EXFO reports third quarter results for fiscal 2021
Via EXFO press room
Jul 15, 2021
QUEBEC CITY, CANADA — EXFO Inc. (NASDAQ: EXFO; TSX: EXF), the communications industry's test, monitoring and analytics experts, reported today financial results for the third quarter ended May 31, 2021.
“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 Philippe Morin.
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 and Europe, Middle East and Africa (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 the Americas and EMEA increased 18.4% and 20.6% year-overyear, respectively, while sales in the Asia-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 to US$4.3 million, or 5.9% of sales.
Sales increased 9.8% to US$72.6 million in the third quarter of fiscal 2021 from US$66.1 million in third quarter of 2020 which had been affected by the coronavirus pandemic.
Bookings improved 47.2% to US$87.0 million in the third quarter of fiscal 2021 from US$59.1 million in the same period in 2020, driven by fiber deployment projects that had been delayed due to the pandemic and a good performance in EMEA. The company's book-to-bill ratio was 1.20 in the third quarter of 2021. A previously announced service assurance lab evaluation with a tier-1 US network operator is ongoing, but it is taking longer than expected due to the level of transformation and functionality required.
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 US$25.0 million, or 34.4% of sales in the third quarter of fiscal 2021 compared to US$18.9 million, or 28.6% of sales, in the third quarter of 2020.
Net R&D expenses attained US$14.4 million, or 19.8% of sales, in the third quarter of fiscal 2021 compared to US$9.2 million, or 13.9% of sales, in the same period last year.
IFRS net loss totaled US$3.7 million, or -US$0.07 per share, in the third quarter of fiscal 2021 compared to net earnings of US$3.2 million, or US$0.06 per share, in the third quarter of 2020. IFRS net loss in the third quarter of 2021 included US$1.8 million in amortization of intangible assets, US$1.2 million in stock-based compensation costs, US$0.1 million in restructuring charges, US$0.8 million in foreign exchange loss, and an income tax effect of the above items of US$0.3 million. Net loss for the third quarter of 2021 also included US$0.4 million for an after-tax wage subsidy by the Canadian government to help companies mitigate the impact of the coronavirus pandemic.
Adjusted EBITDA* amounted to US$4.3 million, or 5.9% of sales, in the third quarter of fiscal 2021 compared to US$10.7 million, or 16.1% of sales, in the third quarter of 2020.
On June 7, EXFO announced a going-private transaction, where Holders of Subordinate Voting Shares (other than the Excluded Shares) will receive US$6.00 per Subordinate Voting Share in cash, representing a 62% premium to the closing price per Subordinate Voting Share on the Nasdaq Global Select Market on June 4, 2021, and a 63% premium to the 20-day volume-weighted average trading price for the Subordinate Voting Shares on the Nasdaq Global Select Market for the period ending on June 4, 2021, the last trading day prior to the date of the announcement.
“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.
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