- Record-high bookings of US$52.3 million, up 19.7% year-over-year
- Sales increase 13.1% year-over-year to US$46.4 million - Gross
margin reaches 62.3%, highest level since second quarter of 2001 -
GAAP net earnings amount to US$0.08 per diluted share QUEBEC CITY,
Jan. 13 /PRNewswire-FirstCall/ -- EXFO Electro-Optical Engineering
Inc. (NASDAQ: EXFO; TSX: EXF) reported today strong financial
results for the first quarter ended November 30, 2008. Sales
increased 13.1% to US$46.4 million in the first quarter of fiscal
2009 from US$41.0 million in the first quarter of 2008, but
decreased 9.0% from US$50.9 million in the fourth quarter of 2008.
Net bookings improved 19.7% year-over-year to a record-high of
US$52.3 million for a book-to-bill ratio of 1.13 in the first
quarter of fiscal 2009 from US$43.7 million in the same period last
year and 14.5% from US$45.7 million in the fourth quarter of 2008.
Gross margin reached 62.3% of sales in the first quarter of fiscal
2009, its highest level since the second quarter of 2001, compared
to 55.7% in the first quarter of 2008 and 59.9% in the fourth
quarter of 2008. GAAP net earnings in the first quarter of fiscal
2009 increased to US$5.3 million, or US$0.08 per diluted share,
from a GAAP net loss of US$0.1 million, or US$ 0.00 per diluted
share, in the same period last year and GAAP net earnings of US$3.3
million, or US$0.05 per diluted share in the fourth quarter of
fiscal 2008. GAAP net earnings in the first quarter of 2009
included US$1.1 million in after-tax amortization of intangible
assets and US$0.3 million in stock-based compensation costs. It
should be noted that EXFO recorded a pre-tax, foreign exchange gain
of US$4.6 million in the first quarter of fiscal 2009. "I am quite
pleased with our record-high bookings of US$52.3 million and best
gross margin in almost eight years in the last quarter, led by very
strong growth from our next-generation, IP test equipment and
recent service assurance acquisition that we're starting to
leverage," said Germain Lamonde, EXFO's Chairman, President and
CEO. "On the strength of a multi-million dollar service assurance
contract with a Tier-1 wireless operator, our Protocol business
collectively accounted for more than 30% of total bookings in the
quarter to significantly contribute to our book-to-bill ratio of
1.13. We also benefited from a weaker Canadian/US exchange rate
which positively affected our operating expenses and our earnings."
"A number of wireline and wireless network operators will likely
reduce their capital expenditures in 2009, given the challenging
macro-economic conditions," Mr. Lamonde added. "But we expect many
will continue to strategically invest in next-generation IP
convergence and broadband deployments in order to add higher-margin
revenues, differentiated services and to reduce their operating
expenses. EXFO is well positioned to take advantage of these growth
segments. We're also counting on important new products and
increased focus to attain our long-term performance metrics. To
remain prudent, however, we have implemented a series of measures
to control expenses, deferred or cancelled hirings, and fine-tuned
our strategies. Finally, our balance sheet remains strong, even
after our successful C$30 million share buyback, as we navigate
through this tumultuous period." Unaudited Selected Financial
Information (In thousands of US dollars)
-------------------------------------------------------------------------
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Segmented results: Q1 2009 Q1 2008 Q4 2008
------------------------------------- Sales: Telecom Division $
41,159 $ 35,365 $ 45,338 Life Sciences and Industrial Division
5,204 5,620 5,605 ------------------------------------- Total $
46,363 $ 40,985 $ 50,943 -------------------------------------
------------------------------------- Earnings from operations:
Telecom Division $ 1,355 $ 21 $ 2,867 Life Sciences and Industrial
Division 738 281 721 ------------------------------------- Total $
2,093 $ 302 $ 3,588 -------------------------------------
------------------------------------- Other selected information:
GAAP net earnings (loss) $ 5,287 $ (93) $ 3,314 After-tax
amortization of intangible assets $ 1,098 $ 499 $ 1,177 Stock-based
compensation costs $ 322 $ 301 $ 368
-------------------------------------------------------------------------
-------------------------------------------------------------------------
Operating Expenses Selling and administrative expenses amounted to
US$17.1 million, or 36.9% of sales, in the first quarter of fiscal
2009 compared to US$14.8 million, or 36.2% of sales, in the same
period last year and US$17.0 million, or 33.4% of sales, in the
fourth quarter of 2008. Gross research and development expenses
totaled US$8.6 million, or 18.6% of sales, in the first quarter of
fiscal 2009 compared to US$7.5 million, or 18.3% of sales, in the
first quarter of 2008 and US$8.6 million, or 16.8% of sales, in the
fourth quarter of 2008. Net R&D expenses totaled US$7.2
million, or 15.6% of sales, in the first quarter of fiscal 2009
compared to US$6.0 million, or 14.7% of sales, in the same period
last year and US$7.3 million, or 14.3% of sales, in the fourth
quarter of 2008. First-Quarter Business Highlights Market expansion
- EXFO delivered sales growth of 13.1% year-over-year, including a
combined US$4.5 million revenue contribution from recently acquired
Brix Networks and Navtel Communications. Its Protocol business
generated record quarterly revenues, accounting for more than 30%
of Telecom Division sales for the first time. The company's
bookings made significant progress in the wireless market in the
first quarter of 2009, while Telecom Division sales increased 16.4%
year-over-year and the Life Sciences and Industrial Division
experienced a 7.4% drop due to deteriorating end-consumer markets.
EXFO's top customer accounted for 3.8% of total sales, while its
top three accounts represented 10.4% of sales, demonstrating the
company's successful diversification efforts. Profitability and
Gross Margin - EXFO reported GAAP net earnings of US$5.3 million,
or US$0.08 per diluted share. An improved gross margin at 62.3%, on
account of a weaker Canadian dollar, increased sales of
higher-margin Protocol test solutions and the ramp-up of low-cost
manufacturing plant in China, also contributed to the company's
profitability in the first quarter. EXFO launched five new products
in the first quarter including amongst others a new software
release for the Transport Blazer product line that delivers
unprecedented insight into 40 Gbit/s network behavior; new software
releases for the IMS InterWatch platform and Packet Blazer product
line to support the migration of voice and video applications to
the IPv6 (Internet Protocol, version 6) addressing scheme; and
expanded Ethernet test capabilities on the Power Blazer product
line through multi-stream, quality of service (QoS) support.
Products on the market two years or less generated 33.1% of total
sales. Business Outlook EXFO forecasted sales between US$45 million
and US$50 million and GAAP net earnings between US$0.01 per diluted
share and US$0.05 per diluted share for the second quarter of 2009.
GAAP net earnings include US$0.02 per share in after-tax
amortization of intangible assets and stock-based compensation
costs. This guidance was established by management based on
existing backlog as of the date of this press release, seasonality,
expected bookings for the remaining of the quarter, as well as
stability in exchange rates compared to the previous quarter.
Conference Call and Webcast EXFO will host a conference call today
at 5 p.m. (Eastern time) to review its financial results for the
first quarter of fiscal 2009. To listen to the conference call and
participate in the question period via telephone, dial
1-416-620-2416. Germain Lamonde, Chairman, President and CEO, and
Pierre Plamondon, CA, Vice-President of Finance and Chief Financial
Officer, will participate in the call. An audio replay of the
conference call will be available one hour after the event until 7
p.m. on January 20, 2009. The replay number is 1-402-977-9141 and
the reservation number is 21405504. The audio Webcast and replay of
the conference call will also be available on EXFO's Website at
http://www.exfo.com/, under the Investors section. Forward-Looking
Statements This press release contains forward-looking statements
within the meaning of the U.S. Private Securities Litigation Reform
Act of 1995, and we intend that such forward-looking statements be
subject to the safe harbors created thereby. Forward-looking
statements are statements other than historical information or
statements of current condition. Words such as may, will, expect,
believe, anticipate, intend, could, estimate, continue, or the
negative or comparable terminology are intended to identify
forward-looking statements. In addition, any statements that refer
to expectations, projections or other characterizations of future
events and circumstances are considered forward-looking statements.
They are not guarantees of future performance and involve risks and
uncertainties. Actual results may differ materially from those in
forward-looking statements due to various factors including
consolidation in the global telecommunications test, measurement
and monitoring industry; capital spending levels in the
telecommunications, life sciences and high-precision assembly
sectors; concentration of sales; fluctuating exchange rates and our
ability to execute in these uncertain conditions; the effects of
the additional actions we have taken in response to such economic
uncertainty (including our ability to quickly adapt cost structures
with anticipated levels of business, ability to manage inventory
levels with market demand); market acceptance of our new products
and other upcoming products; limited visibility with regards to
customer orders and the timing of such orders; our ability to
successfully integrate our acquired and to-be-acquired businesses;
our ability to successfully expand international operations; the
retention of key technical and management personnel; and future
economic, competitive, financial and market conditions, including
any slowdown or recession in the global economy. Assumptions
relating to the foregoing involve judgments and risks, all of which
are difficult or impossible to predict and many of which are beyond
our control. Other risk factors that may affect our future
performance and operations are detailed in our Annual Report, on
Form 20-F, and our other filings with the U.S. Securities and
Exchange Commission and the Canadian securities commissions. We
believe that the expectations reflected in the forward-looking
statements are reasonable based on information currently available
to us, but we cannot assure you that the expectations will prove to
have been correct. Accordingly, you should not place undue reliance
on these forward-looking statements. These statements speak only as
of the date of this document. Unless required by law or applicable
regulations, we undertake no obligation to revise or update any of
them to reflect events or circumstances that occur after the date
of this document. About EXFO EXFO is a leading provider of test and
service assurance solutions for network service providers and
equipment manufacturers in the global telecommunications industry.
The Telecom Division offers a wide range of innovative solutions
extending across the full technology lifecycle ? from design to
technology deployment and onto service assurance ? and covering all
layers on a network infrastructure to enable triple-play services
and next-generation, converged IP networking. The Life Sciences and
Industrial Division offers solutions in medical device and
opto-electronics assembly, fluorescence microscopy and other life
science sectors. For more information, visit http://www.exfo.com/.
EXFO Electro-Optical Engineering Inc. Interim Consolidated Balance
Sheet (in thousands of US dollars) As at As at November 30, August
31, 2008 2008 ------------ ------------ (unaudited) Assets Current
assets Cash $ 5,441 $ 5,914 Short-term investments 65,915 81,626
Accounts receivable Trade 33,018 31,473 Other 4,859 4,753 Income
taxes and tax credits recoverable 3,541 4,836 Inventories 30,125
34,880 Prepaid expenses 1,993 1,774 Future income taxes 8,895 9,140
------------ ------------ 153,787 174,396 Tax credits recoverable
19,264 20,657 Property, plant and equipment 17,475 19,875
Intangible assets 16,121 19,945 Goodwill 36,634 42,653 Future
income taxes 14,297 15,540 ------------ ------------ $ 257,578 $
293,066 ------------ ------------ ------------ ------------
Liabilities Current liabilities Accounts payable and accrued
liabilities $ 24,440 $ 24,713 Deferred revenue 4,560 5,079
------------ ------------ 29,000 29,792 Deferred revenue 3,388
3,759 Forward exchange contracts 2,275 - ------------ ------------
34,663 33,551 ------------ ------------ Shareholders' equity Share
capital 141,991 142,786 Contributed surplus 5,921 5,226 Retained
earnings 65,781 60,494 Accumulated other comprehensive income 9,222
51,009 ------------ ------------ 222,915 259,515 ------------
------------ $ 257,578 $ 293,066 ------------ ------------
------------ ------------ EXFO Electro-Optical Engineering Inc.
Interim Unaudited Consolidated Statements of Earnings (in thousands
of US dollars, except share and per share data) Three months ended
November 30, ------------------------- 2008 2007 ------------
------------ Sales $ 46,363 $ 40,985 Cost of sales (1), (2) 17,480
18,144 ------------ ------------ Gross margin 28,883 22,841
------------ ------------ Operating expenses Selling and
administrative(1) 17,091 14,817 Net research and development(1)
7,221 6,012 Amortization of property, plant and equipment 1,159 976
Amortization of intangible assets 1,319 734 ------------
------------ Total operating expenses 26,790 22,539 ------------
------------ Earnings from operations 2,093 302 Interest income 466
1,483 Foreign exchange gain (loss) 4,568 (616) ------------
------------ Earnings before income taxes 7,127 1,169 Income taxes
Current (61) 1,181 Future 1,901 81 ------------ ------------ 1,840
1,262 ------------ ------------ Net earnings (loss) for the period
$ 5,287 $ (93) ------------ ------------ ------------ ------------
Basic and diluted net earnings (loss) per share $ 0.08 $ (0.00)
Basic weighted average number of shares outstanding (000's) 67,340
69,000 Diluted weighted average number of shares outstanding
(000's) 67,717 69,672 (1) Stock-based compensation costs included
in: Cost of sales $ 29 $ 37 Selling and administrative 201 197 Net
research and development 92 67 ------------ ------------ $ 322 $
301 ------------ ------------ ------------ ------------ (2) The
cost of sales is exclusive of amortization, shown separately. EXFO
Electro-Optical Engineering Inc. Interim Unaudited Consolidated
Statements of Comprehensive Income (Loss) and Accumulated Other
Comprehensive Income (in thousands of US dollars) Comprehensive
income (loss) Three months ended November 30,
------------------------- 2008 2007 ------------ ------------ Net
earnings (loss) for the period $ 5,287 $ (93) Foreign currency
translation adjustment (36,933) 13,906 Changes in unrealized losses
on short-term investments 22 39 Unrealized gains (losses) on
forward exchange contracts (6,929) 1,948 Reclassification of
realized gains on forward exchange contracts in net earnings (loss)
(137) (759) Future income tax effect of the above items 2,190 (380)
------------ ------------ Comprehensive income (loss) $ (36,500) $
14,661 ------------ ------------ ------------ ------------
Accumulated other comprehensive income Three months ended November
30, ------------------------- 2008 2007 ------------ ------------
Foreign currency translation adjustment Cumulative effect of prior
periods $ 51,129 $ 53,418 Current period (36,933) 13,906
------------ ------------ 14,196 67,324 ------------ ------------
Unrealized gains (losses) on forward exchange contracts Cumulative
effect of prior periods (96) 1,948 Current period, net of realized
gains and future income taxes (4,876) 809 ------------ ------------
(4,972) 2,757 ------------ ------------ Unrealized losses on
short-term investments Cumulative effect of prior periods (24) (55)
Current period, net of future income taxes 22 39 ------------
------------ (2) (16) ------------ ------------ Accumulated other
comprehensive income $ 9,222 $ 70,065 ------------ ------------
------------ ------------ EXFO Electro-Optical Engineering Inc.
Interim Unaudited Consolidated Statements of Retained Earnings and
Contributed Surplus (in thousands of US dollars) Retained earnings
Three months ended November 30, ------------------------- 2008 2007
------------ ------------ Balance - Beginning of the period $
60,494 $ 42,330 Add (deduct) Net earnings (loss) for the period
5,287 (93) Premium on redemption of share capital - (39)
------------ ------------ Balance - End of the period $ 65,781 $
42,198 ------------ ------------ ------------ ------------
Contributed surplus Three months ended November 30,
------------------------- 2008 2007 ------------ ------------
Balance - Beginning of the period $ 5,226 $ 4,453 Add (deduct)
Stock-based compensation costs 321 316 Reclassification of
stock-based compensation costs to share capital upon exercise of
stock awards - (2) Discount on redemption of share capital 374 -
------------ ------------ Balance - End of the period $ 5,921 $
4,767 ------------ ------------ ------------ ------------ EXFO
Electro-Optical Engineering Inc. Interim Unaudited Consolidated
Statements of Cash Flows (in thousands of US dollars) Three months
ended November 30, ------------------------- 2008 2007 ------------
------------ Cash flows from operating activities Net earnings
(loss) for the period $ 5,287 $ (93) Add items not affecting cash
Change in discount on short-term investments 456 902 Stock-based
compensation costs 322 301 Amortization 2,478 1,710 Deferred
revenue 353 351 Future income taxes 1,901 81 Change in unrealized
foreign exchange gain (3,456) - ------------ ------------ 7,341
3,252 Change in non-cash operating items Accounts receivable
(7,325) 1,166 Income taxes and tax credits (696) (458) Inventories
(367) (87) Prepaid expenses (542) (612) Accounts payable and
accrued liabilities (1,087) (5,694) ------------ ------------
(2,676) (2,433) ------------ ------------ Cash flows from investing
activities Additions to short-term investments (122,100) (211,453)
Proceeds from disposal and maturity of short-term investments
126,605 214,571 Additions to capital assets (1,514) (1,573)
------------ ------------ 2,991 1,545 ------------ ------------
Cash flows from financing activities Change in bank loan - 699
Exercise of stock options 26 - Redemption of share capital (447)
(174) ------------ ------------ (421) 525 ------------ ------------
Effect of foreign exchange rate changes on cash (367) 343
------------ ------------ Change in cash (473) (20) Cash -
Beginning of the period 5,914 5,541 ------------ ------------ Cash
- End of the period $ 5,441 $ 5,521 ------------ ------------
------------ ------------ DATASOURCE: EXFO Electro-Optical
Engineering Inc. CONTACT: Vance Oliver, Manager, Investor
Relations, (418) 683-0913, Ext. 3733,
Copyright