Jan 2014 Annual Meeting AGM - Germain Lamonde

1. Germain Lamonde
Chairman, President and CEO
January 9, 2014

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 1934. 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 Q1 2014 press release or the “Non-IFRS Measures”
section on EXFO’s website.
© 2014 EXFO Inc. All rights reserved..
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3. FY 2013 Financial Highlights
›Annual sales: $242.2 M (-3.1% YoY)
› R&D investments more in «key technology
platforms»; less on «incremental innovation»
›Gained market share despite tough markets
›IFRS net earnings: $1.3 M (-$3.6 M in 2012)
›Cost savings of $9.0 M YoY
›Adjusted EBITDA*: $17.3 M (7.2% of sales)
›Adjusted EBITDA margin flat YoY
* Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and
amortization, restructuring charges, stock-based compensation costs and foreign exchange
gain.
© 2014 EXFO Inc. All rights reserved..
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4. Segmented Sales — FY 2013
› Physical-layer sales increased 4.3% YoY
› Protocol-layer sales decreased 11.3% YoY
Americas
›Sales: $128.1 M
›Growth YoY: -2.3%
›Sales Split: 53%
EMEA
›Sales: $67.0 M
›Growth YoY: -6.0%
›Sales Split: 28%
Asia-Pacific
›Sales: $47.0 M
›Growth YoY: -1.0%
›Sales Split: 19%
© 2012 EXFO Inc. All rights reserved.
2014
reserved..
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5. Progress Against Growth Strategy
© 2012 EXFO Inc. All rights reserved.
2014
reserved..
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6. Progress Against Growth Strategy
›Sales to wireless customers
reached 28% of sales in 2013
›Launched key new products
›Ready for small cell opportunity
© 2012 EXFO Inc. All rights reserved.
2014
reserved..
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7. Progress Against Growth Strategy
›Acceptance of EXFO Connect
›Optical & Ethernet combination
›Extended iOLM for DAS & FTTA
›One-click diagnostics on protocol
analyzers
© 2012 EXFO Inc. All rights reserved.
2014
reserved..
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8. Progress Against Growth Strategy
›OTDRs: ~50% market share
›100G test solutions: Top 7/15
carriers
›TravelHawk Pro: Top 3/5 LTE
carriers
›MaxTester: Top-3 NA carriers
›EXFO Connect progression
© 2012 EXFO Inc. All rights reserved.
2014
reserved..
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9. Progress Against Growth Strategy
›Reduced OPEX by $9.0 M
›Maintained tight cost controls
›Adj. EBITDA margin* of 7.2%
(flat YoY)
* Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, restructuring charges, stock-based
compensation costs and foreign exchange gain.
© 2012 EXFO Inc. All rights reserved.
2014
reserved..
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10. Looking to the Future ...
Small Cells,
VoLTE & 4G
Networks
• Small cells, DAS & RRH are
key to complement macro-cells
• VoLTE critical roll-out in 2014
• 4G/LTE still in early innings
High-Speed
Broadband
Networks
• From 10G to 40G, 100G and
400G field trials
• Major upgrades to IP network
infrastructures
EXFO’S PORTFOLIO ALIGNED WITH GROWTH VECTORS
© 2014 EXFO Inc. All rights reserved..
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11. Focus on Execution
INNOVATION
›Game-changing solutions
›Solve real-life issues for customers
OPERATIONAL EXCELLENCE
›Efficiency and execution
›Tight control on expenses
›Leverage higher-margin SW solutions
PROFITABLE GROWTH
›Grow profitability faster than revenue
STAY THE COURSE AND EXECUTE FLAWLESSLY
© 2014 EXFO Inc. All rights reserved..
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12. Headwinds & Tailwinds
Headwinds
›Uncertain economic conditions
›Challenging end-markets
›Some carrier investments in 2013
were delayed (especially in the
Americas)
Tailwinds
›3G, 4G/LTE deployments
›Small cells and network density
initiatives (DAS, RRH)
›Mobile backhaul upgrades
›100G network rollouts
›Pair bonding and vectoring on
copper links (100 Mbit/s)
© 2014 EXFO Inc. All rights reserved..
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13. Medium-Term Target
* Adjusted EBITDA represents net earnings before interest, income taxes, depreciation and amortization, stock-based compensation costs
and foreign exchange gain or loss.
BALANCE BETWEEN SALES GROWTH AND PROFITABILITY
© 2014 EXFO Inc. All rights reserved..
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14. Q1 2014 Highlights
› Sales totaled $56.0 M (book-to-bill ratio of 1.03)
› Sales increased YoY in EMEA and A-PAC, but decreased in
the Americas
› Gross margin1 reached 62.2% (up YoY)
› Adjusted EBITDA2 amounted to $2.3 M (down YoY)
› Cash flows from operating activities totaled $3.3 M (up YoY)
1Gross
margin is a non-IFRS measure and represents sales less cost of sales, excluding depreciation and amortization.
EBITDA represents net loss before interest, income taxes, depreciation and amortization, stock-based compensation costs
and foreign exchange gain.
2Adjusted
© 2014 EXFO Inc. All rights reserved..
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15. Questions?
© 2012 EXFO Inc. All rights reserved.
2014
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