- Sales reached
US$72.6 million - Bookings attained
US$87.0 million , book-to-bill ratio of 1.20 - IFRS net loss totaled
US$3.7 million - Adjusted EBITDA amounted to
US$4.3 million - Proxy circular forthcoming on board-approved, going-private transaction
"In the third quarter of 2021, EXFO delivered sales and adjusted EBITDA consistent with expectations while strong bookings were mainly driven by a recovery from the coronavirus pandemic and a good performance in EMEA," said EXFO's CEO
Third Quarter Highlights
- Sales. Sales improved 9.8% year-over-year in the third quarter of 2021 mainly due to increased spending on fiber deployments in the
Americas andEurope ,Middle East andAfrica (EMEA) following a period of reduced investments caused by the coronavirus pandemic in 2020. Test and Measurement (T&M) sales grew 13.9% year-over-year in the third quarter of 2021, while Service Assurance, Systems and Services (SASS) sales dropped 9.6%. Sales in theAmericas and EMEA increased 18.4% and 20.6% year-over-year, respectively, while sales in theAsia-Pacific region fell 23.8%. EXFO's top customer accounted for 5.6% of sales, while the top three represented 14.1%. - Profitability. IFRS net loss totaled
US$3.7 million , or -US$0.07 per share, in the third quarter of 2021, while adjusted EBITDA* amounted toUS$4.3 million , or 5.9% of sales.
Selected Financial Information
(In thousands of US dollars)
Three months | Three months | Nine months | Nine months | ||||||||
Test and Measurement sales | $ | 57,295 | $ | 50,309 | $ | 159,045 | $ | 143,733 | |||
Service Assurance, Systems and Services sales | 14,780 | 16,352 | 53,391 | 52,036 | |||||||
Foreign exchange losses on forward exchange | |||||||||||
contracts | (569) | (514) | (974) | (758) | |||||||
Total sales | $ | 72,644 | $ | 66,147 | $ | 213,410 | $ | 195,011 | |||
Test and Measurement bookings | $ | 59,671 | $ | 46,634 | $ | 164,584 | $ | 153,646 | |||
Service Assurance, Systems and Services bookings | 26,766 | 12,988 | 69,840 | 49,000 | |||||||
Foreign exchange losses on forward exchange | |||||||||||
contracts | (569) | (514) | (974) | (758) | |||||||
Total bookings | $ | 87,006 | $ | 59,108 | $ | 235,398 | $ | 201,888 | |||
Book-to-bill ratio (bookings/sales) | 1.20 | 0.89 | 1.10 | 1.04 | |||||||
Gross margin before depreciation and amortization* | $ | 42,346 | $ | 38,199 | $ | 122,820 | $ | 113,026 | |||
58.3% | 57.7% | 57.6% | 58.0% | ||||||||
Other selected information: | |||||||||||
IFRS net earnings (loss) | $ | (3,682) | $ | 3,177 | $ | (2,567) | $ | (5,907) | |||
Amortization of intangible assets | $ | 1,774 | $ | 1,698 | $ | 6,310 | $ | 5,025 | |||
Stock-based compensation costs | $ | 1,193 | $ | 523 | $ | 2,778 | $ | 1,446 | |||
Restructuring charges | $ | 108 | $ | – | $ | 651 | $ | – | |||
Net income tax effect of the above items | $ | (307) | $ | (257) | $ | (1,135) | $ | (760) | |||
Foreign exchange loss | $ | 826 | $ | 141 | $ | 1,199 | $ | 649 | |||
Adjusted EBITDA* | $ | 4,288 | $ | 10,656 | $ | 17,644 | $ | 13,284 |
Quarterly Overview
Sales increased 9.8% to
Bookings improved 47.2% to
Gross margin before depreciation and amortization* amounted to 58.3% of sales in the third quarter of fiscal 2021 compared to 57.7% in the third quarter of 2020.
Selling and administrative expenses totaled
Net R&D expenses attained
IFRS net loss totaled
Adjusted EBITDA* amounted to
Going-Private Transaction
On
"A Special Committee comprised of independent Directors, and the Board of Directors unanimously recommended that shareholders support the transaction. A proxy circular which includes full details regarding the offer will be issued and distributed to shareholders shortly," said Claude Séguin, Chair of EXFO's Special Committee of the Board.
Conference Call and Webcast
Given a going-private transaction has been initiated, no conference call/webcast will be held.
About EXFO
EXFO (NASDAQ:
Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the
*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 represent net earnings (loss) before interest and other income/expense, 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 historical and prospective financial performance, as well as its performance relative to competitors. These non-IFRS measures are also used by financial analysts to evaluate and compare EXFO's performance against that of competitors and industry players in the company's sector.
Finally, these measures help EXFO plan and forecast future periods as well as make operational and strategic decisions. EXFO believes that providing this information, in addition to the IFRS measures, allows investors 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), in thousands of US dollars:
Adjusted EBITDA
Three months | Three months | Nine months | Nine months | ||||||||
IFRS net earnings (loss) for the period | $ | (3,682) | $ | 3,177 | $ | (2,567) | $ | (5,907) | |||
Add (deduct): | |||||||||||
Depreciation and amortization | 3,898 | 3,833 | 12,857 | 11,732 | |||||||
Interest and other (income) expense | 396 | 291 | (1,607) | 975 | |||||||
Income taxes | 1,549 | 2,691 | 4,333 | 4,389 | |||||||
Stock-based compensation costs | 1,193 | 523 | 2,778 | 1,446 | |||||||
Restructuring charges | 108 | – | 651 | – | |||||||
Foreign exchange loss | 826 | 141 | 1,199 | 649 | |||||||
Adjusted EBITDA for the period | $ | 4,288 | $ | 10,656 | $ | 17,644 | $ | 13,284 | |||
Adjusted EBITDA as a percentage of sales | 5.9% | 16.1% | 8.3% | 6.8% |
Condensed Unaudited Interim Consolidated Balance Sheets | |||||
(in thousands of US dollars) | |||||
As at 2021 | As at 2020 | ||||
Assets | |||||
Current assets | |||||
Cash | $ | 10,913 | $ | 32,818 | |
Short-term investments | 1,621 | 919 | |||
Accounts receivable | |||||
Trade | 55,753 | 56,291 | |||
Other | 7,026 | 4,055 | |||
Income taxes and tax credits recoverable | 6,858 | 4,203 | |||
Inventories | 48,384 | 38,865 | |||
Prepaid expenses | 5,934 | 5,631 | |||
Other assets | 4,240 | 5,493 | |||
140,729 | 148,275 | ||||
Tax credits recoverable | 51,438 | 48,812 | |||
Property, plant and equipment | 41,302 | 39,722 | |||
Right-of-use assets | 8,730 | 10,758 | |||
Intangible assets | 14,177 | 17,616 | |||
43,051 | 40,290 | ||||
Deferred income tax assets | 4,122 | 3,633 | |||
Other assets | 1,674 | 1,548 | |||
$ | 305,223 | $ | 310,654 | ||
Liabilities | |||||
Current liabilities | |||||
Bank loan | $ | 8,001 | $ | 32,737 | |
Accounts payable and accrued liabilities | 50,902 | 41,348 | |||
Provisions | 1,438 | 3,792 | |||
Income taxes payable | 457 | 43 | |||
Deferred revenue | 27,478 | 25,785 | |||
Other liabilities | 4,126 | 4,032 | |||
Current portion of lease liabilities | 3,130 | 3,249 | |||
Current portion of long-term debt | 1,477 | 2,076 | |||
97,009 | 113,062 | ||||
Provisions | 2,900 | 2,782 | |||
Deferred revenue | 9,071 | 8,858 | |||
Lease liabilities | 5,573 | 7,334 | |||
Long-term debt | 1,419 | 2,144 | |||
Deferred income tax liabilities | 2,995 | 3,760 | |||
Other liabilities | 161 | 151 | |||
119,128 | 138,091 | ||||
Shareholders' equity | |||||
Share capital | 95,254 | 94,024 | |||
Contributed surplus | 21,216 | 19,680 | |||
Retained earnings | 100,066 | 102,633 | |||
Accumulated other comprehensive loss | (30,441) | (43,774) | |||
186,095 | 172,563 | ||||
$ | 305,223 | $ | 310,654 |
Condensed Unaudited Interim Consolidated Statements of Earnings | |||||||||||
(in thousands of US dollars, except share and per share data) | |||||||||||
Three months ended | Nine months ended | Three months ended | Nine months ended | ||||||||
Sales | $ | 72,644 | $ | 213,410 | $ | 66,147 | $ | 195,011 | |||
Cost of sales (1) | 30,298 | 90,590 | 27,948 | 81,985 | |||||||
Selling and administrative | 24,986 | 69,485 | 18,898 | 67,705 | |||||||
Net research and development | 14,373 | 39,120 | 9,168 | 33,483 | |||||||
Depreciation of property, plant and | |||||||||||
equipment | 1,346 | 4,159 | 1,291 | 4,158 | |||||||
Depreciation of lease right-of-use assets | 778 | 2,388 | 844 | 2,549 | |||||||
Amortization of intangible assets | 1,774 | 6,310 | 1,698 | 5,025 | |||||||
Interest and other (income) expense | 396 | (1,607) | 291 | 975 | |||||||
Foreign exchange loss | 826 | 1,199 | 141 | 649 | |||||||
Earnings (loss) before income taxes | (2,133) | 1,766 | 5,868 | (1,518) | |||||||
Income taxes | 1,549 | 4,333 | 2,691 | 4,389 | |||||||
Net earnings (loss) for the period | $ | (3,682) | $ | (2,567) | $ | 3,177 | $ | (5,907) | |||
Basic and diluted net earnings (loss) | |||||||||||
per share | $ | (0.07) | $ | (0.05) | $ | 0.06 | $ | (0.11) | |||
Basic weighted average number of shares | |||||||||||
outstanding (000's) | 56,031 | 55,906 | 55,678 | 55,573 | |||||||
Diluted weighted average number of | |||||||||||
shares outstanding (000's) | 56,031 | 55,906 | 56,724 | 55,573 |
(1) The cost of sales is exclusive of depreciation and amortization, shown separately. |
Condensed Unaudited Interim Consolidated Statements of Comprehensive Income (Loss) | |||||||||||
(in thousands of US dollars) | |||||||||||
Three months ended | Nine months ended | Three months ended | Nine months ended | ||||||||
Net earnings (loss) for the period | $ | (3,682) | $ | (2,567) | $ | 3,177 | $ | (5,907) | |||
Other comprehensive income (loss), net of | |||||||||||
income taxes | |||||||||||
Items that may be reclassified | |||||||||||
subsequently to net earnings (loss) | |||||||||||
Foreign currency translation | |||||||||||
adjustment | 7,680 | 12,323 | (3,317) | (4,075) | |||||||
Unrealized gains/losses on forward | |||||||||||
exchange contracts | 1,373 | 2,320 | (1,052) | (1,805) | |||||||
Reclassification of realized gains/losses | |||||||||||
on forward exchange contracts | (490) | (959) | 251 | 607 | |||||||
Deferred income tax effect on | |||||||||||
gains/losses on forward exchange | |||||||||||
contracts | (217) | (351) | 206 | 322 | |||||||
Other comprehensive income (loss) | 8,346 | 13,333 | (3,912) | (4,951) | |||||||
Comprehensive income (loss) for | |||||||||||
the period | $ | 4,664 | $ | 10,766 | $ | (735) | $ | (10,858) |
Condensed Unaudited Interim Consolidated Statements of Changes in Shareholders' Equity | ||||||||||||||
(in thousands of US dollars) | ||||||||||||||
Nine months ended | ||||||||||||||
Share | Contributed | Retained | Accumulated | Total | ||||||||||
Balance as at | $ | 92,706 | $ | 19,196 | $ | 112,173 | $ | (51,511) | $ | 172,564 | ||||
Reclassification of stock-based | ||||||||||||||
compensation costs | 1,505 | (1,505) | – | – | – | |||||||||
Redemption of share capital | (212) | (13) | – | – | (225) | |||||||||
Stock-based compensation costs | – | 1,471 | – | – | 1,471 | |||||||||
Net loss for the period | – | – | (5,907) | – | (5,907) | |||||||||
Other comprehensive loss | ||||||||||||||
Foreign currency translation | ||||||||||||||
adjustment | – | – | – | (4,075) | (4,075) | |||||||||
Changes in unrealized gains/losses | ||||||||||||||
on forward exchange contracts, | ||||||||||||||
net of deferred income taxes | ||||||||||||||
of $322 | – | – | – | (876) | (876) | |||||||||
Total comprehensive income for the period | (10,858) | |||||||||||||
Balance as at | $ | 93,999 | $ | 19,149 | $ | 106,266 | $ | (56,462) | $ | 162,952 |
Nine months ended | ||||||||||||||
Share capital | Contributed | Retained | Accumulated | Total shareholders' | ||||||||||
Balance as at | $ | 94,024 | $ | 19,680 | $ | 102,633 | $ | (43,774) | $ | 172,563 | ||||
Reclassification of stock-based | ||||||||||||||
compensation costs | 1,395 | (1,395) | – | – | – | |||||||||
Issuance of share capital | 414 | – | – | – | 414 | |||||||||
Share issue expenses | (14) | – | – | – | (14) | |||||||||
Redemption of share capital | (565) | 157 | – | – | (408) | |||||||||
Stock-based compensation costs | – | 2,774 | – | – | 2,774 | |||||||||
Net loss for the period | – | – | (2,567) | – | (2,567) | |||||||||
Other comprehensive income | ||||||||||||||
Foreign currency translation | ||||||||||||||
adjustment | – | – | – | 12,323 | 12,323 | |||||||||
Changes in unrealized gains/losses | ||||||||||||||
on forward exchange contracts, | ||||||||||||||
net of deferred income taxes | ||||||||||||||
of $351 | – | – | – | 1,010 | 1,010 | |||||||||
Total comprehensive income for the period | 10,766 | |||||||||||||
Balance as at | $ | 95,254 | $ | 21,216 | $ | 100,066 | $ | (30,441) | $ | 186,095 |
Condensed Unaudited Interim Consolidated Statements of Cash Flows | |||||||||||
(in thousands of US dollars) | |||||||||||
Three months ended | Nine months ended | Three months ended | Nine months ended | ||||||||
Cash flows from operating activities | |||||||||||
Net earnings (loss) for the period | $ | (3,682) | $ | (2,567) | $ | 3,177 | $ | (5,907) | |||
Add (deduct) items not affecting cash | |||||||||||
Stock-based compensation costs | 1,193 | 2,778 | 523 | 1,446 | |||||||
Depreciation and amortization | 3,898 | 12,857 | 3,833 | 11,732 | |||||||
Gain on disposal of capital assets | – | (17) | – | – | |||||||
Write-off of capital assets | 43 | 53 | – | 216 | |||||||
Other income | – | (669) | – | – | |||||||
Deferred revenue | (768) | (849) | (329) | (3,144) | |||||||
Deferred income taxes | 11 | (1,608) | 493 | (161) | |||||||
Changes in foreign exchange gain/loss | (910) | (911) | 869 | 1,750 | |||||||
(215) | 9,067 | 8,566 | 5,932 | ||||||||
Changes in non-cash operating items | |||||||||||
Accounts receivable | (2,366) | 4,017 | (25,485) | (6,874) | |||||||
Income taxes and tax credits | (1,106) | (883) | 44 | (2,618) | |||||||
Inventories | (4,236) | (4,917) | (2,282) | (6,233) | |||||||
Prepaid expenses | (585) | 543 | (773) | 215 | |||||||
Other assets | (252) | 1,411 | (256) | (712) | |||||||
Accounts payable, accrued liabilities | |||||||||||
and provisions | 3,854 | 2,601 | 3,253 | (6,020) | |||||||
Other liabilities | 5 | (1) | 53 | 95 | |||||||
(4,901) | 11,838 | (16,880) | (16,215) | ||||||||
Cash flows from investing activities | |||||||||||
Additions to short-term investments | (1,122) | (1,627) | (1,927) | (2,074) | |||||||
Disposal of short-term investments | – | 978 | – | 1,264 | |||||||
Purchases of capital assets | (2,084) | (4,367) | (1,880) | (6,066) | |||||||
Business combination, net of cash acquired | (1,099) | (300) | – | – | |||||||
(4,305) | (5,316) | (3,807) | (6,876) | ||||||||
Cash flows from financing activities | |||||||||||
Bank loan | (3,202) | (24,895) | 19,934 | 28,304 | |||||||
Repayment of lease liabilities | (778) | (2,388) | (844) | (2,534) | |||||||
Additions to long-term debt | 274 | 274 | – | – | |||||||
Repayment of long-term debt | (487) | (1,646) | (292) | (1,607) | |||||||
Redemption of share capital | – | (408) | – | (225) | |||||||
(4,193) | (29,063) | 18,798 | 23,938 | ||||||||
Effect of foreign exchange rate changes | |||||||||||
on cash | 444 | 636 | (167) | (295) | |||||||
Change in cash during the period | (12,955) | (21,905) | (2,056) | 552 | |||||||
Cash – Beginning of the period | 23,868 | 32,818 | 19,126 | 16,518 | |||||||
Cash – End of the period | $ | 10,913 | $ | 10,913 | $ | 17,070 | $ | 17,070 |
EXFO-F
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