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Share Name | Share Symbol | Market | Type |
---|---|---|---|
EXFO Inc | NASDAQ:EXFO | NASDAQ | Common Stock |
Price Change | % Change | Share Price | Bid Price | Offer Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 6.245 | 6.24 | 6.26 | 0 | 01:00:00 |
Form 20-F
☑
|
Form 40-F
☐
|
Yes
☐
|
No
☑
|
EXFO INC.
|
|
By:
/s/ Philippe Morin
Name:
Philippe Morin
Title:
Chief Executive Officer
|
|
§
|
Sales reach US$58.5 million
|
§
|
Bookings attain US$63.7 million, book-to-bill ratio of 1.09
|
§
|
Adjusted EBITDA totals US$2.3 million
|
§
|
Cost savings from restructuring of US$8.0 million expected in FY 2018
|
Q3 2017
|
Q2 2017
|
Q3 2016
|
||||||||||
Physical-layer sales
|
$
|
41,007
|
$
|
38,038
|
$
|
42,074
|
||||||
Protocol-layer sales
|
17,678
|
22,097
|
19,260
|
|||||||||
Foreign exchange losses on forward exchange contracts
|
(180
|
)
|
(105
|
)
|
(438
|
)
|
||||||
Total sales
|
$
|
58,505
|
$
|
60,030
|
$
|
60,896
|
||||||
Physical-layer bookings
|
$
|
47,157
|
$
|
34,031
|
$
|
41,797
|
||||||
Protocol-layer bookings
|
16,691
|
21,992
|
18,389
|
|||||||||
Foreign exchange losses on forward exchange contracts
|
(180
|
)
|
(105
|
)
|
(438
|
)
|
||||||
Total bookings
|
$
|
63,668
|
$
|
55,918
|
$
|
59,748
|
||||||
Book-to-bill ratio (bookings/sales)
|
1.09
|
0.93
|
0.98
|
|||||||||
Gross margin before depreciation and amortization
*
|
$
|
33,950
|
$
|
37,041
|
$
|
37,016
|
||||||
58.0%
|
|
61.7%
|
|
60.8%
|
|
|||||||
Other selected information:
|
||||||||||||
IFRS net earnings (loss)
|
$
|
(4,304
|
)
|
$
|
1,008
|
$
|
919
|
|||||
Amortization of intangible assets
|
$
|
1,046
|
$
|
768
|
$
|
294
|
||||||
Stock-based compensation costs
|
$
|
372
|
$
|
353
|
$
|
386
|
||||||
Restructuring charges
|
$
|
3,813
|
$
|
–
|
$
|
–
|
||||||
Net income tax effect of the above items
|
$
|
(357
|
)
|
$
|
(162
|
)
|
$
|
(31
|
)
|
|||
Foreign exchange (gain) loss
|
$
|
(1,725
|
)
|
$
|
272
|
$
|
957
|
|||||
Adjusted EBITDA
*
|
$
|
2,300
|
$
|
4,875
|
$
|
5,301
|
·
|
Sales and bookings.
Sales decreased 3.9% year-over-year to US$58.5 million in the third quarter of 2017 mainly due to the timing of orders and necessity to rebuild backlog as bookings improved 6.6% to US$63.7 million. After nine months into fiscal 2017, sales and bookings increased 6.2% and 4.2%, respectively. Physical-layer sales accounted for 70% of total revenue in the third quarter of 2017, while Protocol-layer totaled 30%. Revenue contribution among the three main geographic regions in the third quarter amounted to 62% from the Americas, 20% from EMEA and 18% from Asia-Pacific. EXFO's top customer accounted for 9.9% of sales in the third quarter, while the top three customers represented 24.0%.
|
·
|
Profitability
. EXFO generated adjusted EBITDA of US$2.3 million, or 3.9% of sales, in the third quarter of 2017 and US$13.5 million, or 7.5% of sales, after nine months into the fiscal year. In early May, the company announced a restructuring plan that is expected to deliver annual cost savings of US$8.0 million.
|
·
|
Innovation.
EXFO launched seven new solutions in the third quarter of 2017 and 15 since the beginning of the fiscal year. Key product introductions in the third quarter included a 400G test solution for the high-speed lab and manufacturing markets; a four-slot, FTB-4 Pro platform for network testing in the field, data centers and R&D labs; a software-based solution, Universal Virtual Sync, enabling communications service providers to accurately and cost-effectively measure network latency; a tunable optical time domain reflectometer (OTDR) that characterizes coarse wavelength division multiplexing (CWDM) channels in metro Ethernet links and centralized radio access networks (C-RANs); as well as an optical spectrum analyzer and two optical power meters for the lab and manufacturing markets.
|
Q3 2017
|
Q2 2017
|
Q3 2016
|
||||||||||
IFRS net earnings (loss) for the period
|
$
|
(4,304
|
)
|
$
|
1,008
|
$
|
919
|
|||||
Add (deduct):
|
||||||||||||
Depreciation of property, plant and equipment
|
1,029
|
962
|
958
|
|||||||||
Amortization of intangible assets
|
1,046
|
768
|
294
|
|||||||||
Interest (income) expense
|
57
|
(9
|
)
|
(309
|
)
|
|||||||
Income taxes
|
2,012
|
1,521
|
2,096
|
|||||||||
Stock-based compensation costs
|
372
|
353
|
386
|
|||||||||
Restructuring charges
|
3,813
|
–
|
–
|
|||||||||
Foreign exchange (gain) loss
|
(1,725
|
)
|
272
|
957
|
||||||||
Adjusted EBITDA for the period
|
$
|
2,300
|
$
|
4,875
|
$
|
5,301
|
||||||
Adjusted EBITDA in percentage of sales
|
3.9%
|
|
8.1%
|
|
8.7%
|
|
As at
May 31, 2017 |
As at
August 31, 2016 |
|||||||
Assets
|
||||||||
Current assets
|
||||||||
Cash
|
$
|
34,373
|
$
|
43,208
|
||||
Short-term investments
|
3,337
|
4,087
|
||||||
Accounts receivable
|
||||||||
Trade
|
41,358
|
42,993
|
||||||
Other
|
2,107
|
2,474
|
||||||
Income taxes and tax credits recoverable
|
5,090
|
4,208
|
||||||
Inventories
|
32,124
|
33,004
|
||||||
Prepaid expenses
|
3,781
|
3,099
|
||||||
122,170
|
133,073
|
|||||||
Tax credits recoverable
|
33,718
|
34,594
|
||||||
Property, plant and equipment
|
36,718
|
35,978
|
||||||
Intangible assets
(note 3)
|
11,969
|
3,391
|
||||||
Goodwill
(note 3)
|
32,756
|
21,928
|
||||||
Deferred income tax assets
|
6,705
|
8,240
|
||||||
Other assets
|
455
|
589
|
||||||
$
|
244,491
|
$
|
237,793
|
|||||
Liabilities
|
||||||||
Current liabilities
|
||||||||
Accounts payable and accrued liabilities
|
$
|
41,966
|
$
|
37,174
|
||||
Provisions
|
296
|
299
|
||||||
Income taxes payable
|
610
|
971
|
||||||
Deferred revenue
|
11,556
|
9,486
|
||||||
54,428
|
47,930
|
|||||||
Deferred revenue
|
6,211
|
5,530
|
||||||
Deferred income tax liabilities
|
2,720
|
2,857
|
||||||
Other liabilities
|
31
|
75
|
||||||
63,390
|
56,392
|
|||||||
Shareholders' equity
|
||||||||
Share capital (note 6)
|
90,376
|
85,516
|
||||||
Contributed surplus
|
17,721
|
18,150
|
||||||
Retained earnings
|
126,316
|
126,309
|
||||||
Accumulated other comprehensive loss
|
(53,312
|
)
|
(48,574
|
)
|
||||
181,101
|
181,401
|
|||||||
$
|
244,491
|
$
|
237,793
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Sales
|
$
|
58,505
|
$
|
180,320
|
$
|
60,896
|
$
|
169,725
|
||||||||
Cost of sales
(1)
(note 7)
|
24,555
|
70,357
|
23,880
|
62,921
|
||||||||||||
Selling and administrative (note 7)
|
22,572
|
65,422
|
20,798
|
60,615
|
||||||||||||
Net research and development (note 7)
|
13,263
|
35,841
|
11,303
|
31,398
|
||||||||||||
Depreciation of property, plant and equipment
|
1,029
|
2,894
|
958
|
2,857
|
||||||||||||
Amortization of intangible assets
|
1,046
|
2,241
|
294
|
880
|
||||||||||||
Interest and other (income) expense
|
57
|
28
|
(309
|
)
|
(716
|
)
|
||||||||||
Foreign exchange (gain) loss
|
(1,725
|
)
|
(1,965
|
)
|
957
|
(454
|
)
|
|||||||||
Earnings (loss) before income taxes
|
(2,292
|
)
|
5,502
|
3,015
|
12,224
|
|||||||||||
Income taxes
(note 8)
|
2,012
|
5,495
|
2,096
|
5,576
|
||||||||||||
Net earnings (loss) for the period
|
$
|
(4,304
|
)
|
$
|
7
|
$
|
919
|
$
|
6,648
|
|||||||
Basic and diluted net earnings (loss) per share
|
$
|
(0.08
|
)
|
$
|
0.00
|
$
|
0.02
|
$
|
0.12
|
|||||||
Basic weighted average number of shares outstanding (000s)
|
54,593
|
54,328
|
53,940
|
53,894
|
||||||||||||
Diluted weighted average number of shares outstanding (000s)
(note 9)
|
54,593
|
55,479
|
54,813
|
54,655
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Net earnings (loss) for the period
|
$
|
(4,304
|
)
|
$
|
7
|
$
|
919
|
$
|
6,648
|
|||||||
Other comprehensive income (loss), net of income taxes
|
||||||||||||||||
Items that will not be reclassified subsequently to net earnings
|
||||||||||||||||
Foreign currency translation adjustment
|
(2,568
|
)
|
(4,766
|
)
|
5,488
|
775
|
||||||||||
Items that may be reclassified subsequently to net earnings
|
||||||||||||||||
Unrealized gains/losses on forward exchange contracts
|
(127
|
)
|
(362
|
)
|
1,045
|
825
|
||||||||||
Reclassification of realized gains/losses on forward exchange contracts in net earnings
|
39
|
359
|
666
|
2,383
|
||||||||||||
Deferred income tax effect of gains/losses on forward exchange contracts
|
39
|
31
|
(434
|
)
|
(824
|
)
|
||||||||||
Other comprehensive income (loss)
|
(2,617
|
)
|
(4,738
|
)
|
6,765
|
3,159
|
||||||||||
Comprehensive income (loss) for the period
|
$
|
(6,921
|
)
|
$
|
(4,731
|
)
|
$
|
7,684
|
$
|
9,807
|
Nine months ended May 31, 2016
|
||||||||||||||||||||
Share
capital |
Contributed
surplus |
Retained
earnings |
Accumulated
other comprehensive loss |
Total
shareholders' equity |
||||||||||||||||
Balance as at September 1, 2015
|
$
|
86,045
|
$
|
17,778
|
$
|
117,409
|
$
|
(52,005
|
)
|
$
|
169,227
|
|||||||||
Redemption of share capital (note 6)
|
(457
|
)
|
55
|
–
|
–
|
(402
|
)
|
|||||||||||||
Reclassification of stock-based compensation costs (note 6)
|
1,238
|
(1,238
|
)
|
–
|
–
|
–
|
||||||||||||||
Stock-based compensation costs
|
–
|
1,040
|
–
|
–
|
1,040
|
|||||||||||||||
Net earnings for the period
|
–
|
–
|
6,648
|
–
|
6,648
|
|||||||||||||||
Other comprehensive income
|
||||||||||||||||||||
Foreign currency translation adjustment
|
–
|
–
|
–
|
775
|
775
|
|||||||||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $824
|
–
|
–
|
–
|
2,384
|
2,384
|
|||||||||||||||
Total comprehensive income for the period
|
9,807
|
|||||||||||||||||||
Balance as at May 31, 2016
|
$
|
86,826
|
$
|
17,635
|
$
|
124,057
|
$
|
(48,846
|
)
|
$
|
179,672
|
Nine months ended May 31, 2017
|
||||||||||||||||||||
Share
capital |
Contributed
surplus |
Retained
earnings |
Accumulated
other comprehensive loss |
Total
shareholders' equity |
||||||||||||||||
Balance as at September 1, 2016
|
$
|
85,516
|
$
|
18,150
|
$
|
126,309
|
$
|
(48,574
|
)
|
$
|
181,401
|
|||||||||
Issuance of share capital (notes 3 and 6)
|
3,490
|
–
|
–
|
–
|
3,490
|
|||||||||||||||
Reclassification of stock-based compensation costs (note 6)
|
1,370
|
(1,370
|
)
|
–
|
–
|
–
|
||||||||||||||
Stock-based compensation costs
|
–
|
941
|
–
|
–
|
941
|
|||||||||||||||
Net earnings for the period
|
–
|
–
|
7
|
–
|
7
|
|||||||||||||||
Other comprehensive income (loss)
|
||||||||||||||||||||
Foreign currency translation adjustment
|
–
|
–
|
–
|
(4,766
|
)
|
(4,766
|
)
|
|||||||||||||
Changes in unrealized gains/losses on forward exchange contracts, net of deferred income taxes of $31
|
–
|
–
|
–
|
28
|
28
|
|||||||||||||||
Total comprehensive loss for the period
|
(4,731
|
)
|
||||||||||||||||||
Balance as at May 31, 2017
|
$
|
90,376
|
$
|
17,721
|
$
|
126,316
|
$
|
(53,312
|
)
|
$
|
181,101
|
Three months
ended
May 31, 2017
|
Nine months
ended
May 31, 2017
|
Three months
ended
May 31, 2016
|
Nine months
ended
May 31, 2016
|
|||||||||||||
Cash flows from operating activities
|
||||||||||||||||
Net earnings (loss) for the period
|
$
|
(4,304
|
)
|
$
|
7
|
$
|
919
|
$
|
6,648
|
|||||||
Add (deduct) items not affecting cash
|
||||||||||||||||
Stock-based compensation costs
|
372
|
983
|
386
|
1,076
|
||||||||||||
Depreciation and amortization
|
2,075
|
5,135
|
1,252
|
3,737
|
||||||||||||
Deferred revenue
|
79
|
3,026
|
1,203
|
4,876
|
||||||||||||
Deferred income taxes
|
704
|
1,163
|
611
|
1,285
|
||||||||||||
Changes in foreign exchange gain/loss
|
(524
|
)
|
(955
|
)
|
626
|
(333
|
)
|
|||||||||
(1,598
|
)
|
9,359
|
4,997
|
17,289
|
||||||||||||
Changes in non-cash operating items
|
||||||||||||||||
Accounts receivable
|
(901
|
)
|
1,701
|
(5,887
|
)
|
3,394
|
||||||||||
Income taxes and tax credits
|
(842
|
)
|
(1,232
|
)
|
(301
|
)
|
632
|
|||||||||
Inventories
|
315
|
(9
|
)
|
(759
|
)
|
(6,627
|
)
|
|||||||||
Prepaid expenses
|
(863
|
)
|
(761
|
)
|
(452
|
)
|
(418
|
)
|
||||||||
Other assets
|
(103
|
)
|
(127
|
)
|
–
|
203
|
||||||||||
Accounts payable, accrued liabilities, provisions and other liabilities
|
1,169
|
1,756
|
4,670
|
6,347
|
||||||||||||
(2,823
|
)
|
10,687
|
2,268
|
20,820
|
||||||||||||
Cash flows from investing activities
|
||||||||||||||||
Additions to short-term investments
|
(2,571
|
)
|
(2,887
|
)
|
(3,109
|
)
|
(3,130
|
)
|
||||||||
Proceeds from disposal and maturity of short-term investments
|
3,298
|
3,596
|
–
|
501
|
||||||||||||
Purchases of capital assets
|
(2,555
|
)
|
(5,448
|
)
|
(1,138
|
)
|
(3,374
|
)
|
||||||||
Business combinations, net of cash acquired (note 3)
|
(7,479
|
)
|
(12,479
|
)
|
‒
|
‒
|
||||||||||
(9,307
|
)
|
(17,218
|
)
|
(4,247
|
)
|
(6,003
|
)
|
|||||||||
Cash flows from financing activities
|
||||||||||||||||
Bank loan
|
–
|
–
|
–
|
468
|
||||||||||||
Repayment of long-term debt (note 3)
|
(1,480
|
)
|
(1,480
|
)
|
–
|
–
|
||||||||||
Redemption of share capital (note 6)
|
–
|
–
|
(215
|
)
|
(402
|
)
|
||||||||||
(1,480
|
)
|
(1,480
|
)
|
(215
|
)
|
66
|
||||||||||
Effect of foreign exchange rate changes on cash
|
(360
|
)
|
(824
|
)
|
1,049
|
1,526
|
||||||||||
Change in cash
|
(13,970
|
)
|
(8,835
|
)
|
(1,145
|
)
|
16,409
|
|||||||||
Cash – Beginning of the period
|
48,343
|
43,208
|
43,418
|
25,864
|
||||||||||||
Cash – End of the period
|
$
|
34,373
|
$
|
34,373
|
$
|
42,273
|
$
|
42,273
|
||||||||
Supplementary information
|
||||||||||||||||
Income taxes paid
|
$
|
627
|
$
|
2,188
|
$
|
505
|
$
|
1,621
|
||||||||
Additions to capital assets
|
$
|
1,779
|
$
|
5,441
|
$
|
1,011
|
$
|
3,386
|
1
|
Nature of Activities and Incorporation
|
2
|
Basis of Presentation
|
3
|
Business Combinations
|
Assets acquired
|
||||
Core technology
|
$
|
4,130
|
||
Other assets
|
236
|
|||
4,366
|
||||
Liability assumed
|
||||
Deferred income taxes
|
279
|
|||
Net identifiable assets acquired
|
4,087
|
|||
Goodwill
|
4,403
|
|||
Fair value of the total consideration transferred
|
$
|
8,490
|
Assets acquired
|
||||
Accounts receivable
|
$
|
1,701
|
||
Intangible assets
|
5,998
|
|||
Other assets
|
37
|
|||
7,736
|
||||
Liability assumed
|
||||
Accounts payable and accrued liabilities
|
3,343
|
|||
Deferred revenue
|
211
|
|||
Long-term debt
|
1,480
|
|||
Net identifiable assets acquired
|
2,702
|
|||
Goodwill
|
6,417
|
|||
Fair value of the total consideration transferred, net of cash acquired
|
$
|
9,119
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
|||||||
Balance – beginning of the period
|
$
|
26,094
|
$
|
21,928
|
||||
Business combinations
|
6,417
|
10,820
|
||||||
Foreign currency translation adjustment
|
245
|
8
|
||||||
Balance – end of the period
|
$
|
32,756
|
$
|
32,756
|
4
|
Restructuring Charges
|
5
|
Financial Instruments
|
Level 1: |
Quoted prices (unadjusted) in active market for identical assets or liabilities
|
Level 2: |
Inputs other than quoted prices included within Level 1 that are observable for the asset and liability, either directly or indirectly
|
Level 3: |
Unobservable inputs for the asset or liability
|
As at May 31, 2017
|
As at August 31, 2016 | |||||||||||||||||||||||
Level 1
|
Level 2
|
Level 3
|
Level 1
|
Level 2
|
Level 3
|
|||||||||||||||||||
Financial assets
|
||||||||||||||||||||||||
Short-term investments
|
$
|
3,337
|
$
|
–
|
$
|
–
|
$
|
4,087
|
$
|
–
|
$
|
–
|
||||||||||||
Forward exchange contracts
|
$
|
–
|
$
|
480
|
$
|
–
|
$
|
–
|
$
|
980
|
$
|
–
|
||||||||||||
Financial liabilities
|
||||||||||||||||||||||||
Forward exchange contracts
|
$
|
–
|
$
|
476
|
$
|
–
|
$
|
–
|
$
|
1,120
|
$
|
–
|
||||||||||||
Contingent liability (note 3)
|
$
|
–
|
$
|
–
|
$
|
1,400
|
$
|
–
|
$
|
–
|
$
|
–
|
||||||||||||
Expiry dates
|
Contractual
amounts |
Weighted average
contractual forward rates |
|||||||
June 2017 to August 2017
|
$
|
6,000
|
1.3059
|
||||||
September 2017 to August 2018
|
18,300
|
1.3407
|
|||||||
September 2018 to August 2019
|
10,900
|
1.3426
|
|||||||
Total
|
$
|
35,200
|
1.3353
|
Expiry dates
|
Contractual
amounts |
Weighted average
contractual forward rates |
|||||||
June 2017 to August 2017
|
$
|
1,600
|
69.66
|
||||||
September 2017 to August 2018
|
3,400
|
69.49
|
|||||||
Total
|
$
|
5,000
|
69.54
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Losses on forward exchange contracts
|
$
|
180
|
$
|
525
|
$
|
438
|
$
|
2,287
|
6
|
Share Capital
|
Nine months ended May 31, 2016
|
||||||||||||||||||||
Multiple voting shares
|
Subordinate voting shares
|
|||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Total
amount
|
||||||||||||||||
Balance as at September 1, 2015
|
31,643,000
|
$
|
1
|
22,092,034
|
$
|
86,044
|
$
|
86,045
|
||||||||||||
Redemption of restricted share units
|
−
|
−
|
155,784
|
−
|
−
|
|||||||||||||||
Redemption of deferred share units
|
−
|
−
|
653
|
−
|
−
|
|||||||||||||||
Redemption of share capital
|
−
|
−
|
(200
|
)
|
(1
|
)
|
(1
|
)
|
||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
−
|
−
|
−
|
723
|
723
|
|||||||||||||||
Balance as at November 30, 2015
|
31,643,000
|
1
|
22,248,271
|
86,766
|
86,767
|
|||||||||||||||
Redemption of restricted share units
|
−
|
−
|
119,973
|
−
|
−
|
|||||||||||||||
Redemption of share capital
|
−
|
−
|
(62,442
|
)
|
(243
|
)
|
(243
|
)
|
||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
−
|
−
|
−
|
507
|
507
|
|||||||||||||||
Balance as at February 29, 2016
|
31,643,000
|
1
|
22,305,802
|
87,030
|
87,031
|
|||||||||||||||
Redemption of restricted share units
|
−
|
−
|
1,807
|
−
|
−
|
|||||||||||||||
Redemption of share capital
|
−
|
−
|
(54,369
|
)
|
(213
|
)
|
(213
|
)
|
||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
−
|
−
|
−
|
8
|
8
|
|||||||||||||||
Balance as at May 31, 2016
|
31,643,000
|
$
|
1
|
22,253,240
|
$
|
86,825
|
$
|
86,826
|
Nine months ended May 31, 2017
|
||||||||||||||||||||
Multiple voting shares
|
Subordinate voting shares
|
|||||||||||||||||||
Number
|
Amount
|
Number
|
Amount
|
Total
amount
|
||||||||||||||||
Balance as at September 1, 2016
|
31,643,000
|
$
|
1
|
21,917,942
|
$
|
85,515
|
$
|
85,516
|
||||||||||||
Issuance of share capital (note 3)
|
−
|
−
|
793,070
|
3,490
|
3,490
|
|||||||||||||||
Redemption of restricted share units
|
−
|
−
|
88,371
|
−
|
−
|
|||||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
−
|
−
|
−
|
346
|
346
|
|||||||||||||||
Balance as at November 30, 2016
|
31,643,000
|
1
|
22,799,383
|
89,351
|
89,352
|
|||||||||||||||
Redemption of restricted share units
|
−
|
−
|
97,900
|
−
|
−
|
|||||||||||||||
Redemption of deferred share units
|
−
|
−
|
29,456
|
−
|
−
|
|||||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
−
|
−
|
−
|
489
|
489
|
|||||||||||||||
Balance as at February 28, 2017
|
31,643,000
|
1
|
22,926,739
|
89,840
|
89,841
|
|||||||||||||||
Redemption of restricted share units
|
−
|
−
|
132,422
|
−
|
−
|
|||||||||||||||
Redemption of deferred share units
|
−
|
−
|
450
|
−
|
−
|
|||||||||||||||
Reclassification of stock-based compensation costs to share capital upon exercise of stock awards
|
−
|
−
|
−
|
535
|
535
|
|||||||||||||||
Balance as at May 31, 2017
|
31,643,000
|
$
|
1
|
23,059,611
|
$
|
90,375
|
$
|
90,376
|
7
|
Statements of Earnings
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Gross research and development expenses
|
$
|
14,710
|
$
|
40,067
|
$
|
12,612
|
$
|
35,363
|
||||||||
Research and development tax credits and grants
|
(1,447
|
)
|
(4,226
|
)
|
(1,309
|
)
|
(3,965
|
)
|
||||||||
Net research and development expenses for the period
|
$
|
13,263
|
$
|
35,841
|
$
|
11,303
|
$
|
31,398
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Inventory write-down for the period
|
$
|
1,464
|
$
|
2,440
|
$
|
596
|
$
|
2,052
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Cost of sales
|
||||||||||||||||
Depreciation of property, plant and equipment
|
$
|
374
|
$
|
1,104
|
$
|
325
|
$
|
960
|
||||||||
Amortization of intangible assets
|
927
|
1,896
|
179
|
524
|
||||||||||||
1,301
|
3,000
|
504
|
1,484
|
|||||||||||||
Selling and administrative expenses
|
||||||||||||||||
Depreciation of property, plant and equipment
|
130
|
387
|
125
|
385
|
||||||||||||
Amortization of intangible assets
|
23
|
59
|
19
|
55
|
||||||||||||
153
|
446
|
144
|
440
|
|||||||||||||
Net research and development expenses
|
||||||||||||||||
Depreciation of property, plant and equipment
|
525
|
1,403
|
508
|
1,512
|
||||||||||||
Amortization of intangible assets
|
96
|
286
|
96
|
301
|
||||||||||||
621
|
1,689
|
604
|
1,813
|
|||||||||||||
$
|
2,075
|
$
|
5,135
|
$
|
1,252
|
$
|
3,737
|
|||||||||
Depreciation of property, plant and equipment
|
$
|
1,029
|
$
|
2,894
|
$
|
958
|
$
|
2,857
|
||||||||
Amortization of intangible assets
|
1,046
|
2,241
|
294
|
880
|
||||||||||||
Total depreciation and amortization expenses for the period
|
$
|
2,075
|
$
|
5,135
|
$
|
1,252
|
$
|
3,737
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Salaries and benefits
|
$
|
30,565
|
$
|
88,587
|
$
|
28,983
|
$
|
83,741
|
||||||||
Restructuring charges (note 4)
|
2,783
|
2,783
|
−
|
−
|
||||||||||||
Stock-based compensation costs
|
372
|
983
|
386
|
1,076
|
||||||||||||
Total employee compensation for the period
|
$
|
33,720
|
$
|
92,353
|
$
|
29,369
|
$
|
84,817
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Cost of sales
(1)
|
$
|
1,582
|
$
|
1,582
|
$
|
−
|
$
|
−
|
||||||||
Selling and administrative expenses
|
919
|
919
|
−
|
−
|
||||||||||||
Net research and development expenses
|
1,312
|
1,312
|
−
|
−
|
||||||||||||
Total restructuring charges for the period
|
$
|
3,813
|
$
|
3,813
|
$
|
−
|
$
|
−
|
(1)
|
Includes $1,030,000 in inventory write-off.
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Cost of sales
|
$
|
33
|
$
|
87
|
$
|
25
|
$
|
80
|
||||||||
Selling and administrative expenses
|
251
|
681
|
285
|
775
|
||||||||||||
Net research and development expenses
|
88
|
215
|
76
|
221
|
||||||||||||
Total stock-based compensation for the period
|
$
|
372
|
$
|
983
|
$
|
386
|
$
|
1,076
|
8
|
Income Taxes
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Income tax (recovery) provision at combined Canadian federal and provincial statutory tax rate (27%)
|
$
|
(619
|
)
|
$
|
1,486
|
$
|
814
|
$
|
3,300
|
|||||||
Increase (decrease) due to:
|
||||||||||||||||
Foreign income taxed at different rates
|
(60
|
)
|
(640
|
)
|
(212
|
)
|
(612
|
)
|
||||||||
Non-deductible loss (non-taxable income)
|
(226
|
)
|
(37
|
)
|
(203
|
)
|
(273
|
)
|
||||||||
Non-deductible expenses
|
225
|
578
|
171
|
486
|
||||||||||||
Change in tax rates
|
15
|
(10
|
)
|
‒
|
‒
|
|||||||||||
Foreign exchange effect of translation of foreign subsidiaries in the functional currency
|
27
|
(91
|
)
|
227
|
328
|
|||||||||||
Utilization of previously unrecognized deferred income tax assets
|
234
|
(55
|
)
|
32
|
‒
|
|||||||||||
Unrecognized deferred income tax assets on temporary deductible differences and unused tax losses
|
2,222
|
4,202
|
1,340
|
2,682
|
||||||||||||
Other
|
194
|
62
|
(73
|
)
|
(335
|
)
|
||||||||||
Income tax provision for the period
|
$
|
2,012
|
$
|
5,495
|
$
|
2,096
|
$
|
5,576
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Current
|
$
|
1,308
|
$
|
4,332
|
$
|
1,485
|
$
|
4,291
|
||||||||
Deferred
|
704
|
1,163
|
611
|
1,285
|
||||||||||||
$
|
2,012
|
$
|
5,495
|
$
|
2,096
|
$
|
5,576
|
9
|
Earnings per Share
|
Three months
ended May 31, 2017 |
Nine months
ended May 31, 2017 |
Three months
ended May 31, 2016 |
Nine months
ended May 31, 2016 |
|||||||||||||
Basic weighted average number of shares outstanding (000s)
|
54,593
|
54,328
|
53,940
|
53,894
|
||||||||||||
Add - dilutive effect of (000s):
|
||||||||||||||||
Restricted share units
|
1,018
|
999
|
735
|
635
|
||||||||||||
Deferred share units
|
145
|
152
|
138
|
126
|
||||||||||||
Diluted weighted average number of shares outstanding (000s)
|
55,756
|
55,479
|
54,813
|
54,655
|
||||||||||||
Stock awards excluded from the calculation of diluted weighted average number of shares because their exercise price was greater than the average market price of the common shares (000s)
|
–
|
–
|
–
|
101
|
Three months
ended
May 31, 2017
|
Three months
ended
May 31, 2016
|
Nine months
ended
May 31, 2017
|
Nine months
ended
May 31, 2016
|
|||||||||||||
Sales
|
$
|
58,505
|
$
|
60,896
|
$
|
180,320
|
$
|
169,725
|
||||||||
Cost of sales
(1)
|
24,555
|
23,880
|
70,357
|
62,921
|
||||||||||||
Selling and administrative
|
22,572
|
20,798
|
65,422
|
60,615
|
||||||||||||
Net research and development
|
13,263
|
11,303
|
35,841
|
31,398
|
||||||||||||
Depreciation of property, plant and equipment
|
1,029
|
958
|
2,894
|
2,857
|
||||||||||||
Amortization of intangible assets
|
1,046
|
294
|
2,241
|
880
|
||||||||||||
Interest and other (income) expenses
|
57
|
(309
|
)
|
28
|
(716
|
)
|
||||||||||
Foreign exchange (gain) loss
|
(1,725
|
)
|
957
|
(1,965
|
)
|
(454
|
)
|
|||||||||
Earnings (loss) before income taxes
|
(2,292
|
)
|
3,015
|
5,502
|
12,224
|
|||||||||||
Income taxes
|
2,012
|
2,096
|
5,495
|
5,576
|
||||||||||||
Net earnings (loss) for the period
|
$
|
(4,304
|
)
|
$
|
919
|
$
|
7
|
$
|
6,648
|
|||||||
Basic and diluted net earnings (loss) per share
|
$
|
(0.08
|
)
|
$
|
0.02
|
$
|
0.00
|
$
|
0.12
|
|||||||
Other selected information:
|
||||||||||||||||
Gross margin before depreciation and amortization
(2)
|
$
|
33,950
|
$
|
37,016
|
$
|
109,963
|
$
|
106,804
|
||||||||
Research and development:
|
||||||||||||||||
Gross research and development
|
$
|
14,710
|
$
|
12,612
|
$
|
40,067
|
$
|
35,363
|
||||||||
Net research and development
|
$
|
13,263
|
$
|
11,303
|
$
|
35,841
|
$
|
31,398
|
||||||||
Restructuring charges included in:
|
||||||||||||||||
Cost of sales
|
$
|
1,582
|
$
|
‒
|
$
|
1,582
|
$
|
‒
|
||||||||
Selling and administrative
|
$
|
919
|
$
|
‒
|
$
|
919
|
$
|
‒
|
||||||||
Net research and development
|
$
|
1,312
|
$
|
‒
|
$
|
1,312
|
$
|
‒
|
||||||||
Adjusted EBITDA
(2)
|
$
|
2,300
|
$
|
5,301
|
$
|
13,496
|
$
|
15,867
|
(1)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(2)
|
Refer to page 38 for non-IFRS measures.
|
Three months
ended
May 31, 2017
|
Three months
ended
May 31, 2016
|
Nine months
ended
May 31, 2017
|
Nine months
ended
May 31, 2016
|
|||||||||||||
Sales
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
100.0
|
%
|
||||||||
Cost of sales
(1)
|
42.0
|
39.2
|
39.0
|
37.1
|
||||||||||||
Selling and administrative
|
38.6
|
34.2
|
36.3
|
35.7
|
||||||||||||
Net research and development
|
22.7
|
18.6
|
19.9
|
18.5
|
||||||||||||
Depreciation of property, plant and equipment
|
1.8
|
1.5
|
1.6
|
1.7
|
||||||||||||
Amortization of intangible assets
|
1.8
|
0.5
|
1.2
|
0.5
|
||||||||||||
Interest and other (income) expense
|
‒
|
(0.5
|
)
|
‒
|
(0.4
|
)
|
||||||||||
Foreign exchange (gain) loss
|
(3.0
|
)
|
1.5
|
(1.1
|
)
|
(0.3
|
)
|
|||||||||
Earnings (loss) before income taxes
|
(3.9
|
)
|
5.0
|
3.1
|
7.2
|
|||||||||||
Income taxes
|
3.5
|
3.5
|
3.1
|
3.3
|
||||||||||||
Net earnings (loss) for the period
|
(7.4
|
)%
|
1.5
|
%
|
‒
|
%
|
3.9
|
%
|
||||||||
Other selected information:
|
||||||||||||||||
Gross margin before depreciation and amortization
(2)
|
58.0
|
%
|
60.8
|
%
|
61.0
|
%
|
62.9
|
%
|
||||||||
Research and development:
|
||||||||||||||||
Gross research and development
|
25.1
|
%
|
20.7
|
%
|
22.2
|
%
|
20.8
|
%
|
||||||||
Net research and development
|
22.7
|
%
|
18.6
|
%
|
19.9
|
%
|
18.5
|
%
|
||||||||
Restructuring charges included in:
|
||||||||||||||||
Cost of sales
|
2.7
|
%
|
‒
|
%
|
0.9
|
%
|
‒
|
%
|
||||||||
Selling and administrative
|
1.6
|
%
|
‒
|
%
|
0.5
|
%
|
‒
|
%
|
||||||||
Net research and development
|
2.2
|
%
|
‒
|
%
|
0.7
|
%
|
‒
|
%
|
||||||||
Adjusted EBITDA
(2)
|
3.9
|
%
|
8.7
|
%
|
7.5
|
%
|
9.3
|
%
|
(1)
|
The cost of sales is exclusive of depreciation and amortization, shown separately.
|
(2)
|
Refer to page 38 for non-IFRS measures.
|
Three months
ended
May 31, 2017
|
Three months
ended
May 31, 2016
|
Nine months
ended
May 31, 2017
|
Nine months
ended
May 31, 2016
|
|||||||||||||
Physical-layer product line
|
$
|
41,007
|
$
|
42,074
|
$
|
121,061
|
$
|
112,133
|
||||||||
Protocol-layer product line
|
17,678
|
19,260
|
59,784
|
59,879
|
||||||||||||
58,685
|
61,334
|
180,845
|
172,012
|
|||||||||||||
Foreign exchange losses on forward exchange contracts
|
(180
|
)
|
(438
|
)
|
(525
|
)
|
(2,287
|
)
|
||||||||
Total sales
|
$
|
58,505
|
$
|
60,896
|
$
|
180,320
|
$
|
169,725
|
Three months
ended
May 31, 2017
|
Three months
ended
May 31, 2016
|
Nine months
ended
May 31, 2017
|
Nine months
ended
May 31, 2016
|
|||||||||||||
Physical-layer product line
|
$
|
47,157
|
$
|
41,797
|
$
|
125,278
|
$
|
115,549
|
||||||||
Protocol-layer product line
|
16,691
|
18,389
|
60,692
|
64,662
|
||||||||||||
63,848
|
60,186
|
185,970
|
180,211
|
|||||||||||||
Foreign exchange losses on forward exchange contracts
|
(180
|
)
|
(438
|
)
|
(525
|
)
|
(2,287
|
)
|
||||||||
Total bookings
|
$
|
63,668
|
$
|
59,748
|
$
|
185,445
|
$
|
177,924
|
Three months
ended
May 31, 2017
|
Three months
ended
May 31, 2016
|
Nine months
ended
May 31, 2017
|
Nine months
ended
May 31, 2016
|
|||||||||||||
Americas
|
62 %
|
|
59 %
|
|
56 %
|
|
55 %
|
|
||||||||
Europe, Middle-East and Africa
|
20
|
22
|
24
|
25
|
||||||||||||
Asia-Pacific
|
18
|
19
|
20
|
20
|
||||||||||||
100 %
|
|
100 %
|
|
100 %
|
|
100 %
|
|
Expiry dates
|
Contractual
amounts
|
Weighted average
contractual
forward rates
|
||||||
June 2017 to August 2017
|
$
|
6,000,000
|
1.3059
|
|||||
September 2017 to August 2018
|
18,300,000
|
1.3407
|
||||||
September 2018 to August 2019
|
10,900,000
|
1.3426
|
||||||
Total
|
$
|
35,200,000
|
1.3353
|
Expiry dates
|
Contractual
amounts
|
Weighted average
contractual
forward rates
|
||||||
June 2017 to August 2017
|
$
|
1,600,000
|
69.66
|
|||||
September 2017 to August 2018
|
3,400,000
|
69.49
|
||||||
Total
|
$
|
5,000,000
|
69.54
|
Three months
ended
May 31, 2017
|
Three months
ended
May 31, 2016
|
Nine months
ended
May 31, 2017
|
Nine months
ended
May 31, 2016
|
|||||||||||||
IFRS net earnings (loss) for the period
|
$
|
(4,304
|
)
|
$
|
919
|
$
|
7
|
$
|
6,648
|
|||||||
Add (deduct):
|
||||||||||||||||
Depreciation of property, plant and equipment
|
1,029
|
958
|
2,894
|
2,857
|
||||||||||||
Amortization of intangible assets
|
1,046
|
294
|
2,241
|
880
|
||||||||||||
Interest and other (income) expense
|
57
|
(309
|
)
|
28
|
(716
|
)
|
||||||||||
Income taxes
|
2,012
|
2,096
|
5,495
|
5,576
|
||||||||||||
Stock-based compensation costs
|
372
|
386
|
983
|
1,076
|
||||||||||||
Restructuring charges
|
3,813
|
‒
|
3,813
|
‒
|
||||||||||||
Foreign exchange (gain) loss
|
(1,725
|
)
|
957
|
(1,965
|
)
|
(454
|
)
|
|||||||||
Adjusted EBITDA for the period
|
$
|
2,300
|
$
|
5,301
|
$
|
13,496
|
$
|
15,867
|
||||||||
Adjusted EBITDA as a percentage of sales
|
3.9%
|
|
8.7%
|
|
7.5%
|
|
9.3%
|
|
Quarters ended
|
||||||||||||||||
May 31,
2017
|
February 28,
2017
|
November 30,
2016
|
August 31,
2016
|
|||||||||||||
Sales
|
$
|
58,505
|
$
|
60,030
|
$
|
61,785
|
$
|
62,858
|
||||||||
Cost of sales
(1)
|
$
|
24,555
|
$
|
22,989
|
$
|
22,813
|
$
|
24,145
|
||||||||
Net earnings (loss)
|
$
|
(4,304
|
)
|
$
|
1,008
|
$
|
3,303
|
$
|
2,252
|
|||||||
Basic and diluted net earnings (loss) per share
|
$
|
(0.08
|
)
|
$
|
0.02
|
$
|
0.06
|
$
|
0.04
|
Quarters ended
|
||||||||||||||||
May 31,
2016
|
February 29,
2016
|
November 30,
2015
|
August 31,
2015
|
|||||||||||||
Sales
|
$
|
60,896
|
$
|
53,597
|
$
|
55,232
|
$
|
56,594
|
||||||||
Cost of sales
(1)
|
$
|
23,880
|
$
|
18,904
|
$
|
20,137
|
$
|
21,975
|
||||||||
Net earnings
|
$
|
919
|
$
|
3,963
|
$
|
1,766
|
$
|
1,882
|
||||||||
Basic and diluted net earnings per share
|
$
|
0.02
|
$
|
0.07
|
$
|
0.03
|
$
|
0.03
|
(1)
|
The cost of sales is exclusive of depreciation and amortization.
|
1. |
Review:
I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of EXFO Inc.
(the "issuer") for the interim period ended May 31, 2017.
|
2. |
No misrepresentation:
Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
3. |
Fair presentation:
Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
4. |
Responsibility:
The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in Regulation 52-109 respecting Certification of Disclosure in Issuer's Annual and Interim Filings (c. V-1.1, r. 27), for the issuer.
|
5. |
Design:
Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings
|
(a) |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
(i) |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
(ii) |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
|
(b) |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
|
5.1 |
Control framework:
The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is the
Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
|
5.2 |
N/A
|
5.3 |
N/A
|
6. |
Reporting changes in ICFR:
The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on March 1, 2017 and ended on May 31, 2017 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
|
1. |
Review:
I have reviewed the interim financial report and interim MD&A (together, the "interim filings") of EXFO Inc.
(the "issuer") for the interim period ended May 31, 2017.
|
2. |
No misrepresentation:
Based on my knowledge, having exercised reasonable diligence, the interim filings do not contain any untrue statement of a material fact or omit to state a material fact required to be stated or that is necessary to make a statement not misleading in light of the circumstances under which it was made, with respect to the period covered by the interim filings.
|
3. |
Fair presentation:
Based on my knowledge, having exercised reasonable diligence, the interim financial report together with the other financial information included in the interim filings fairly present in all material respects the financial condition, financial performance and cash flows of the issuer, as of the date of and for the periods presented in the interim filings.
|
4. |
Responsibility:
The issuer's other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (DC&P) and internal control over financial reporting (ICFR), as those terms are defined in Regulation 52-109 respecting Certification of Disclosure in Issuer's Annual and Interim Filings (c. V-1.1, r. 27), for the issuer.
|
5. |
Design:
Subject to the limitations, if any, described in paragraphs 5.2 and 5.3, the issuer's other certifying officer and I have, as at the end of the period covered by the interim filings
|
(a) |
designed DC&P, or caused it to be designed under our supervision, to provide reasonable assurance that
|
(i) |
material information relating to the issuer is made known to us by others, particularly during the period in which the interim filings are being prepared; and
|
(ii) |
information required to be disclosed by the issuer in its annual filings, interim filings or other reports filed or submitted by it under securities legislation is recorded, processed, summarized and reported within the time periods specified in securities legislation; and
|
(b) |
designed ICFR, or caused it to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with the issuer's GAAP.
|
5.1 |
Control framework:
The control framework the issuer's other certifying officer and I used to design the issuer's ICFR is the
Internal Control – Integrated Framework
(2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).
|
5.2 |
N/A
|
5.3 |
N/A
|
6. |
Reporting changes in ICFR:
The issuer has disclosed in its interim MD&A any change in the issuer's ICFR that occurred during the period beginning on March 1, 2017 and ended on May 31, 2017 that has materially affected, or is reasonably likely to materially affect, the issuer's ICFR.
|
1 Year EXFO Chart |
1 Month EXFO Chart |
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