annual general and special meeting jan 2018
TRANSCRIPT
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Germain Lamonde, Founder and Executive Chairman
Philippe Morin, Chief Executive Officer
January 10, 2018
Annual Generaland Special Meeting
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© 2018 EXFO Inc. All rights reserved. 2
Forward-looking statements
Certain statements in this presentation, or given in response to your questions, may constitute forward-looking statements within the meaning of the Securities Act of 1934. The Private Securities Litigation Reform Act of 1995 provides “safe-harbors” for such forward-looking statements and we intend that any forward-looking statements made today be subject to the safe harbors. We caution you that any forward-looking statements are just predictions. They are not guarantees of future performance and involve risks and uncertainties. Actual results may differ materially from those projected in forward-looking statements and we invite you to review the company’s most recent filings with the Securities and Exchange Commission or Canadian securities commissions for a discussion of the factors at risk. These forward-looking statements speak only as of the date of this presentation and, unless required by law or applicable regulations, we will not be reviewing or updating the material that is contained herein.
For a reconciliation of adjusted EBITDA to net earnings, refer to the Q1 2018 news release on EXFO’s website.
All amounts in millions of US dollars, except otherwise noted.
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Smooth CEO transition© 2018 EXFO Inc. All rights reserved. 3
Germain LamondeFounder & Executive Chairman
Philippe MorinChief Executive Officer
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FY 2017 results
© 2018 EXFO Inc. All rights reserved. 4
*Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs, restructuring charges, change in fair value of cash contingent consideration and foreign exchange loss.
$22.0MAdj. EBITDA*
margin of 9.1%
$12.9MCash flows from
operations
$243.3MRevenue up 4.6%
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Product family salesPhysical : +6.6% in 2017– Optical test leadership– 100G investment cycle
Protocol: -1.7% in 2017– Rationalized passive wireless SA portfolio
$144.1$151.9
$161.9
$80.6 $83.3 $81.9
FY 2015 FY 2016 FY 2017
Physical Protocol
In m
illion
s of U
S$
*Excludes losses on FX contracts. © 2018 EXFO Inc. All rights reserved. 5
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Geographical salesAmericas: +5.6% in 2017– Leveraged 100G investment cycle– Headwind: consolidation tier-1 CSPs
EMEA: +8.6% in 2017– Catch-up spending among CSPs– Ontology revenue contribution
Asia-Pacific: -2.9% in 2017– Slowdown in China
$119.5
$57.3$45.3
$222.1
$127.5
$57.2$47.9
$232.6
$134.7
$62.1$46.5
$243.3
Americas EMEA Asia-Pacific Global
FY 2015 FY 2016 FY 2017
In m
illion
s of U
S$
*Excludes losses on FX contracts. © 2018 EXFO Inc. All rights reserved. 6
55% 26% 19%
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© 2018 EXFO Inc. All rights reserved. 7
M&Astrategy
Accelerate growth,critical mass
and profitability
in T&M and
Systems
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- Optical RFoCPRI test capabilities for fiber-based radio access networks
- First all-in-one solution to combine optical, Ethernet and RF testing
- New remote RF interference monitoring for C-RAN
- Deal: US$5.0M in cash + US$3.5M in stock
© 2018 EXFO Inc. All rights reserved. 8
FY’17
(November 2016)
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- Automated network topology discovery and service-chain mapping
- With EXFO’s active system: real-time views of network services and related elements for root-cause analysis
- Deal: All-cash valued at US$7.8M, + minor earnout
(net of cash acquired)
© 2018 EXFO Inc. All rights reserved. 9
FY’17
(March 2017)
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- Complementary high-end optical test instruments for lab and manufacturing markets
- Includes OSAs, tunable lasers, filters, and passive optical component test system
- Deal: US$9.5M in cash (net of cash acquired)
© 2018 EXFO Inc. All rights reserved. 10
FY’18
(October 2017)
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- Provider of network and subscriber intelligence
- Leading passive service assurance, analytics and professional services
- Deal: 40.3% stake- Entire Astellia equity:
US$30.3M
© 2018 EXFO Inc. All rights reserved. 11
FY’18
(Pending)
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Astellia update
AMF green light to launch public tender offer (PTO) (Dec. 12, 2017)
- All hurdles passed before launching of PTO
EXFO announced opening of PTO(Dec. 15, 2017)
- Offer extends 25 trading days to January 23, 2018
AMF to disclose results of PTO(Jan. 29, 2018)
- EXFO seeking to acquire 100% of Astellia’s equity
© 2018 EXFO Inc. All rights reserved. 12
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© 2018 EXFO Inc. All rights reserved. 13
C$70.0M (US$54.3M) and US$ 9.0M in revolving credit facilities
Usage- Astellia’s remaining equity- Working capital- General corporate purposes
M&A focus- Deliver value and synergies from recent
acquisitions- No meaningful acquisition in the short-term
New credit
facilities
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Q1 2018 Results/Outlook Philippe Morin, CEO
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Growth drivers
© 2018 EXFO Inc. All rights reserved. 15
Fiber 5GNetwork virtualizationCloud
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Major customer groups
© 2018 EXFO Inc. All rights reserved. 16
Webscalecompanies
Communications service providers
Equipment manufacturers
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Revenue
$63.4M
© 2018 EXFO Inc. All rights reserved. 17
Bookings
$65.9M
IFRS netearnings
$2.7M
AdjustedEBITDA*
$6.1M
* Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs, change in the fair value of cash contingent consideration and foreign exchange gain.
Adjusted EBITDA margin of 9.6%
Q1 2018 results
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© 2018 EXFO Inc. All rights reserved. 18
Financial milestones
Short-term1
(FY 2018)Medium-term
(Three years)
Adj. EBITDA2of $26 M(18% growth YoY)
Adj. EBITDAmargin of 15%
1Short-term financial milestone excludes financial results from pending Astellia acquisition.2Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs, and foreign exchange gain or loss.
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Questions?
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