Company News
EXFO reports second quarter results for fiscal 2021
EXFO Inc., the communications industry’s test, monitoring and analytics experts, reported today financial results for the second quarter ended February 28, 2021.
“EXFO delivered another solid performance in the second quarter of 2021, marked by a robust book-to-bill ratio of 1.15 and healthy cash flows from operations of US$14.7 million,” said EXFO’s CEO Philippe Morin. “I am particularly pleased with our strong bookings that reflect increased market demand, driven by catch-up spending and early deployments of 5G, cloud-based networks, as communications service providers get a better handle on transforming their networks during the coronavirus pandemic. Recent success in securing multi-year contracts bodes well for the footprint expansion of our Nova Adaptive Service Assurance platform with a growing number of RFPs (requests for proposals) for 5G standalone network monitoring systems expected in 2021 and 2022.”
Second Quarter Highlights
- Sales. The coronavirus outbreak had forced a one-month shutdown of EXFO’s manufacturing facility in Shenzhen, China in February 2020, which negatively impacted second quarter revenues in 2020. With this in mind, sales increased 25.2% year-over-year in the second quarter of 2021 with Test and Measurement (T&M) sales growing 36.8% and Service Assurance, Systems and Services (SASS) sales dropping 2.1%. Sales in the Americas and Europe, Middle East and Africa (EMEA) improved 25.7% and 54.7% year-over-year, respectively, while sales in the Asia-Pacific region fell 18.3%. EXFO’s top customer accounted for 6.8% of sales, while the top three represented 14.3%.
- Profitability. IFRS net loss totaled US$2.4 million, or -US$0.04 per share, in the second quarter of 2021, while adjusted EBITDA amounted to US$3.4 million, or 4.9% of sales. The company generated US$14.7 million in cash flows from operations in the second quarter of 2021 and had a net cash position of US$10.2 million at the end of the quarter.
Selected Financial Information
(In thousands of US dollars)
Q2 2021 | Q2 2020 | H1 2021 | H1 2020 | ||||||||
Test and Measurement sales | $ | 51,277 | $ | 37,477 | $ | 101,750 | $ | 93,424 | |||
Service Assurance, Systems and Services sales | 17,565 | 17,935 | 38,611 | 35,684 | |||||||
Foreign exchange gains (losses) on forward exchange contracts | 412 | (99) | 405 | (244) | |||||||
Total sales | $ | 69,254 | $ | 55,313 | $ | 140,766 | $ | 128,864 | |||
Test and Measurement bookings | $ | 53,665 | $ | 52,003 | $ | 104,913 | $ | 107,012 | |||
Service Assurance, Systems and Services bookings | 25,272 | 20,963 | 43,074 | 36,012 | |||||||
Foreign exchange gains (losses) on forward exchange contracts | 412 | (99) | 405 | (244) | |||||||
Total bookings | $ | 79,349 | $ | 72,867 | $ | 148,392 | $ | 142,780 | |||
Book-to-bill ratio (bookings/sales) | 1.15 | 1.32 | 1.05 | 1.11 | |||||||
Gross margin before depreciation and amortization* | $ | 38,831 | $ | 31,517 | $ | 80,474 | $ | 74,827 | |||
56.1% | 57.0% | 57.2% | 58.1% | ||||||||
Other selected information: | |||||||||||
IFRS net earnings (loss) | $ | (2,439) | $ | (9,021) | $ | 1,115 | $ | (9,084) | |||
Amortization of intangible assets | $ | 1,987 | $ | 1,695 | $ | 4,536 | $ | 3,327 | |||
Stock-based compensation costs | $ | 1,017 | $ | 436 | $ | 1,585 | $ | 923 | |||
Restructuring charges | $ | ‒ | $ | ‒ | $ | 543 | $ | ‒ | |||
Net income tax effect of the above items | $ | (298) | $ | (254) | $ | (828) | $ | (503) | |||
Foreign exchange loss | $ | 127 | $ | 382 | $ | 373 | $ | 508 | |||
Adjusted EBITDA* | $ | 3,407 | $ | (4,916) | $ | 13,356 | $ | 2,628 |
Quarterly Overview
Sales increased 25.2% to US$69.3 million in the second quarter of fiscal 2021 from US$55.3 million in the coronavirus-impacted second quarter of 2020, which had been marked by a one-month shutdown of the company’s manufacturing facility in Shenzhen, China.
Bookings improved 8.9% to US$79.3 million in the second quarter of fiscal 2021 from US$72.9 million in the same period in 2020. The company’s book-to-bill ratio was 1.15 in the second quarter of 2021.
Gross margin before depreciation and amortization amounted to 56.1% of sales in the second quarter of fiscal 2021 compared to 57.0% in the second quarter of 2020.
Selling and administrative expenses totaled US$22.9 million, or 33.1% of sales in the second quarter of fiscal 2021 compared to US$24.3 million, or 44.0% of sales, in the second quarter of 2020.
Net R&D expenses attained US$13.5 million, or 19.6% of sales, in the second quarter of fiscal 2021 compared to US$12.6 million, or 22.7% of sales, in the same period last year.
IFRS net loss totaled US$2.4 million, or -US$0.04 per share, in the second quarter of fiscal 2021 compared to US$9.0 million, or -US$0.16 per share, in the second quarter of 2020. IFRS net loss in the second quarter of 2021 included US$2.0 million in amortization of intangible assets, US$1.0 million in stock-based compensation costs, US$0.1 million in foreign exchange loss, and an income tax effect of the above items of $0.3 million. Net loss also included US$0.3 million for an after-tax wage subsidy granted by the Canadian government to help qualifying companies alleviate the effects of the pandemic, as well as US$0.7 million for the excess of the fair value of net identifiable assets acquired over fair value of the total consideration for inOpticals Inc. (now EXFO Taiwan), net of cash acquired for the acquisition.
Adjusted EBITDA amounted to US$3.4 million, or 4.9% of sales, in the second quarter of fiscal 2021 compared to -US$4.9 million, or -8.9% of sales, in the second quarter of 2020. PRNewswire
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