EXFO reports second quarter results for fiscal 2018

QUEBEC CITY, April 10, 2018

Following a successful public tender offer, EXFO achieved majority control of Astellia's share capital on January 26, 2018 and assumed full control of the France-based company on February 28, 2018. Astellia is recognized as a global leader in the performance analysis of mobile networks and subscriber experience.

Sales increased 7.8% year-over-year to US$64.7 million in the second quarter of fiscal 2018 and 5.2% to US$128.1 million at the halfway mark of the fiscal year. Sales, excluding the one-month contribution of Astellia, attained US$62.9 million in the second quarter of 2018 compared to US$60.0 million in the second quarter of 2017. Astellia contributed US$1.8 million in sales in the second quarter and first half of 2018. Astellia's sales were reduced by US$0.3 million to account for acquisition-related fair value adjustment of deferred revenue.

Bookings improved 17.3% year-over-year to US$65.6 million for a book-to-bill ratio of 1.01 in the second quarter of fiscal 2018 and 8.0% to US$131.5 million for a book-to-bill ratio of 1.03 at the halfway mark of the fiscal year. Bookings, excluding the one-month contribution of Astellia, reached US$63.1 million in the second quarter of 2018 compared to US$55.9 million in the same period last year. Astellia contributed US$2.5 million in bookings in the second quarter and first half of 2018.

Gross margin before depreciation and amortization^* amounted to 60.9% of sales in the second quarter of fiscal 2018 compared to 61.7% in the second quarter of 2017. Gross margin before depreciation and amortization amounted to 62.1% of sales at the halfway mark of fiscal 2018 compared to 62.4% for the same period in 2017.

IFRS net loss attributable to the parent interest totaled US$4.7 million, or US$0.08 per share, in the second quarter of fiscal 2018 and US$2.0 million, or US$0.04 per share, at the halfway mark of the fiscal year. In comparison, net earnings attributable to the parent interest totaled US$1.0 million, or US$0.02 per diluted share, in the second quarter of 2017 and US$4.3 million, or US$0.08 per diluted share, in the first half of 2017. EXFO's share of Astellia's net loss amounted to US$2.7 million in the second quarter and first half of 2018.

IFRS net loss attributable to the parent interest in the second quarter of 2018 included US$2.7 million in after-tax amortization of intangible assets, US$0.4 million in stock-based compensation costs, US$0.6 million for the positive change in the fair value of the cash contingent consideration related to Ontology Systems, US$1.5 million in after-tax acquisition costs related to Astellia, US$0.3 million for the acquisition-related deferred revenue fair value adjustment, and US$1.5 million in income tax expenses to account for the effects of the recent US tax reform.