EXFO reports first quarter results for fiscal 2021
Jan 12, 2021
- 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,
"EXFO delivered a strong first-quarter performance in fiscal 2021 as compared to a coronavirus-free opening quarter in 2020," said EXFO's CEO
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 inEurope ,Middle East andAfrica (EMEA) andAsia-Pacific improved 23.3% and 9.2% year-over-year, respectively, while sales in theAmericas 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 , orUS$0.06 per share, in the first quarter of 2021, while adjusted EBITDA amounted toUS$9.9 million , or 13.9% of sales. Net earnings included an after-tax wage subsidy ofUS$1.4 million under theCanada emergency wage subsidy program to help qualifying businesses alleviate the effects of the pandemic, as well as an after-tax insurance recovery ofUS$2.5 million related to the loss of assets.
Selected Financial Information |
|||||
(In thousands of US dollars) |
|||||
Three months ended |
|||||
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
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
For the first quarter of 2020, net loss included
Adjusted EBITDA* amounted to
Conference Call and Webcast
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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 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 |
|||||
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% |
|
|||||
Condensed Unaudited Interim Consolidated Balance Sheets |
|||||
(in thousands of US dollars) |
|||||
As at 2020 |
As at 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 |
|||
|
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 |
|
|||||
Condensed Unaudited Interim Consolidated Statements of Earnings |
|||||
(in thousands of US dollars, except share and per share data) |
|||||
Three months ended |
|||||
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. |
|
|||||
Condensed Unaudited Interim Consolidated Statements of Comprehensive Income |
|||||
(in thousands of US dollars) |
|||||
Three months ended |
|||||
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 |
|
||||||||||||||
Condensed Unaudited Interim Consolidated Statements of Changes in Shareholders' Equity |
||||||||||||||
(in thousands of US dollars) |
||||||||||||||
Three 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 |
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 |
– |
– |
– |
118 |
118 |
|||||||||
Total comprehensive income for the period |
616 |
|||||||||||||
Balance as at |
$ |
93,355 |
$ |
18,816 |
$ |
112,110 |
$ |
(50,832) |
$ |
173,449 |
||||
Three months ended |
||||||||||||||
Share |
Contributed |
Retained |
Accumulated |
Total |
||||||||||
Balance as at |
$ |
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 |
– |
– |
– |
66 |
66 |
|||||||||
Total comprehensive income for the period |
4,342 |
|||||||||||||
Balance as at |
$ |
94,190 |
$ |
19,724 |
$ |
106,187 |
$ |
(42,986) |
$ |
177,115 |
|
|||||
Condensed Unaudited Interim Consolidated Statements of Cash Flows |
|||||
(in thousands of US dollars) |
|||||
Three months ended |
|||||
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
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SOURCE
Vance Oliver, Director, Investor Relations, (418) 683-0913, Ext. 23733, vance.oliver@exfo.com