
|
$
|
94,024
|
|
$
|
19,680
|
|
$
|
102,633
|
|
$
|
(43,774)
|
|
$
|
172,563
|
Reclassification of
stock-based compensation costs
|
704
|
|
(704)
|
|
–
|
|
–
|
|
–
|
Redemption of share
capital
|
(538)
|
|
158
|
|
–
|
|
–
|
|
(380)
|
Stock-based
compensation costs
|
–
|
|
590
|
|
–
|
|
–
|
|
590
|
Net earnings for the
period
|
–
|
|
–
|
|
3,554
|
|
–
|
|
3,554
|
Other comprehensive
income
|
|
|
|
|
|
|
|
|
|
Foreign currency
translation adjustment
|
–
|
|
–
|
|
–
|
|
722
|
|
722
|
Changes in unrealized
gains/losses on forward exchange contracts, net of deferred income
taxes of $34
|
–
|
|
–
|
|
–
|
|
66
|
|
66
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive
income for the period
|
|
|
|
|
|
|
|
|
4,342
|
|
|
|
|
|
|
|
|
|
|
Balance as at
November 30, 2020
|
$
|
94,190
|
|
$
|
19,724
|
|
$
|
106,187
|
|
$
|
(42,986)
|
|
$
|
177,115
|
EXFO
Inc.
|
Condensed
Unaudited Interim Consolidated Statements of Cash
Flows
|
|
(in thousands of US
dollars)
|
|
|
Three months
ended
November
30,
|
|
2020
|
|
2019
|
|
|
|
|
Cash flows from
operating activities
|
|
|
|
Net earnings (loss)
for the period
|
$
|
3,554
|
|
$
|
(63)
|
Add (deduct) items
not affecting cash
|
|
|
|
Stock-based
compensation costs
|
568
|
|
487
|
Depreciation and
amortization
|
4,723
|
|
3,926
|
Write-off of capital
assets
|
10
|
|
216
|
Deferred
revenue
|
(1,600)
|
|
(4,372)
|
Deferred income
taxes
|
(1,318)
|
|
(442)
|
Changes in foreign
exchange gain/loss
|
212
|
|
(21)
|
|
6,149
|
|
(269)
|
|
|
|
|
Changes in non-cash
operating items
|
|
|
|
Accounts
receivable
|
(831)
|
|
72
|
Income taxes and tax
credits
|
1,220
|
|
516
|
Inventories
|
(2,605)
|
|
(3,493)
|
Prepaid
expenses
|
579
|
|
378
|
Other
assets
|
1,391
|
|
35
|
Accounts payable,
accrued liabilities and provisions
|
(3,833)
|
|
(3,693)
|
Other
liabilities
|
(8)
|
|
(16)
|
|
2,062
|
|
(6,470)
|
Cash flows from
investing activities
|
|
|
|
Additions to
short-term investments
|
(230)
|
|
(147)
|
Disposal of
short-term investments
|
30
|
|
563
|
Purchases of capital
assets
|
(1,111)
|
|
(2,040)
|
|
(1,311)
|
|
(1,624)
|
Cash flows from
financing activities
|
|
|
|
Bank loan
|
(16,338)
|
|
8,354
|
Repayment of lease
liabilities
|
(833)
|
|
(844)
|
Repayment of
long-term debt
|
(581)
|
|
(676)
|
Redemption of share
capital
|
(380)
|
|
(225)
|
|
(18,132)
|
|
6,609
|
|
|
|
|
Effect of foreign
exchange rate changes on cash
|
(45)
|
|
12
|
|
|
|
|
Change in
cash
|
(17,426)
|
|
(1,473)
|
Cash – Beginning
of the period
|
32,818
|
|
16,518
|
Cash – End of the
period
|
$
|
15,392
|
|
$
|
15,045
|
EXFO-F
View original
content:http://www.prnewswire.com/news-releases/exfo-reports-first-quarter-results-for-fiscal-2021-301206898.html
SOURCE EXFO Inc.