EXFO Inc EBITDA dropped on 30.3% and Revenue decreased on 7.4%
07.10.2020 • About EXFO Inc (
$EXF) • By InTwits
EXFO Inc reported FY2020 financial results today. Here are the key drivers of the company's long term financial model:
- EXFO Inc has low CAPEX intensity: 5 year average CAPEX/Revenue was 2.8%. At the same time it's in pair with industry average of 5.6%
- CAPEX is quite volatile: 2 CADm in FY2020, 7 CADm in FY2019, 1 CADm in FY2018, 15 CADm in FY2017, 36 CADm in FY2016
- The company has unprofitable business model: ROIC is -1.1%
- It operates with medium-size leverage: Net Debt/EBITDA is 1.1x while industry average is 0.9x
Below you can find a comprehensive analysis of the key data driving the company's performance and the stock price.
Revenue and profitability
The company's Revenue decreased on 7.4%. Annual revenue decline showed slowdown in FY20Q4 - revenue increased slightly on 0.57%. Revenue decline was worsened by EBITDA margin decline. EBITDA Margin decreased slightly on 1.6 pp from 6.6% to 5.0% in FY2020.
Gross Margin decreased slightly on 1.8 pp from 58.6% to 56.9% in FY2020. Gross Margin stuck to a declining trend at -1.4 pp per annum in FY2016-FY2020. SG&A as a % of Revenue showed almost no change in FY2020.
Net Income margin decreased on 2.7 pp from -0.86% to -3.6% in FY2020.
Investments (CAPEX, working capital and M&A)
EXFO Inc's CAPEX/Revenue was 2.9% in FY2020. EXFO Inc's CAPEX/Revenue showed almost no change from FY2017 to FY2020. It's average CAPEX/Revenue for the last three years was 3.1%. Battling declining revenue EXFO Inc invested a large share of EBITDA (57.7%) to CAPEX but that didn't help at least in this year.
Return on investment
The company operates at negative ROIC (-1.1%) and ROE (-5.5%). ROIC decreased on 3.4 pp from 2.4% to -1.1% in FY2020. ROE decreased on 4.1 pp from -1.4% to -5.5% in FY2020.
Leverage (Debt)
Company's Net Debt / EBITDA is 1.1x and Debt / EBITDA is 3.6x. Net Debt / EBITDA jumped on 1.4x from -0.3x to 1.1x in FY2020. Debt jumped on 343% while cash surged on 98.7%.
EXFO Inc has short term refinancing risk: cash is only 86.2% of short term debt.
Financial and operational results
FY ended 31.08.2020
EXFO Inc ($EXF) key annual financial indicators| mln. $ | 2016 | 2017 | 2018 | 2019 | 2020 | 2020/2019 |
|---|
P&L
|
|---|
| Revenue | 232.6 | 243.3 | 269.5 | 286.9 | 265.6 | -7.4% |
| Gross Profit | 145.5 | 149.0 | 164.5 | 168.2 | 151.0 | -10.2% |
| SG&A | 82.2 | 86.3 | 98.8 | 98.6 | 92.3 | -6.4% |
| EBITDA | 20.7 | 15.9 | 11.3 | 19.0 | 13.2 | -30.3% |
| Net Income | 8.9 | 0.9 | -11.9 | -2.5 | -9.5 | |
Balance Sheet
|
|---|
| Cash | 43.2 | 38.4 | 12.8 | 16.5 | 32.8 | 98.7% |
| Short Term Debt | 0.0 | 0.0 | 13.6 | 7.4 | 38.1 | 411.0% |
| Long Term Debt | 0.0 | 0.0 | 5.9 | 3.3 | 9.5 | 187.8% |
Cash flow
|
|---|
| Capex | 4.4 | 7.2 | 10.5 | 7.5 | 7.6 | 2.0% |
Ratios
|
|---|
| Revenue growth | 4.7% | 4.6% | 10.8% | 6.4% | -7.4% | |
| EBITDA growth | 90.5% | -22.9% | -28.8% | 67.6% | -30.3% | |
|
|---|
| Gross Margin | 62.6% | 61.2% | 61.0% | 58.6% | 56.9% | -1.8% |
| EBITDA Margin | 8.9% | 6.5% | 4.2% | 6.6% | 5.0% | -1.6% |
| SG&A, % of revenue | 35.3% | 35.5% | 36.7% | 34.4% | 34.8% | 0.4% |
| Net Income Margin | 3.8% | 0.3% | -4.4% | -0.9% | -3.6% | -2.7% |
| CAPEX, % of revenue | 1.9% | 2.9% | 3.9% | 2.6% | 2.9% | 0.3% |
|
|---|
| ROIC | 9.1% | 4.6% | -2.2% | 2.4% | -1.1% | -3.4% |
| ROE | 5.0% | 0.5% | -6.4% | -1.4% | -5.5% | -4.1% |
| Net Debt/EBITDA | -2.1x | -2.4x | 0.6x | -0.3x | 1.1x | 1.4x |
EXFO Inc ($EXF) key quoterly financial indicators
| mln. $ | FY20Q1 | FY20Q2 | FY20Q3 | FY20Q4 | | YoY change |
|---|
P&L
|
|---|
| Revenue | 74 | 55 | 66 | 71 | | 6.3% | -25.2% | -10.1% | 0.6% |
| EBITDA | 7 | -5 | 10 | 1 | | - | -174.6% | 37.0% | -75.5% |
| Net Income | -0 | -9 | 3 | -4 | | - | -273.7% | 15,028.6% | - |
Balance Sheet
|
|---|
| Cash | 15 | 19 | 17 | 33 | | -16.8% | -22.8% | 25.3% | 98.7% |
| Short Term Debt | 19 | 19 | 39 | 38 | | -23.1% | 59.8% | 415.3% | 411.0% |
| Long Term Debt | 10 | 9 | 10 | 9 | | 90.5% | 94.8% | 146.9% | 187.8% |
Ratios
|
|---|
| Gross Margin | 58.9% | 57.0% | 57.7% | 53.8% | | 0.6% | -3.7% | -0.9% | -3.0% |
| EBITDA Margin | 9.6% | -9.7% | 15.3% | 2.0% | | 11.5% | -19.4% | 5.3% | -6.2% |
| Net Income Margin | -0.1% | -16.3% | 4.8% | -5.1% | | 10.7% | -23.3% | 4.8% | -4.8% |
Peers in Communications
Below we provide EXFO Inc benchmarking against other companies in Communications industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Armada Data Corp ($ARD) | - | 5.9% | 23.4% | -2.3% | 13.7% |
| Vecima Networks Inc ($VCM) | - | -34.1% | 9.3% | 8.9% | 13.4% |
| iSIGN Media Solutions Inc ($ISD) | - | 70.9% | -90.9% | 38.5% | 10.1% |
| Uniserve Communications Corp ($USS) | - | 12.5% | 24.1% | 39.0% | 0.9% |
| Tucows Inc ($TC) | - | 73.5% | 5.0% | -2.6% | -7.7% |
| |
|---|
| Median (6 companies) | 2.3% | 12.5% | 9.3% | 23.7% | 5.5% |
|---|
| EXFO Inc ($EXF) | - | 4.6% | 10.8% | 6.4% | -7.4% |
Top companies by Gross margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Vecima Networks Inc ($VCM) | 57.0% | 51.8% | 53.6% | 52.8% | 54.2% |
| Uniserve Communications Corp ($USS) | 50.2% | 48.9% | 44.4% | 36.9% | 34.2% |
| Tucows Inc ($TC) | 33.2% | 25.7% | 28.0% | 29.9% | 27.5% |
| Plaintree Systems Inc ($NPT) | 11.5% | 11.6% | 27.6% | 28.4% | 22.2% |
| iSIGN Media Solutions Inc ($ISD) | 12.7% | 25.7% | -84.0% | 19.9% | 20.1% |
| |
|---|
| Median (5 companies) | 40.1% | 30.8% | 36.2% | 29.9% | 27.5% |
|---|
| EXFO Inc ($EXF) | 62.6% | 61.2% | 61.0% | 58.6% | 56.9% |
Top companies by EBITDA margin, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Vecima Networks Inc ($VCM) | 30.3% | 21.6% | 15.6% | 5.9% | 17.0% |
| Tucows Inc ($TC) | 14.7% | 11.9% | 12.8% | 15.3% | 10.7% |
| Plaintree Systems Inc ($NPT) | -4.4% | -3.8% | 15.7% | 16.3% | 7.3% |
| Armada Data Corp ($ARD) | 19.2% | 14.7% | 14.2% | -0.1% | 6.3% |
| Uniserve Communications Corp ($USS) | -8.7% | 2.9% | -28.9% | -14.9% | -6.3% |
| |
|---|
| Median (6 companies) | 6.8% | 2.9% | 12.8% | 2.9% | 6.8% |
|---|
| EXFO Inc ($EXF) | 8.9% | 6.5% | 4.2% | 6.6% | 5.0% |
Top companies by CAPEX/Revenue, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Tucows Inc ($TC) | 4.2% | 3.9% | 8.1% | 13.1% | 14.3% |
| Uniserve Communications Corp ($USS) | 3.7% | 2.4% | 9.8% | 0.6% | 1.5% |
| Vecima Networks Inc ($VCM) | 4.8% | 2.2% | 2.3% | 22.3% | 1.2% |
| Armada Data Corp ($ARD) | 0.2% | 0.3% | 0.2% | 0.4% | 0.3% |
| Plaintree Systems Inc ($NPT) | 2.2% | 1.9% | 2.0% | 3.2% | 0.1% |
| |
|---|
| Median (6 companies) | 2.8% | 1.9% | 2.0% | 4.6% | 0.7% |
|---|
| EXFO Inc ($EXF) | 1.9% | 2.9% | 3.9% | 2.6% | 2.9% |
Top companies by ROIC, %
| Top 5 | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Armada Data Corp ($ARD) | 68.1% | 48.3% | 52.5% | -1.0% | 12.5% |
| Tucows Inc ($TC) | 58.3% | 25.6% | 18.0% | 15.5% | 3.0% |
| Plaintree Systems Inc ($NPT) | -44.7% | -174.1% | 269.1% | 72.4% | 2.7% |
| Vecima Networks Inc ($VCM) | 19.3% | 5.1% | 1.8% | -3.6% | 0.1% |
| Uniserve Communications Corp ($USS) | - | - | -652.3% | -243.8% | -155.8% |
| |
|---|
| Median (6 companies) | 0.1% | 5.1% | 18.0% | -1.0% | 2.7% |
|---|
| EXFO Inc ($EXF) | 9.1% | 4.6% | -2.2% | 2.4% | -1.1% |
Top companies by Net Debt / EBITDA
| Top | FY2016 | FY2017 | FY2018 | FY2019 | FY2020 |
|---|
| Tucows Inc ($TC) | -0.2x | 1.5x | 1.2x | 2.0x | 3.7x |
| Plaintree Systems Inc ($NPT) | - | - | 0.9x | 0.3x | 0.9x |
| Vecima Networks Inc ($VCM) | -0.6x | -0.1x | -0.7x | -3.6x | -0.7x |
| Armada Data Corp ($ARD) | 0.1x | -0.8x | -0.9x | - | -0.7x |
| |
|---|
| Median (4 companies) | 1.6x | 0.7x | 0.1x | 0.3x | 0.1x |
|---|
| EXFO Inc ($EXF) | -2.1x | -2.4x | 0.6x | -0.3x | 1.1x |
