EXFO, Inc. (EXFO) Misses Q1 EPS by 4c, Revenues Beat; Offers Q2 EPS/Revenue Guidance Below Consensus

EXFO, Inc. (NASDAQ: EXFO) reported Q1 EPS of $0.00, $0.04 worse than the analyst estimate of $0.04. Revenue for the quarter came in at $73.6 million versus the consensus estimate of $72.96 million.

First-Quarter Highlights

• Sales. Sales increased 6.3% in the first quarter of fiscal 2020 mainly due to a more linear influx of Test and Measurement (T&M) orders compared to the same period in 2019, and stronger demand for the company's solutions in the Asia-Pacific region. T&M sales accounted for 76% of revenue in the first quarter of 2020, while Service Assurance, Systems and Services (SASS) sales totaled 24%. Revenue distribution among the three main selling regions amounted to 54% in the Americas, 29% in Europe, Middle East and Africa (EMEA) and 17% in Asia-Pacific. EXFO's top customer accounted for 11.9% of sales, while the top three represented 19.7%.
• Profitability. IFRS net loss amounted to US$0.1 million, or US$0.00 per share, in the first quarter of fiscal 2020, while adjusted EBITDA totaled US$7.5 million, or 10.3% of sales. EXFO adopted IFRS 16, "Leases," on Sept. 1, 2019, using the modified retrospective method which had a positive impact on adjusted EBITDA of US$0.9 million, or 1.2% of sales, in the first quarter of 2020. Prior period amounts were not adjusted.
• Innovation. EXFO introduced the Optical Wave Expert, the first test solution to integrate DWDM (dense wavelength division multiplexing) channel power validation and OTDR (optical time domain reflectometry) fault-locating capabilities on a single port. Designed to reduce mean-time-to-repair, this instrument enables field technicians to automatically troubleshoot optical fiber links.

"EXFO delivered a strong first-quarter performance to begin fiscal 2020, highlighted by sales above the midpoint of guidance for a fifth consecutive reporting period and adjusted EBITDA margin in double-digits," said EXFO's CEO Philippe Morin. "These results demonstrate the heightened leverage in our business model through a combination of increased revenue and lower cost structure. Although we are operating within a highly dynamic and transforming industry, we are confident about achieving our profitable growth strategy for the full fiscal year."

GUIDANCE:

EXFO, Inc. sees Q2 2020 EPS of ($0.09)-($0.05), versus the consensus of $0.07. EXFO, Inc. sees Q2 2020 revenue of $66-71 million, versus the consensus of $75.25 million.

Business Outlook

• EXFO forecasts sales between US$66.0 million and US$71.0 million for the second quarter of fiscal 2020, while IFRS net loss is expected to range between -US$0.09 and -US$0.05 per share. IFRS net loss includes US$0.05 per share in after-tax amortization of intangible assets, stock-based compensation costs and anticipated foreign exchange loss.

For earnings history and earnings-related data on EXFO, Inc. (EXFO) click here.

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