EXFO Inc (NASDAQ:EXFO) Q3 2019 Earnings Conference Call - Final Transcript

Jul 10, 2019 • 05:00 pm ET


EXFO Inc (NASDAQ:EXFO) Q3 2019 Earnings Conference Call - Final Transcript


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Good day and welcome to EXFO's Third Quarter Conference Call for Fiscal 2019. Today's conference is being recorded.

At this time, I would like to turn the conference over to Vance Oliver, Director of Investor Relations. Please go ahead.

Vance Oliver

Good afternoon and welcome to EXFO's third quarter conference call for fiscal 2019. With me on the line today are Philippe Morin, EXFO's Chief Executive Officer; and Pierre Plamondon, CFO and Vice President of Finance. Germain Lamonde, EXFO's Founder and Executive Chairman, will also be available to answer questions during the Q&A period.

A reminder that this conference call will include certain forward-looking statements and/or estimates concerning our intents, beliefs or expectations regarding future events that may affect EXFO. Please note that such comments will be affected by risks and/or uncertainties which may cause the actual results of the Company to be materially different from those expressed or implied today. For more information about EXFO, I encourage you to review our Form 20-F filed with the Securities and Exchange Commission. Our Annual Information Form is available with Canadian Securities Commission as well.

Please note that non-IFRS numbers may be used during this conference call. A reconciliation of these non-IFRS results with IFRS numbers is available in the Q3 2019 news release on our website. All dollar amounts in this conference call are expressed in US dollars unless otherwise indicated.

So without further delay, I will turn the call over to Philippe.

Philippe Morin

Thank you, Vance, and good afternoon, everyone. EXFO delivered another solid quarter in Q3 2019 with revenues above the midpoint of our guidance range at $73.6 million and an adjusted EBITDA at $7.9 million or 10.7% of our sales. This marks the second consecutive quarter with our adjusted EBITDA margins in double-digits. Now after nine months into fiscal 2019, our sales have now increased 8.2% year-on-year and bookings at 10.9% while adjusted EBITDA have now surged 74.5% to $19.4 million. This heightened level of consistency reflects a strong execution against our growth strategy, leveraging key growth vectors like fiber buildouts, data center interconnects, initial 5G deployments and network virtualizations.

We've also maintained a sound financial discipline during the fiscal year, and if you recall, we did announce a restructuring plan last August which is positively impacting our bottom line. We've now completed our restructuring, delivering $8 million in cost savings in fiscal 2019 and delivering $10.5 million in subsequent years. Our four recent acquisitions including Astellia are now fully integrated and we're ideally positioned to take advantage of key growth drivers to help our customers transform their networks.

So, as a result, I am confident we will achieve our $24 million adjusted EBITDA target for our fiscal 2019, and as previously mentioned, we have generated more than $19 million in adjusted EBITDA after nine months in our fiscal year and our fourth quarter has historically been quite profitable due to seasonality related to the summer holidays period.

Now let's take a closer look on how our two major product families have