EXFO Inc reports 14.6% EBITDA decline and 3.8% Revenue decline
07.10.2015 • About EXFO Inc (
$EXF) • By InTwits
EXFO Inc reported FY2015 financial results today. Overall the company's long term financial model is characterised by the following facts:
- EXFO Inc doesn't have a profitable business model yet: FY2015 ROIC is 1.6%
- EBITDA Margin is quite volatile: 4.9% in FY2015, 5.5% in FY2014, 6.4% in FY2013, 5.8% in FY2012, 13.8% in FY2011
- EXFO Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 4.7%. At the same time it's in pair with industry average of 26.4%.
- CAPEX is quite volatile: 5.9 in FY2015, 7.9 in FY2014, 8.0 in FY2013, 23.8 in FY2012, 12.2 in FY2011
- The company has potentially unprofitable business model: ROIC is at 1.6%
Below you can find a comprehensive analysis of the key data driving the company's performance and stock price.
EXFO Inc ($EXF) key annual financial indicators
| mln. $ | 2011 | 2012 | 2013 | 2014 | 2015 | 2015/2014 |
|---|
P&L
|
|---|
| Revenue | 269.7 | 250.0 | 242.2 | 230.8 | 222.1 | -3.8% |
| Gross Profit | 162.8 | 152.0 | 143.7 | 139.0 | 137.0 | -1.4% |
| SG&A | | | 88.8 | 86.4 | 82.2 | -4.9% |
| EBITDA | 37.2 | 14.5 | 15.5 | 12.7 | 10.8 | -14.6% |
| Net Income | 22.1 | -3.6 | 1.3 | 0.8 | 5.3 | 576.6% |
Balance Sheet
|
|---|
| Cash | 22.8 | 58.9 | 45.4 | 54.1 | 25.9 | -52.2% |
| Short Term Debt | 1.4 | 0.6 | 0.3 | 0.0 | 0.0 | |
| Long Term Debt | 1.0 | 0.3 | 0.0 | 0.0 | 0.0 | |
Cash flow
|
|---|
| Capex | 12.2 | 23.8 | 8.0 | 7.9 | 5.9 | -25.2% |
Ratios
|
|---|
| Revenue growth | 33.0% | -7.3% | -3.1% | -4.7% | -3.8% | |
| EBITDA growth | 51.1% | -61.0% | 6.8% | -18.0% | -14.6% | |
| Gross Margin | 60.4% | 60.8% | 59.3% | 60.2% | 61.7% | 1.5% |
| EBITDA Margin | 13.8% | 5.8% | 6.4% | 5.5% | 4.9% | -0.6% |
| Net Income Margin | 8.2% | -1.4% | 0.6% | 0.3% | 2.4% | 2.0% |
| SG&A, % of revenue | | | 36.7% | 37.4% | 37.0% | -0.4% |
| CAPEX, % of revenue | 4.5% | 9.5% | 3.3% | 3.4% | 2.7% | -0.8% |
| ROIC | 9.1% | 0.2% | 1.2% | 1.5% | 1.6% | 0.2% |
| ROE | 9.1% | -1.4% | 0.5% | 0.3% | 2.6% | 2.3% |
| Net Debt/EBITDA | -0.5x | -4.0x | -2.9x | -4.3x | -2.4x | 1.9x |
Revenue and profitability
The company's Revenue decreased on 3.8% in FY2015. Revenue decline was accompanies by EBITDA margin decline. EBITDA Margin decreased slightly on 0.62 pp from 5.5% to 4.9% in FY2015.
Gross Margin increased slightly on 1.5 pp from 60.2% to 61.7% in FY2015. SG&A as a % of Revenue showed almost no change in FY2015.
Net Income marign increased on 2.0 pp from 0.34% to 2.4% in FY2015.
Capital expenditures (CAPEX) and working capital investments
In FY2015 the company had CAPEX/Revenue of 2.7%. CAPEX/Revenue decreased on 6.9 pp from 9.5% in FY2012 to 2.7% in FY2015. Average CAPEX/Revenue for the last three years was 3.1%.Battling declining revenue the company invested a large share of EBITDA (54.7%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at low ROIC (1.61%) and ROE (2.64%). ROIC showed almost no change in FY2015. ROE increased on 2.3 pp from 0.33% to 2.6% in FY2015.
Leverage (Debt)
The company has no debt. Cash dropped on 52.2% in FY2015.
Appendix 1: Peers in Communications
Below you can find EXFO Inc benchmarking vs. other companies in Communications industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.
Top companies by Revenue growth, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Telehop Communications Inc ($HOP) | -11.7% | -13.1% | -7.8% | 105.7% | |
| Wi2Wi Corp ($YTY) | | | 11.5% | 100.3% | |
| BSM Technologies Inc ($GPS) | | | 39.1% | 55.5% | |
| Plaintree Systems Inc ($NPT) | | 14.5% | 9.1% | 50.8% | -7.1% |
| Aimia Inc ($AIM) | 2.9% | 6.3% | -25.6% | 47.5% | |
| |
|---|
| Median (49 companies) | 7.3% | 5.0% | 2.1% | 3.1% | 2.7% |
|---|
| EXFO Inc ($EXF) | | -7.3% | -3.1% | -4.7% | -3.8% |
Top companies by Gross margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wanted Technologies Corp ($WAN) | 86.6% | 90.5% | 93.2% | 94.3% | |
| CounterPath Corp ($CCV) | 74.1% | 80.0% | 85.1% | 80.9% | 81.5% |
| Mediagrif Interactive Technologies Inc ($MDF) | 78.2% | 79.8% | 79.8% | 78.8% | 80.1% |
| NeuLion Inc ($NLN) | 45.2% | 53.6% | 63.8% | 70.2% | |
| Sangoma Technologies Corp ($STC) | 74.5% | 68.8% | | 66.9% | |
| |
|---|
| Median (40 companies) | 43.2% | 42.8% | 42.5% | 41.8% | 50.6% |
|---|
| EXFO Inc ($EXF) | 60.4% | 60.8% | 59.3% | 60.2% | 61.7% |
Top companies by EBITDA margin, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Manitoba Telecom Services Inc ($MBT) | 33.7% | 34.3% | 33.7% | 47.4% | |
| Cogeco Cable Inc ($CCA) | 45.8% | 46.0% | 44.9% | 43.8% | |
| Cogeco Inc ($CGO) | 28.1% | 43.2% | 43.5% | 43.3% | |
| Shaw Communications Inc ($SJR.B) | 43.3% | 42.7% | 43.3% | 42.1% | |
| BCE Inc ($BCE) | 37.0% | 38.8% | 37.7% | 38.4% | |
| |
|---|
| Median (49 companies) | 16.4% | 15.6% | 14.8% | 13.4% | 7.6% |
|---|
| EXFO Inc ($EXF) | 13.8% | 5.8% | 6.4% | 5.5% | 4.9% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Newfoundland Capital Corp Ltd ($NCC.B) | | 8.7% | 5.5% | 76.8% | |
| Axia NetMedia Corp ($AXX) | 10.7% | 30.8% | 27.2% | 27.0% | |
| UrtheCast Corp ($UR) | | | | 26.5% | |
| TeraGo Inc ($TGO) | 21.6% | 20.9% | 21.5% | 23.1% | |
| Manitoba Telecom Services Inc ($MBT) | 16.3% | 19.8% | 18.1% | 22.4% | |
| |
|---|
| Median (52 companies) | 4.3% | 2.2% | 3.0% | 2.1% | 2.2% |
|---|
| EXFO Inc ($EXF) | 4.5% | 9.5% | 3.3% | 3.4% | 2.7% |
Top companies by ROIC, %
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Wi2Wi Corp ($YTY) | -28.5% | -166.9% | | 136.7% | |
| Tucows Inc ($TC) | 12.8% | 17.7% | 22.5% | 35.4% | |
| Asian Television Network International Ltd ($SAT) | 102.7% | 34.6% | 23.6% | 23.4% | |
| Points International Ltd ($PTS) | 20.7% | 14.9% | 15.0% | 21.2% | |
| NeuLion Inc ($NLN) | -62.1% | -55.8% | -10.3% | 18.5% | |
| |
|---|
| Median (53 companies) | 6.3% | 9.2% | 8.3% | 8.3% | -9.2% |
|---|
| EXFO Inc ($EXF) | 9.1% | 0.2% | 1.2% | 1.5% | 1.6% |
Top companies by Net Debt / EBITDA
| Top 5 | FY2011 | FY2012 | FY2013 | FY2014 | FY2015 |
|---|
| Plaintree Systems Inc ($NPT) | 0.7x | | | 124.2x | 3.9x |
| Advantex Marketing International Inc ($ADX) | | 4.8x | 2.2x | 5.0x | |
| MDC Partners Inc ($MDZ.A) | 7.3x | 12.4x | 112.6x | 4.6x | |
| Quebecor Inc ($QBR.B) | 2.0x | 3.7x | 3.9x | 4.2x | |
| Postmedia Network Canada Corp ($PNC.B) | 2.9x | 3.3x | 3.4x | 4.2x | |
| |
|---|
| Median (41 companies) | 1.0x | 1.4x | 1.3x | 1.5x | 2.3x |
|---|
| EXFO Inc ($EXF) | -0.5x | -4.0x | -2.9x | -4.3x | -2.4x |
