June 29, 2017
EXFO Inc., the network test, monitoring and analytics vendor, reported today financial results for the third quarter ended May 31, 2017.
Sales reached US$58.5 million in the third quarter of fiscal 2017 compared to US$60.9 million in the third quarter of 2016 and US$60.0 million in the second quarter of 2017.
Bookings attained US$63.7 million in the third quarter of fiscal 2017 compared to US$59.7 million in the same period last year and US$55.9 million in the second quarter of 2017. The company’s book-to-bill ratio was 1.09 in the third quarter of 2017.
Gross margin before depreciation and amortization* amounted to 58.0% of sales in the third quarter of fiscal 2017 compared to 60.8% in the third quarter of 2016 and 61.7% in the second quarter of 2017. Excluding restructuring charges of US$1.6 million or 2.7% of sales, gross margin would have amounted to 60.7% in the third quarter of 2017.
Adjusted EBITDA* totaled US$2.3 million, or 3.9% of sales, in the third quarter of fiscal 2017 compared to US$5.3 million, or 8.7% of sales, in the third quarter of 2016 and US$4.9 million, or 8.1% of sales, in the second quarter of 2017.
At the beginning of March, EXFO acquired UK-based Ontology Systems for a consideration of US$7.7 million, net of cash acquired, plus an earnout estimated at US$1.4 million based on future sales.
In early May, EXFO announced a restructuring plan to streamline its monitoring solutions portfolio. The plan, which resulted in US$3.8 million of restructuring charges in the third quarter of 2017, is expected to generate annual cost savings of US$8.0 million, the company said.
“Although bookings were robust at US$63.7 million, the timing of orders and necessity to rebuild backlog affected our financial results in the third quarter of 2017,” said company CEO Philippe Morin. “Looking at the bigger picture, we continued capturing market share in optical and high-speed Ethernet testing in the field, data centres and labs as reflected by sales and bookings growth of 6.2% and 4.2% nine months into the fiscal year.
“We also addressed an underperforming product line within our monitoring solutions portfolio and fined-tuned our go-to-market strategy to sharpen our focus and enhance profitability. We should begin benefiting from our restructuring efforts in the fourth quarter, but the full impact will be felt in fiscal 2018.”