- Sales reach US$59.8
million
- Bookings attain $64.3
million, book-to-bill ratio of 1.07
- Adjusted EBITDA totals US$2.7
million
QUEBEC CITY,
Jan. 9, 2013 /CNW Telbec/ - EXFO Inc.
(NASDAQ: EXFO; TSX: EXF) reported today financial results for the
first quarter ended November 30,
2012.
Sales reached US$59.8
million in the first quarter of fiscal 2013 compared to
US$66.4 million in the first quarter
of 2012 and US$57.2 million in the
fourth quarter of 2012.
Bookings attained US$64.3
million in the first quarter of fiscal 2013 compared to
US$71.4 million in the same period
last year and US$55.2 million in the
fourth quarter of 2012. The company's book-to-bill ratio was 1.07
in the first quarter of 2013.
Gross margin* amounted to 60.5% of
sales in the first quarter of fiscal 2013 compared to 64.8% in the
first quarter of 2012 and 62.8% in the fourth quarter of
2012.
IFRS net loss in the first quarter of fiscal
2013 totaled US$1.6 million, or
US$0.03 per share, compared to net
earnings of US$2.9 million, or
US$0.05 per diluted share, in the
same period last year and a net loss of US$3.7 million, or US$0.06 per share, in the fourth quarter of 2012.
IFRS net loss in the first quarter of 2013 included US$1.9 million in after-tax amortization of
intangible assets, a foreign exchange gain of US$0.8 million and US$0.4
million in stock-based compensation costs.
Adjusted EBITDA** totaled
US$2.7 million, or 4.5% of sales, in
the first quarter of fiscal 2013 compared to US$6.5 million, or 9.7% of sales, in the
first quarter of 2012 and US$4.5
million, or 8.0% of sales, in the fourth quarter of
2012.
"Despite a challenging environment during the
last several quarters, I am increasingly optimistic about EXFO's
opportunities for fiscal 2013 based on improving market conditions,
recent investment plans announced by network operators and our
highest bookings level in the past year," said Germain Lamonde, EXFO's Chairman, President and
CEO. "While both Protocol and Physical-layer product groups
delivered sequential bookings growth of about 15% in the first
quarter, I am particularly excited about our Protocol
solutions, especially in the areas of 4G/LTE, mobile backhaul and
service assurance where we're gaining traction with tier-1 wireless
operators. Given these data points, our history of market-share
gains and recent restructuring initiative, we plan to increase
sales 6% to 10% in 2013 and significantly improve
profitability."
Selected Financial Information
(In thousands of US dollars)
|
|
Q1 2013 |
|
Q4 2012 |
|
Q1 2012 |
|
Sales |
$ |
59,821 |
|
$ |
57,156 |
|
$ |
66,388 |
|
Gross margin* |
$ |
36,164 |
|
$ |
35,899 |
|
$ |
43,018 |
|
|
60.5% |
|
|
62.8% |
|
|
64.8% |
|
Other selected
information: |
|
|
|
|
|
|
|
|
|
IFRS net earnings (loss) |
$ |
(1,638) |
|
$ |
(3,714) |
|
$ |
2,887 |
|
Amortization of intangible assets |
$ |
1,962 |
|
$ |
1,931 |
|
$ |
1,921 |
|
Stock-based compensation costs |
$ |
448 |
|
$ |
429 |
|
$ |
555 |
|
Restructuring costs |
$ |
‒ |
|
$ |
2,329 |
|
$ |
‒ |
|
Net income tax effect of the above items |
$ |
(67) |
|
$ |
(247) |
|
$ |
(30) |
|
Foreign exchange gain (loss) |
$ |
756 |
|
$ |
(1,940) |
|
$ |
1,664 |
|
Adjusted EBITDA** |
$ |
2,720 |
|
$ |
4,546 |
|
$ |
6,472 |
Operating Expenses
Selling and administrative expenses totaled US$22.3 million, or 37.3% of sales in the first
quarter of fiscal 2013 compared to US$24.6
million, or 37.1% of sales, in the same period last year and
US$22.2 million, or 38.9%
of sales, in the fourth quarter of 2012.
Gross research and development expenses amounted
to US$13.9 million, or 23.2% of
sales, in the first quarter of fiscal 2013 compared to
US$14.8 million, or 22.3% of sales,
in the first quarter of 2012 and US$14.1 million, or 24.7% of sales, in
the fourth quarter of 2012.
Net R&D expenses totaled US$11.6 million, or 19.4% of sales, in the first
quarter of fiscal 2013 compared to US$12.5 million, or 18.8% of sales, in the same
period last year and US$11.9 million,
or 20.8% of sales, in the fourth quarter of 2012.
First-Quarter Highlights
- EXFO's sales and bookings improved 4.7% and 16.4% sequentially
in the first quarter mainly due to increased traction of
Physical-layer products and less seasonality. It should be noted
the company was unable to recognize into revenue in the first
quarter more than US$2.0 million in
orders. EXFO's top customer accounted for 7.2% of sales in the
first quarter, while the top three represented 15.6%. Global sales
originated 56% from the Americas, 27% from Europe, Middle
East and Africa (EMEA), and
17% from Asia-Pacific.
- Focusing on profitability, EXFO expects to benefit from
US$8.0 million in annual cost-savings
from its almost completed restructuring plan. The company has
reported US$2.3 million in
restructuring costs so far with US$0.3
million left to incur in the second quarter of 2013. Based
on increased sales volume and a tight control on expenses, EXFO
expects to deliver a significant improvement in adjusted EBITDA in
2013.
- On the innovation front, EXFO launched five new products,
including the next-generation BV-110 service assurance probe that
enables network operators to validate service-level agreements and
end-user quality of experience (QoE) at customer premises and cell
sites. It fully complements the recently launched BV-3100 hardware
probe, which allows operators to accelerate Ethernet deployments in
wireless backhaul and metro networks. The company also strengthened
its FTB Ecosystem and EXFO Connect initiative with the introduction
of FTB Anywhere, a unique cloud-based solution allowing an operator
to share software licenses among its fleet of FTB platforms to
avoid costly delays in shipping units across large
geographies.
Business Outlook
EXFO forecasts sales between US$62.0 million
and US$67.0 million for the second quarter of fiscal 2013,
while IFRS net loss is expected to range between US$0.04 and US$0.00 per share. Net loss includes
US$0.04 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 2013. To listen to the conference call and
participate in the question period via telephone, dial
1-416-981-9005. 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 16, 2013. The replay number is
1-402-977-9141 and the reservation number is 21620458. 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 1700 people in 25 countries, supporting more than
2000 telecom customers worldwide. For more information, visit
www.EXFO.com.
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 and/or recession (including our ability to quickly
adapt cost structures with anticipated levels of business and our
ability to manage inventory levels with market demand); capital
spending and network deployment levels in the telecommunications
industry; future economic, competitive, financial and market
conditions; limited visibility with regards to customer orders and
the timing of such orders; fluctuating exchange rates;
consolidation in the global telecommunications test and
service assurance industry and increased competition among vendors;
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 purposes of evaluating its historical and
prospective financial performance, as well as its performance
relative to competitors. These measures also help the company
to plan and forecast 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 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 is defined as net
earnings (loss) before interest, income taxes, depreciation of
property, plant and equipment, amortization of intangible
assets, restructuring charges, stock-based compensation costs and
foreign exchange gain (loss).
The following tables summarize the
reconciliation of adjusted EBITDA to IFRS net earnings (loss), in
thousands of US dollars:
Adjusted EBITDA
|
|
Three months
ended
November 30,
2012 |
|
Three months
ended
August 31,
2012 |
|
Three months
ended
November 30,
2011 |
|
IFRS net earnings (loss) for the period |
|
$ |
(1,638) |
|
$ |
(3,714) |
|
$ |
2,887 |
|
Add (deduct): |
|
Depreciation of property, plant and equipment |
|
|
1,605 |
|
|
1,535 |
|
|
1,568 |
Amortization of intangible assets |
|
|
1,962 |
|
|
1,931 |
|
|
1,921 |
Interest (income) expenses |
|
|
(33) |
|
|
(63) |
|
|
71 |
Income taxes |
|
|
1,132 |
|
|
159 |
|
|
1,134 |
Restructuring charges |
|
|
‒ |
|
|
2,329 |
|
|
‒ |
Stock-based compensation costs |
|
|
448 |
|
|
429 |
|
|
555 |
Foreign exchange (gain) loss |
|
|
(756) |
|
|
1,940 |
|
|
(1,664) |
Adjusted EBITDA for the period |
|
$ |
2,720 |
|
$ |
4,546 |
|
$ |
6,472 |
|
Adjusted EBITDA in percentage of sales |
|
|
4.5% |
|
|
8.0% |
|
|
9.7% |
EXFO Inc. |
Condensed Unaudited
Interim Consolidated Balance Sheets |
|
(in thousands of US
dollars) |
|
|
|
As at
November 30,
2012 |
|
|
As at
August 31,
2012 |
Assets |
|
|
|
|
|
|
|
|
|
|
|
Current assets |
|
|
|
|
|
Cash |
$ |
50,818 |
|
$ |
58,868 |
Short-term investments |
|
8,171 |
|
|
8,236 |
Accounts receivable |
|
|
|
|
|
|
Trade |
|
45,701 |
|
|
37,643 |
|
Other |
|
3,773 |
|
|
4,283 |
Income taxes and tax credits
recoverable |
|
8,597 |
|
|
9,024 |
Inventories |
|
41,065 |
|
|
41,212 |
Prepaid expenses |
|
3,415 |
|
|
3,800 |
|
|
161,540 |
|
|
163,066 |
|
|
|
|
|
|
Tax credits recoverable |
|
40,511 |
|
|
38,397 |
Property, plant and equipment |
|
49,045 |
|
|
49,848 |
Intangible assets |
|
12,214 |
|
|
14,132 |
Goodwill |
|
28,958 |
|
|
29,160 |
Deferred income taxes |
|
11,946 |
|
|
12,080 |
|
|
|
|
|
|
|
$ |
304,214 |
|
$ |
306,683 |
Liabilities |
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
|
|
|
|
Accounts payable and accrued
liabilities |
$ |
35,202 |
|
$ |
32,392 |
Provisions |
|
853 |
|
|
952 |
Income taxes payable |
|
1,068 |
|
|
917 |
Current portion of long-term debt |
|
583 |
|
|
565 |
Deferred revenue |
|
9,348 |
|
|
10,583 |
|
|
47,054 |
|
|
45,409 |
|
|
|
|
|
|
Deferred revenue |
|
4,596 |
|
|
4,997 |
Long-term debt |
|
291 |
|
|
282 |
Other liabilities |
|
413 |
|
|
609 |
Deferred income taxes |
|
2,609 |
|
|
2,105 |
|
|
54,963 |
|
|
53,402 |
|
|
|
|
|
|
Shareholders' equity |
|
|
|
|
|
Share capital |
|
110,835 |
|
|
110,965 |
Contributed surplus |
|
16,950 |
|
|
17,298 |
Retained earnings |
|
109,873 |
|
|
111,511 |
Accumulated other comprehensive
income |
|
11,593 |
|
|
13,507 |
|
|
|
|
|
|
|
|
249,251 |
|
|
253,281 |
|
|
|
|
|
|
|
$ |
304,214 |
|
$ |
306,683 |
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, |
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
2011 |
|
|
|
|
|
|
|
Sales |
|
$ |
59,821 |
|
$ |
66,388 |
|
|
|
|
|
|
|
Cost of sales (1) |
|
|
23,657 |
|
|
23,370 |
Selling and administrative |
|
|
22,290 |
|
|
24,618 |
Net research and development |
|
|
11,602 |
|
|
12,483 |
Depreciation of property, plant and equipment |
|
|
1,605 |
|
|
1,568 |
Amortization of intangible assets |
|
|
1,962 |
|
|
1,921 |
Earnings (loss) from operations |
|
|
(1,295) |
|
|
2,428 |
|
|
|
|
|
|
|
Interest income (expenses) |
|
|
33 |
|
|
(71) |
Foreign exchange gain |
|
|
756 |
|
|
1,664 |
Earnings (loss) before income taxes |
|
|
(506) |
|
|
4,021 |
|
|
|
|
|
|
|
Income taxes |
|
|
1,132 |
|
|
1,134 |
|
|
|
|
|
|
|
Net earnings (loss) for the period |
|
$ |
(1,638) |
|
$ |
2,887 |
|
|
|
|
|
|
|
Basic and diluted net earnings (loss) per
share |
|
$ |
(0.03) |
|
$ |
0.05 |
|
|
|
|
|
|
|
Basic weighted average number of shares
outstanding (000's) |
|
|
60,389 |
|
|
60,341 |
|
|
|
|
|
|
|
Diluted weighted average number of shares
outstanding (000's) |
|
|
60,389 |
|
|
61,763 |
(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, |
|
|
|
|
|
|
|
|
|
|
2012 |
|
|
2011 |
|
|
|
|
|
|
|
Net earnings (loss) for the
period |
|
$ |
(1,638) |
|
$ |
2,887 |
Other comprehensive income (loss), net
of income taxes |
|
|
|
|
|
|
Items that will not be reclassified
subsequently to net earnings |
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
|
(1,708) |
|
|
(11,827) |
Items that may be reclassified
subsequently to net earnings |
|
|
|
|
|
|
|
Unrealized gains on forward exchange
contracts |
|
|
(83) |
|
|
(819) |
|
Reclassification of realized gains on forward
exchange contracts in net earnings (loss) |
|
|
(199) |
|
|
(625) |
|
Deferred income tax effect of gains on forward
exchange contracts |
|
|
76 |
|
|
395 |
|
|
|
(206) |
|
|
(1,049) |
Other comprehensive loss |
|
|
(1,914) |
|
|
(12,876) |
|
|
|
|
|
|
|
Comprehensive loss for the
period |
|
$ |
(3,552) |
|
$ |
(9,989) |
EXFO Inc. |
Condensed Unaudited
Interim Consolidated Statements of Changes in Shareholders'
Equity |
|
(in thousands of US
dollars) |
|
|
|
Three
months ended November 30, 2011 |
|
|
Share
Capital |
|
|
Contributed
Surplus |
|
|
Retained
earnings |
|
|
Accumulated
other
comprehensive
income |
|
|
Total
shareholders' equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at September 1, 2011 |
$ |
110,341 |
|
$ |
18,017 |
|
$ |
115,104 |
|
$ |
21,049 |
|
$ |
264,511 |
Redemption of share capital |
|
(244) |
|
|
(119) |
|
|
- |
|
|
- |
|
|
(363) |
Reclassification of stock-based
compensation costs |
|
848 |
|
|
(848) |
|
|
- |
|
|
- |
|
|
- |
Stock-based compensation costs |
|
- |
|
|
489 |
|
|
- |
|
|
- |
|
|
489 |
Net earnings for the period |
|
- |
|
|
- |
|
|
2,887 |
|
|
- |
|
|
2,887 |
Other comprehensive loss |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Foreign currency translation adjustment |
|
- |
|
|
- |
|
|
- |
|
|
(11,827) |
|
|
(11,827) |
|
Changes in unrealized gains on forward exchange
contracts, net of deferred income taxes of $395 |
|
- |
|
|
- |
|
|
- |
|
|
(1,049) |
|
|
(1,049) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Total comprehensive income (loss) for
the period |
|
- |
|
|
- |
|
|
2,887 |
|
|
(12,876) |
|
|
(9,989) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance as at November 30, 2011 |
$ |
110,945 |
|
$ |
17,539 |
|
$ |
117,991 |
|
$ |
8,173 |
|
$ |
254,648 |
|
|
|
|
|
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 |
EXFO Inc. |
Condensed Unaudited
Interim Consolidated Statements of Cash Flows |
|
(in thousands of US
dollars) |
|
|
|
Three
months ended
November 30, |
|
|
|
|
|
|
|
|
2012 |
|
|
2011 |
|
|
|
|
|
|
Cash flows from operating
activities |
|
|
|
|
|
Net earnings (loss) for the
period |
$ |
(1,638) |
|
$ |
2,887 |
Add (deduct) items not affecting
cash |
|
|
|
|
|
|
Change in discount on short-term investments |
|
2 |
|
|
31 |
|
Stock-based compensation costs |
|
448 |
|
|
555 |
|
Depreciation and amortization |
|
3,567 |
|
|
3,489 |
|
Deferred revenue |
|
(1,531) |
|
|
(1,141) |
|
Deferred income taxes |
|
733 |
|
|
718 |
|
Change in foreign exchange gain/loss |
|
(23) |
|
|
(1,214) |
|
|
1,558 |
|
|
5,325 |
|
|
|
|
|
|
Change in non-cash operating
items |
|
|
|
|
|
|
Accounts receivable |
|
(8,104) |
|
|
(2,897) |
|
Income taxes and tax credits |
|
(1,873) |
|
|
172 |
|
Inventories |
|
(160) |
|
|
593 |
|
Prepaid expenses |
|
359 |
|
|
15 |
|
Accounts payable, accrued liabilities and
provisions |
|
3,637 |
|
|
3,397 |
|
Other liabilities |
|
(195) |
|
|
(61) |
|
|
(4,778) |
|
|
6,544 |
Cash flows from investing
activities |
|
|
|
|
|
Additions to short-term
investments |
|
(24,533) |
|
|
(57,922) |
Proceeds from disposal and maturity of
short-term investments |
|
24,527 |
|
|
90,779 |
Additions to capital assets |
|
(1,989) |
|
|
(4,486) |
|
|
(1,995) |
|
|
28,371 |
Cash flows from financing
activities |
|
|
|
|
|
Bank loan |
|
- |
|
|
(785) |
Exercise of stock options |
|
51 |
|
|
- |
Redemption of share capital |
|
(973) |
|
|
(363) |
|
|
(922) |
|
|
(1,148) |
|
|
|
|
|
|
Effect of foreign exchange rate
changes on cash |
|
(355) |
|
|
(368) |
|
|
|
|
|
|
Change in cash |
|
(8,050) |
|
|
33,399 |
Cash - Beginning of the
period |
|
58,868 |
|
|
22,771 |
Cash - End of the period |
$ |
50,818 |
|
$ |
56,170
|
|
SOURCE EXFO INC.