Stifel Nicolaus Technology Conference. Pierre Plamondon Vice-President, Finance & CFO February 7, 2013

Transcription

1 Stifel Nicolaus Technology Conference Pierre Plamondon Vice-President, Finance & CFO February 7, 2013

2 Forward-Looking Statements 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 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 (loss), refer to the Q press release or the Non-IFRS Measures section on EXFO s website. 2

3 EXFO at a Glance Who We Are No.2 supplier in portable telecom testing and innovation leader in IP service assurance Helping network operators and equipment manufacturers design, deploy and monitor IP fixed and mobile networks What We ve Done Gained market share year-in and year-out for past 27 years Ten-year sales CAGR of 20% Difficult market in FY 2012 EXFO sales: -7% YoY while double-digit market decrease Restructuring: Expected annual savings of $8.0 M and restructuring costs of $2.6 M Where We re Going Increase wireless presence Enable network operators to reduce operating expenses Expand share of wallet with Tier-1 operators Accelerate profitability through execution 2013 EXFO Inc. All rights reserved. 3

4 Global Organization Americas FY 2012 Sales: $130.6 M Growth YoY: -4.6% Sales Split: 52% EMEA FY 2012 Sales: $71.0 M Growth YoY: -16.4% Sales Split: 29% No.1 in portable optical testing No.2 in portable telecom testing Asia-Pacific FY 2012 Sales: $47.3 M Growth YoY: +1.2% Sales Split: 19% 2000 CUSTOMERS IN >100 COUNTRIES 1700 EMPLOYEES IN >25 COUNTRIES 4

5 Bandwidth Demand Global IP traffic Up 4X from Mobile IP traffic Up 18X (Cisco) DESPITE STRONG FUNDAMENTAL DRIVERS, CHALLENGING CONDITIONS FOR WIRELINE MARKET IN EXFO EXFO Inc. Inc. All All rights rights reserved. reserved. 5

6 US Carrier CAPEX 20.0% 18.0% 16.0% 14.0% 12.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% Capital Intensity 14.6% 15.6% 15.1% 12.7% 13.3% E 2013E 2014E AT&T Verizon Sprint T-Mobile Average Source: Morgan Stanley 4G/LTE AND COMPETITION TO DRIVE INVESTMENTS 6

7 Growth Strategy Increase Wireless Presence Enable Operators to Reduce OPEX Expand Share of Wallet with Tier-1 Operators Accelerate Profitability via Execution Wireless sales to continue growing (~24% of sales in FY 2012) Key productivity differentiators, FTB Ecosystem and EXFO Connect Doing business with ~80% of top-100 operators worldwide Combining revenue growth with a tight control on expenses EXPANDING MARKET SHARE FOR 27 CONSECUTIVE YEARS 7

8 Riding the Right Waves Market-Driven Innovation Wireless backhaul 4G/LTE, 3G DAS, RRH 100G upgrades FTTH, VDSL2 Focus on Execution Unmatched customer experience INNOVATION AND EXECUTION ENABLE MARKET-SHARE GAINS 8

9 Telecom Market PHYSICAL (Optical & Access) PROTOCOL (Wireless, Serv. Assurance, Transport & Datacom) TAM SAM Annual growth rate Sales FY 2012 Sales growth FY 12/ 11 Five-year sales CAGR Gross margin profile Major competitors $700 M $550 M ~5% $135.1 M -14.5% 3.9% Low-60s (%) JDSU, Anritsu, Sunrise $3.2 B $1.8 B ~15% $113.7 M 4.4% 46.1% Mid-70s (%) JDSU, IXIA, Tektronix PROTOCOL TO DRIVE REVENUE & EARNINGS GROWTH 2013 EXFO Inc. All rights reserved. 9

10 Financial Snapshot $300 Revenue 70.0% $250 $200 Sales CAGR of 20% over last 10 Years 60.0% 50.0% 40.0% $250 M (-7% YoY) Gained market share FY 13: 6-10% growth (estimate) Gross Margin $ % Improved to 63.3% Up 9X out of 10 years FY 13-15: Trending up 20.0% $ % Adjusted EBITDA Margin In US$ Millions $50 36% 34% 21% 24% -5% 32% 33% -7% % -10.0% 7.3% in FY 12 from 13.5% in FY 11 due to lower revenue level Mid-term goal: 15% Revenue Gross Margin Adjusted EBITDA Margin 10

11 Strong Value Proposition 5 Good Reasons to Invest in EXFO Excellent track record of sales growth Sales CAGR of 20% in last 10 years Well-positioned for key growth drivers Bandwidth expansion and IP network convergence 3. Balancing sales growth and profitability Targeting adjusted EBITDA 1 margin of 15% on revenue of $350 to $400 M Solid balance sheet Cash position of $59.0 M and negligible debt as at November 30, 2012 Experienced and disciplined management team Deep knowledge of managing business in growth and downward markets 1 Adjusted EBITDA represents net earnings before interest, income taxes, depreciation of property plant and equipment, amortization of intangible assets, stock-based compensation costs and foreign exchange gain or loss EXFO Inc. All rights reserved. 11