jan 2015 annual meeting agm - germain lamonde
TRANSCRIPT
Germain Lamonde Chairman, President and CEO January 8, 2015
2 © 2015 EXFO Inc. All rights reserved..
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.
Annual financial data in this presentation is prepared in accordance with international financial reporting standards (IFRS) and Canadian generally accepted accounting principles (GAAP). Quarterly financial data is prepared in accordance with IFRS. For a reconciliation of adjusted EBITDA to net earnings, refer to the Q1 2015 press release or the “Non-IFRS Measures” section on EXFO’s website.
All amounts in millions of US dollars, except otherwise noted.
Forward-Looking Statements
3 © 2015 EXFO Inc. All rights reserved..
FY 2014 Financial Highlights
› Sales: $230.8 M (-4.7% YoY) › Reduced carrier spending in the Americas › Merger activity (mostly in USA) › Weighing major network changes
› Bookings: $240.4 M (+3.0% YoY)
› B/B ratio: 1.04 (0.96 in 2013) › Replenished backlog in 2014
› Gross margin: 62.4% (61.8% in 2013) ›Raised gross margin for 8X in last 10 years
› Adjusted EBITDA*: $14.4 M (6.2% of sales) ›Reduced OPEX by $6.2 M
› Cash flows from operations: $19.8 M
* Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization,
stock-based compensation costs and foreign exchange gain.
3 © 2015 EXFO Inc. All rights reserved..
4 © 2015 EXFO Inc. All rights reserved..
Segmented Sales—FY 2014
PHYSICAL & PROTOCOL BOOKINGS UP 3.0% YoY
Sales down 6.3% and 1.2% for Physical and Protocol lines in 2014
Weakness in the Americas in 2014
GEOGRAPHICAL SALES FY 2014
PHYSICAL/PROTOCOL SALES
5 © 2015 EXFO Inc. All rights reserved..
Technology Acquisitions
• SNMP polling • Integrated into SA offering • Unmatched end-to-end
visibility and scalability ByteSphere
• CEM analytics • Combined with wireless
probes • End-to-end solution
Aito Technologies
6 © 2015 EXFO Inc. All rights reserved.
Key Contract Wins
• Tier-1 MNO (US) • Optimize efficiency • EXFO Connect
SERVICE ASSURANCE
• Tier-1 MNO (Europe) • Mobile backhaul • Ethernet One solution
WIRELESS
7 © 2015 EXFO Inc. All rights reserved.
Hardware to Virtualized
Environments
Legacy to Packet-based IP
Architectures Fixed to Mobile
Networks
7 © 2015 EXFO Inc. All rights reserved.
Major Shifts in Network Operator Spending
8 © 2015 EXFO Inc. All rights reserved. 8 © 2015 EXFO Inc. All rights reserved..
Growth Strategy Top-line driven: Bolster sales and gross margin
INCREASE Wireless presence. Bookings to wireless customers reached 30-32% of total bookings in FY 2014.
EVOLVE Into a solutions supplier. End-to-end solutions deliver higher margins.
ACCELERATE Profitability. Combining revenue growth with a tight control on costs.
EXPAND Share of wallet with tier-1 network operators. Top-15 operators account for ~65% of total spending.
9 © 2015 EXFO Inc. All rights reserved. 9 © 2015 EXFO Inc. All rights reserved..
Transformation into Solutions Supplier Enabling Network Operators to Cope with Real-World Challenges
› Five-plus years with Brix Networks (SA solution)
› EXFO Connect represents unique advantage
› Important wins in FY 2014
› Continuing journey with ByteSphere and Aito Technologies acquisitions
DEPLOY NEW REVENUE–GENERATING SERVICES
INCREASE NETWORK CAPACITY
REDUCE OPERATING COSTS
IMPROVE QUALITY OF EXPERIENCE
10 © 2015 EXFO Inc. All rights reserved..
Intelligent Platforms
Contextual Analytics EXFO Connect
Service & Network Assurance
Leveraging Key Assets
11 © 2015 EXFO Inc. All rights reserved..
Management Priority
* Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs and foreign exchange gain or loss.
MEDIUM-TERM PROFITABILITY TARGET
12 © 2015 EXFO Inc. All rights reserved..
Q1 2015 Highlights
› Sales totaled $56.7 M (up YoY)
› Bookings reached $54.2 M (book-to-bill ratio of 0.96)
› Gross margin1 attained 62.6% (up YoY)
› IFRS net earnings totaled $1.5 M (up YoY)
› Adjusted EBITDA2 amounted to $3.2 M (Up YoY)
1Gross margin before depreciation and amortization is a non-IFRS measure and represents sales less cost of sales, excluding depreciation and amortization. 2Adjusted EBITDA represents net earnings (loss) before interest, income taxes, depreciation and amortization, stock-based compensation costs and foreign exchange gain.
13 © 2015 EXFO Inc. All rights reserved..
Substantial Issuer Bid (SIB)
› Modified Dutch Auction of C$30 M › Shares can be tendered between C$4.20 and C$4.60
› Or at lowest purchase price set by SIB
› EXFO will select lowest price that allows company to purchase maximum number of shares
› Current share price does not reflect full value of business
› EXFO believes SIB is a good use of cash and creates value for shareholders
› Offer expires on Feb. 13, 2015
14 © 2015 EXFO Inc. All rights reserved..
Committed to Building Value
Growth Strategy
• Top-line driven • Targeting market
share gains • Not relying on
end-markets to vastly improve
Cost Savings Share Buybacks
• $6.2 M in 2014 • $9.0 M in 2013 • Tight cost
controls in effect
• SIB (C$30 M) • NCIB ($0.9 M) in
Q1 2015 • Good use of
cash and creates value
15 © 2015 EXFO Inc. All rights reserved. 15 © 2015 EXFO Inc. All rights reserved.
Questions?