EXFO reports second quarter results for fiscal 2019

    --  Sales increased 14.2% to US$73.9 million, high end of guidance range
    --  Bookings improved 16.0% to US$76.1 million, book-to-bill ratio of 1.03
    --  IFRS net earnings reached US$5.2 million, US$0.09 per share
    --  Adjusted EBITDA totaled US$8.8 million, 11.9% of sales
    --  Cash flows from operations surged to US$18.7 million

QUEBEC CITY, April 2, 2019 /PRNewswire/ - EXFO Inc. (NASDAQ: EXFO) (TSX: EXF), the communications industry's test, monitoring and analytics experts, reported today financial results for the second quarter ended February 28, 2019.

IFRS sales increased 14.2% to US$73.9 million in the second quarter of fiscal 2019 from US$64.7 million in the second quarter of 2018. Second-quarter sales for 2019 included a US$7.5 million revenue contribution from Astellia, which was reduced by US$0.6 million to account for acquisition-related fair value adjustment of deferred revenue. In comparison, Astellia had generated US$1.8 million in revenue for one month in the second quarter 2018.

Bookings, which included a US$10.3 million contribution from Astellia, improved 16.0% year-over-year to US$76.1 million in the second quarter of fiscal 2019 from US$65.6 million in the same period of 2018. In comparison, Astellia had delivered US$2.5 million in bookings for one month in the second quarter 2018. EXFO's book-to-bill ratio was 1.03 in the second quarter of 2019.

Gross margin before depreciation and amortization(*) amounted to 60.7% of sales in the second quarter of fiscal 2019 compared to 60.9% in the second quarter of 2018.

IFRS net earnings in the second quarter of fiscal 2019 totaled US$5.2 million, or US$0.09 per share, compared to a net loss attributable to the parent interest(1) of US$4.7 million, or US$0.08 per share, in the second quarter of 2018. IFRS net earnings in the second quarter of 2019 included net expenses totaling US$3.9 million: US$1.9 million in after-tax amortization of intangible assets, US$0.5 million in stock-based compensation costs, US$0.5 million in after-tax restructuring charges, US$0.6 million for acquisition-related fair value adjustment of deferred revenue, and a foreign exchange loss of US$0.4 million.

These net expenses were offset by the sale of a building under EXFO's restructuring plan that generated a gain of US$1.7 million in the second quarter of 2019. The company also benefited from a deferred income tax recovery of US$2.4 million in the second quarter of 2019.

Adjusted EBITDA(*) totaled US$8.8 million, or 11.9% of sales, in the second quarter of fiscal 2019 compared to US$2.5 million, or 3.9% of sales, in the second quarter of 2018.

"EXFO delivered outstanding second quarter results with strong revenue and bookings growth, profitability and cash flow generation--all encouraging signs for our T&M and SASS product families and the leverage in our operating model," said EXFO's CEO Philippe Morin. "Our unique value propositions resonated very well with industry executives at Mobile World Congress and Optical Fiber Conference, as our solutions enable fiber buildouts deep into the network edge, 5G wireless deployments and network virtualization. Clearly, EXFO is on track with its profitable growth strategy amid a rapidly transforming industry."



       
              Selected Financial Information



       
              (In thousands of US dollars)

    ===

                                                    Q2 2019                 Q2 2018                          H1 2019                        H1 2018

                                                                                                                                               ---



        Test and Measurement
         sales                                               $
          50,407                $
          49,884              $
           100,171               $
            100,070


        Service Assurance, Systems and
         Services sales                                            23,701                        14,457                        43,117                          27,425


        Foreign exchange gains (losses) on
         forward exchange contracts                                 (181)                          381                         (160)                            618




       Total sales                                          $
          73,927                $
          64,722              $
           143,128               $
            128,113




        Test and Measurement
         bookings                                            $
          45,320                $
          47,386              $
           109,316               $
            100,240


        Service Assurance, Systems and
         Services bookings                                         30,953                        17,819                        48,174                          30,607


        Foreign exchange gains (losses) on
         forward exchange contracts                                 (181)                          381                         (160)                            618




       Total bookings                                       $
          76,092                $
          65,586              $
           157,330               $
            131,465


        Book-to-bill ratio (bookings/
         sales)                                                      1.03                          1.01                          1.10                            1.03


        Gross margin before
         depreciation and
         amortization*                                       $
          44,865                $
          39,396               $
           85,169                $
            79,498


                                                                    60.7%                        60.9%                        59.5%                          62.1%




                   Other selected information:


        IFRS net earnings (loss)
         attributable to the
         parent interest                                      $
          5,193               $
          (4,660)             $
           (2,274)              $
            (1,981)


        Amortization of
         intangible assets                                    $
          2,130                 $
          3,056                $
           5,070                 $
            4,175


        Stock-based compensation
         costs                                                  $
          461                   $
          438                  $
           879                   $
            840


        Restructuring charges                                   $
          577          
      $                               $
           3,318    
           $                  -


        Change in fair value of
         cash contingent
         consideration                            
           $                                $
          (561)  
          $                                   $
            (716)


        Acquisition-related
         deferred revenue fair
         value adjustment                                       $
          571                   $
          309                $
           1,435                   $
            309


        Income tax expense for US
         tax reform                               
           $                                $
          1,528   
          $                                   $
            1,528


        Gain on disposal of
         capital assets                                     $
          (1,732)         
      $                             $
           (1,732)   
           $                  -


        Deferred income tax
         recovery                                           $
          (2,383)         
      $                             $
           (2,383)   
           $                  -


        Net income tax effect of
         the above items                                      $
          (348)                $
          (394)               $
           (771)                $
            (566)


        Foreign exchange (gain)
         loss                                                   $
          416                   $
          (8)                 $
           201               $
            (1,226)



       Adjusted EBITDA*                                      $
          8,784                 $
          2,492               $
           11,512                 $
            8,551

    ===                                                                                                                                                          ===

Operating Expenses
Selling and administrative expenses reached US$25.5 million, or 34.4% of sales in the second quarter of fiscal 2019 compared to US$24.9 million, or 38.5% of sales, in the same period last year.

Net R&D expenses attained US$12.2 million, or 16.5% of sales, in the second quarter of fiscal 2019 compared to US$13.1 million, or 20.2% of sales, in the second quarter of 2018.

Second-Quarter Highlights

    --  Growth. Sales increased 14.2% year-over-year mainly due to a
        full-quarter contribution from the Astellia acquisition, compared to one
        month for the same period in 2018, and revenue recognition of a US$4.9
        million order for EXFO's real-time network topology software. Test and
        measurement sales accounted for 68% of total revenue in the second
        quarter of 2019, while SASS sales totaled 32%. Revenue breakdown among
        the three main selling regions amounted to 50% in the Americas, 34% in
        Europe, Middle East and Africa (EMEA) and 16% in Asia-Pacific. EXFO's
        top customer accounted for 14.9% of sales, while the top three
        represented 24.7%.
    --  Profitability. IFRS net earnings totaled US$5.2 million in the second
        quarter of 2019, while adjusted EBITDA amounted to US$8.8 million, or
        11.9% of sales. The company also generated US$18.7 million in cash flows
        from operations in the second quarter.
    --  Innovation. EXFO showcased its new product introductions at Mobile World
        Congress (MWC) and Optical Fiber Conference (OFC), high-profile
        tradeshows held during and after the quarter-end. At MWC, EXFO provided
        an overview of its highly differentiated service assurance and analytics
        platform, including automated assurance, diagnostics and troubleshooting
        of 5G networks. At OFC, EXFO demonstrated the breadth and depth of its
        market-leading optical test offering, including its recently released
        Open Transceiver System for 400G testing, to allow for successful,
        high-speed network transformations. The company also presented its
        latest field test automation, cloud reporting and remote testing
        capabilities. On the recognition front, EXFO received Frost & Sullivan's
        2018 Customer Value Leadership Award for Global Data Analytics
        Solutions. This fifth award for EXFO's Service Assurance, Systems and
        Services (SASS) portfolio during the past year recognizes the company's
        ability to optimize subscriber experience and maximize benefits for
        communications service providers at every level of these organizations,
        from engineering to customer care.

(1 )Represents net loss excluding share of the net loss attributable to Astellia's minority shareholders.

Business Outlook
EXFO forecasts IFRS sales between US$70.0 million and US$75.0 million for the third quarter of fiscal 2019. IFRS net loss is expected to range between US$0.04 and US$0.00 per share in the third quarter of 2019. IFRS net loss includes US$0.05 per share in after-tax amortization of intangible assets and stock-based compensation costs.

This guidance, which is a forward-looking statement, was established by management based on existing backlog as of the date of this news release, seasonality, expected bookings for the remaining of the quarter, as well as exchange rates as of the day of this news release.

Conference Call and Webcast
EXFO will host a conference call today at 5 p.m. (Eastern time) to review second quarter results for fiscal 2019. To listen to the conference call and participate in the question period via telephone, dial 1-323-794-2093. Please take note the following participant passcode will be required: 8906152. Germain Lamonde, founder and Executive Chairman, Philippe Morin, Chief Executive Officer, and Pierre Plamondon, Vice-President of Finance and Chief Financial Officer, will participate in the call. An audio replay of the conference call will be available two hours after the event until 8:00 p.m. on April 9, 2019. The replay number is 1-719-457-0820 and the required participant passcode is 8906152. The audio Webcast and replay of the conference call will also be available on EXFO's Website at www.EXFO.com, under the Investors section.

About EXFO
EXFO (NASDAQ: EXFO) (TSX: EXF) develops smarter test, monitoring and analytics solutions for fixed and mobile network operators, webscale companies and equipment manufacturers in the global communications industry. Our customers count on us to deliver superior network performance, service reliability and subscriber insights. They count on our unique blend of equipment, software and services to accelerate digital transformations related to fiber, 4G/LTE and 5G deployments. They count on our expertise with automation, real-time troubleshooting and big data analytics, which are critical to their business performance. We've spent over 30 years earning this trust, and today 1,900 EXFO employees in over 25 countries work side by side with our customers in the lab, field, data center and beyond. For more information, visit EXFO.com and follow us on the EXFO Blog.

Forward-Looking Statements
This news release contains forward-looking statements within the meaning of the U.S. Private Securities Litigation Reform Act of 1995, and we intend that such forward-looking statements be subject to the safe harbors created thereby. Forward-looking statements are statements other than historical information or statements of current condition. Words such as may, expect, believe, plan, anticipate, intend, could, estimate, continue, or similar expressions or the negative of such expressions are intended to identify forward-looking statements. In addition, any statements that refer to expectations, projections or other characterizations of future events and circumstances are considered forward-looking statements. They are not guarantee of future performance and involve risks and uncertainties. Actual results may differ materially from those in forward-looking statements due to various factors including, but not limited to, macroeconomic uncertainty, including trade wars; our ability to successfully integrate businesses that we acquire; capital spending and network deployment levels in the telecommunications industry (including our ability to quickly adapt cost structures to anticipated levels of business and our ability to manage inventory levels with market demand); future economic, competitive, financial and market conditions; consolidation in the global telecommunications test, service assurance and analytics solutions markets and increased competition among vendors; capacity to adapt our future product offering to future technological changes; limited visibility with regard to the timing and nature of customer orders; delay in revenue recognition due to longer sales cycles for complex systems involving customers' acceptance; fluctuating exchange rates; concentration of sales; timely release and market acceptance of our new products and other upcoming products; our ability to successfully expand international operations and to conduct business internationally; and the retention of key technical and management personnel. Assumptions relating to the foregoing involve judgments and risks, all of which are difficult or impossible to predict and many of which are beyond our control. Other risk factors that may affect our future performance and operations are detailed in our Annual Report, on Form 20-F, and our other filings with the U.S. Securities and Exchange Commission and the Canadian securities commissions. We believe that the expectations reflected in the forward-looking statements are reasonable based on information currently available to us, but we cannot assure you that the expectations will prove to have been correct. Accordingly, you should not place undue reliance on these forward-looking statements. These statements speak only as of the date of this document. Unless required by law or applicable regulations, we undertake no obligation to revise or update any of them to reflect events or circumstances that occur after the date of this document.

*Non-IFRS Measures
EXFO provides non-IFRS measures (gross margin before depreciation and amortization and adjusted EBITDA) as supplemental information regarding its operational performance. Gross margin before depreciation and amortization represents sales, less cost of sales, excluding depreciation and amortization. Adjusted EBITDA represent net earnings (loss) attributable to the parent interest before interest and other income/expense, income taxes, depreciation and amortization, stock-based compensation costs, restructuring charges, change in fair value of cash contingent consideration, acquisition-related deferred revenue fair value adjustment, and foreign exchange gain or loss.

These non-IFRS measures eliminate the effect on IFRS results of non-cash and/or non-operating statement of earnings elements, as well as elements subject to significant volatility such as foreign exchange gain or loss. EXFO uses these measures for evaluating historical and prospective financial performance, as well as its performance relative to competitors. These non-IFRS measures are also the financial measures used by financial analysts to evaluate and compare EXFO's performance against competitors and industry players in the company's sector.

Finally, these measures help EXFO plan and forecast future periods as well as make operational and strategic decisions. EXFO believes that providing this information, in addition to the IFRS measures, allows investors to see the company's results through the eyes of management, and to better understand historical and future financial performance. More importantly, it enables the comparison of EXFO's performance on a relatively similar basis against other public and private companies in the industry worldwide.

The presentation of this additional information is not prepared in accordance with IFRS. Therefore, the information may not necessarily be comparable to that of other companies and should be considered as a supplement to, not a substitute for, the corresponding measures calculated in accordance with IFRS.

The following table summarizes the reconciliation of adjusted EBITDA to IFRS net earnings (loss) attributable to the parent interest, in thousands of US dollars:



     
                Adjusted EBITDA


                                   Q2 2019          Q2 2018       H1 2019   H1 2018





      IFRS net earnings
       (loss) attributable
       to the parent
       interest for the
       period                              $
     5,193          $
        (4,660)             $
       (2,274)  $
        (1,981)




      Add (deduct):




      Depreciation of
       property, plant and
       equipment                     1,390             1,263          2,819      2,417


      Amortization of
       intangible assets             2,130             3,056          5,070      4,175


      Interest and other
       (income) expense            (1,514)              334        (1,137)       672


      Income taxes                   (440)            2,321          1,201      4,061


      Stock-based
       compensation costs              461               438            879        840


      Restructuring
       charges                         577                           3,318


      Change in fair value
       of cash contingent
       consideration                                  (561)                   (716)


      Acquisition-related
       deferred revenue
       fair value
       adjustment                      571               309          1,435        309


      Foreign exchange
       (gain) loss                     416               (8)           201    (1,226)



      Adjusted EBITDA for
       the period (1)                      $
     8,784            $
        2,492               $
       11,512    $
         8,551





      Adjusted EBITDA in
       percentage of sales           11.9%             3.9%          8.0%      6.7%



               (1) Includes acquisition-
                related costs of US$1.4
                million and US$2.1 million
                for the three months and six
                months ended February 28,
                2018 (nil in fiscal 2019)


                                                     
              
                EXFO Inc.


                                    
              
          Condensed Unaudited Interim Consolidated Balance Sheets




                                                   
             (in thousands of US dollars)






                                                                                         As at                       As at

                                                                                     February 28,                 August 31,

                                                                                             2019                        2018






     
                Assets




                   Current assets



     Cash                                                                     $
              24,763              $
          12,758


      Short-term investments                                                                2,238                       2,282



     Accounts receivable



     Trade                                                                                41,227                      47,273



     Other                                                                                 3,490                       4,137


      Income taxes and tax credits
       recoverable                                                                          5,124                       4,790



     Inventories                                                                          38,598                      38,589



     Prepaid expenses                                                                      5,049                       5,291



     Other assets                                                                          2,583                       2,279



                                                                                          123,072                     117,399




                   Tax credits recoverable                                                 46,727                      47,677


                   Property, plant and equipment                                           42,036                      44,310


                   Intangible assets                                                       24,904                      29,866



     
                Goodwill                                                                39,707                      39,892


                   Deferred income tax assets                                               5,708                       4,714


                   Other assets                                                               828                         686



                                                                              $
              282,982             $
          284,544



                   Liabilities




                   Current liabilities



     Bank loan                                                                 $
              9,001              $
          10,692


      Accounts payable and accrued
       liabilities                                                                         47,560                      47,898



     Provisions                                                                            1,314                       2,954



     Income taxes payable                                                                    687                         873



     Deferred revenue                                                                     23,914                      16,556



     Other liabilities                                                                     1,656                       3,197


      Current portion of long-term
       debt                                                                                 2,724                       2,921



                                                                                           86,856                      85,091




                   Provisions                                                               2,517                       2,347


                   Deferred revenue                                                         9,345                       6,947


                   Long-term debt                                                           4,578                       5,907


                   Deferred income tax liabilities                                          4,572                       5,910


                   Other liabilities                                                          327                         421



                                                                                          108,195                     106,623





                   Shareholders' equity



     Share capital                                                                        92,878                      91,937



     Contributed surplus                                                                  18,277                      18,428



     Retained earnings                                                                   112,379                     114,906


      Accumulated other comprehensive
       loss                                                                              (48,747)                   (47,350)



                                                                                          174,787                     177,921





                                                                              $
              282,982             $
          284,544


                                                                                     
              
                EXFO Inc.


                                                               
              
           Condensed Unaudited Interim Consolidated Statements of Earnings




                                                                      
         (in thousands of US dollars, except share and per share data)






                                                 
       
            Three months                                                 Six months             
       
            Three months             Six months

                                                   
       
              ended                               
              
                ended                 
       
              ended      
     
              ended

                                                 
       
            February 28,                                                February 28,            
       
            February 28,            February 28,

                                                                       2019                                                        2019                                  2018                     2018






     
                Sales                                 $
              73,927                                         $
              143,128                     $
             64,722       $
             128,113






     Cost of sales (1)                                              29,062                                                      57,959                                25,326                   48,615


      Selling and administrative                                     25,474                                                      51,849                                24,916                   48,109


      Net research and development                                   12,216                                                      27,440                                13,087                   24,339


      Depreciation of property,
       plant and equipment                                            1,390                                                       2,819                                 1,263                    2,417


      Amortization of intangible
       assets                                                         2,130                                                       5,070                                 3,056                    4,175


      Change in fair value of cash
       contingent consideration                                
              ?                                               
              ?                                (561)                   (716)


      Interest and other (income)
       expense                                                      (1,514)                                                    (1,137)                                  334                      672


      Foreign exchange (gain) loss                                      416                                                         201                                   (8)                 (1,226)


      Share in net loss of an
       associate                                               
              ?                                               
              ?                                2,080                    2,080


      Gain on the deemed disposal
       of the investment in an
       associate                                               
              ?                                               
              ?                              (2,080)                 (2,080)



                   Earnings (loss) before income
                    taxes                                             4,753                                                     (1,073)                              (2,691)                   1,728




                   Income taxes                                       (440)                                                      1,201                                 2,321                    4,061





                   Net earnings (loss) for the
                    period                                            5,193                                                     (2,274)                              (5,012)                 (2,333)


                   Net loss for the period
                    attributable to non-
                    controlling interest                       
              ?                                               
              ?                                (352)                   (352)





                   Net earnings (loss) for the
                    period attributable to
                    parent interest                       $
              5,193                                         $
              (2,274)                   $
             (4,660)      $
             (1,981)





                   Basic and diluted net
                    earnings (loss) attributable
                    to parent interest per share           $
              0.09                                          $
              (0.04)                    $
             (0.08)       $
             (0.04)




                   Basic weighted average number
                    of shares outstanding
                    (000's)                                          55,343                                                      55,263                                54,975                   54,890




                   Diluted weighted average
                    number of shares outstanding
                    (000's)                                          56,160                                                      55,263                                54,975                   54,890




              (1)              The cost of sales is exclusive
                                  of depreciation and
                                  amortization, shown separately.


                                                                                           
              
                EXFO Inc.


                                                           
          
                Condensed Unaudited Interim Consolidated Statements of Comprehensive Income (Loss)




                                                                                        
              (in thousands of US dollars)






                                                      
       
            Three months                                                     Six months                    
       
          Three months    
       
           Six months

                                                        
        
             ended                                   
              
                ended                        
       
            ended         
       
            ended

                                                      
       
            February 28,                                                    February 28,                   
       
          February 28,               February 28,

                                                                           2019                                                             2019                                        2018                       2018





                  Net earnings (loss) for the period           $
             5,193                                              $
              (2,274)                          $
            (5,012)          $
           (2,333)


     Other comprehensive income (loss),
      net of income taxes


     Items that may be reclassified
      subsequently to net earnings


     Foreign currency translation
      adjustment                                                          1,807                                                          (1,549)                                      2,286                    (1,844)


     Unrealized gains/losses on forward
      exchange contracts                                                    496                                                            (191)                                         39                      (485)


     Reclassification of realized gains/
      losses on forward exchange
      contracts in net earnings                                             210                                                              301                                       (225)                     (608)


     Deferred income taxes on gains/
      losses on forward exchange
      contracts                                                           (167)                                                              42                                          48                        263



     Other comprehensive income (loss)                                    2,346                                                          (1,397)                                      2,148                    (2,674)





                  Comprehensive income (loss) for the
                   period                                                 7,539                                                          (3,671)                                    (2,864)                   (5,007)




                  Comprehensive loss for the period
                   attributable to non-controlling
                   interest                                        
              ?                                                    
              ?                                      (352)                     (352)





                  Comprehensive income (loss) for the
                   period attributable to parent
                   interest                                    $
             7,539                                              $
              (3,671)                          $
            (2,512)          $
           (4,655)


                                                                                                                                        
              
                EXFO Inc.


                                                                                                               
           
     Condensed Unaudited Interim Consolidated Statements of Changes in Shareholders' Equity




                                                                                                                                     
              (in thousands of US dollars)




                                                   
             
     Six months ended February 28, 2018



                                                      Share                                       Contributed surplus                                      Retained earnings                                    Accumulated other comprehensive loss        Non-controlling interest    
       
             Total

                                                     capital                                                                                                                                                                                                                                  shareholders' equity





      Balance as at September 1, 2017         $
          90,411                                        $
              18,184                                     $
              127,160                                                     $
              (38,965) 
     $                
              ?           $
              196,790


      Reclassification of stock-based
       compensation costs                              1,273                                                   (1,273)                                           
              ?                                                            
              ?                    
              ?     
                           ?



     Stock-based compensation costs             
             ?                                                      856                                            
              ?                                                            
              ?                    
              ?                           856



     Business combination                       
             ?                                             
              ?                                           
              ?                                                           
               ?                         (3,662)                       (3,662)


      Acquisition of non-controlling interest    
             ?                                             
              ?                                                  (352)                                                            
              ?                           4,014                          3,662



     Net loss for the period                    
             ?                                             
              ?                                                (1,981)                                                            
              ?                           (352)                       (2,333)



     Other comprehensive loss


      Foreign currency translation adjustment    
             ?                                             
              ?                                           
              ?                                                                 (1,844)                    
              ?                       (1,844)


      Changes in unrealized gains/losses on
       forward exchange contracts, net of
       deferred income taxes of $263             
             ?                                             
              ?                                           
              ?                                                                   (830)                    
              ?                         (830)





      Comprehensive loss for the period                                                                                                                                                                                                                                                                    (5,007)





      Balance as at February 28, 2018         $
          91,684                                        $
              17,767                                     $
              124,827                                                     $
              (41,639) 
     $                
              ?           $
              192,639


                                          
           
       Six months ended February 28, 2019



                                               Share                                     Contributed surplus  Retained earnings   Accumulated other comprehensive loss    
     
             Total

                                              capital                                                                                                                         shareholders' equity





      Balance as at September 1, 2018  $
          91,937                                      $
              18,428 $
              114,906                    $
              (47,350)         $
              177,921



     Adoption of IFRS 9                    
           ?                                           
              ?              (253)                           
              ?                       (253)



      Adjusted balance as at September
       1, 2018                                 91,937                                                  18,428             114,653                                (47,350)                     177,668


      Reclassification of stock-based
       compensation costs                       1,067                                                 (1,067)       
              ?                           
              ?                
              ?


      Redemption of share capital               (126)                                                     21        
              ?                           
              ?                       (105)


      Stock-based compensation costs        
           ?                                                    895        
              ?                           
              ?                         895


      Net loss for the period               
           ?                                           
              ?            (2,274)                           
              ?                     (2,274)


      Other comprehensive income
       (loss)


      Foreign currency translation
       adjustment                           
           ?                                           
              ?       
              ?                                (1,549)                     (1,549)


      Changes in unrealized gains/
       losses on forward exchange
       contracts, net of deferred
       income taxes of $42                  
           ?                                           
              ?       
              ?                                    152                          152





      Total comprehensive loss for the
       period                                                                                                                                                                              (3,671)




      Balance as at February 28, 2019  $
          92,878                                      $
              18,277 $
              112,379                    $
              (48,747)         $
              174,787


                                                                                          
              
                EXFO Inc.


                                                                   
             
            Condensed Unaudited Interim Consolidated Statements of Cash Flows




                                                                                       
              (in thousands of US dollars)






                                                           
       
            Three months                                                  Six months        
       
            Three months              Six months

                                                             
       
              ended                                
              
                ended            
       
              ended      
     
               ended

                                                           
       
            February 28,                                                 February 28,       
       
            February 28,             February 28,

                                                                                 2019                                                         2019                             2018                      2018





                   Cash flows from operating activities


      Net earnings (loss) for the period                             $
             5,193                                          $
              (2,274)              $
             (5,012)      $
              (2,333)


      Add (deduct) items not affecting cash


      Stock-based compensation costs                                              461                                                          879                              438                       840



     Depreciation and amortization                                             3,520                                                        7,889                            4,319                     6,592


      Gain on disposal of capital assets                                      (1,732)                                                     (1,732)                    
              ?             
              ?



     Write-off of capital assets                                                 261                                                          261                              124                       248


      Change in fair value of cash contingent
       consideration                                                     
              ?                                                
              ?                           (561)                    (716)



     Deferred revenue                                                          6,021                                                        9,943                            3,016                     2,234



     Deferred income taxes                                                   (2,124)                                                     (2,153)                           2,384                     2,144


      Share in net loss of an associate                                  
              ?                                                
              ?                           2,080                     2,080


      Gain on deemed disposal of the
       investment in an associate                                        
              ?                                                
              ?                         (2,080)                  (2,080)


      Changes in foreign exchange gain/loss                                        76                                                        (453)                             611                       364



                                                                               11,676                                                       12,360                            5,319                     9,373


      Changes in non-cash operating items



     Accounts receivable                                                       9,871                                                        5,819                            4,255                     5,340



     Income taxes and tax credits                                              1,031                                                           33                          (3,018)                  (2,959)



     Inventories                                                                 999                                                        (362)                             779                   (1,174)



     Prepaid expenses                                                             22                                                          205                            (129)                      189



     Other assets                                                              (327)                                                       (339)                           (528)                    (524)


      Accounts payable, accrued liabilities
       and provisions                                                         (3,114)                                                          18                            (447)                  (1,816)



     Other liabilities                                                       (1,470)                                                     (1,521)                              22                       210



                                                                               18,688                                                       16,213                            6,253                     8,639



                   Cash flows from investing activities


      Additions to short-term investments                                       (292)                                                       (292)                           (248)                    (482)


      Proceeds from disposal of short-term
       investments                                                       
              ?                                                         342                              234                       234



     Purchases of capital assets                                             (1,797)                                                     (4,679)                         (2,258)                  (4,249)


      Proceeds from disposal of capital assets                                  3,318                                                        3,318                     
              ?             
              ?



     Investment in an associate                                         
              ?                                                
              ?                         (2,219)                 (12,530)


      Business combinations, net of cash
       acquired                                                          
              ?                                                
              ?                         (9,580)                 (19,120)



                                                                                1,229                                                      (1,311)                        (14,071)                 (36,147)



                   Cash flows from financing activities



     Bank loan                                                              (12,501)                                                     (1,244)                           2,064                     2,066



     Repayment of long-term debt                                               (735)                                                     (1,452)                           (200)                    (270)



     Redemption of share capital                                               (105)                                                       (105)                    
              ?             
              ?



                                                                             (13,341)                                                     (2,801)                           1,864                     1,796



                   Effect of foreign exchange rate changes
                    on cash                                                       100                                                         (96)                              56                     (170)





                   Change in cash during the period                             6,676                                                       12,005                          (5,898)                 (25,882)


                   Cash - Beginning of the period                              18,087                                                       12,758                           18,451                    38,435



                   Cash - End of the period                         $
             24,763                                           $
              24,763                $
             12,553        $
              12,553

EXFO-F

View original content:http://www.prnewswire.com/news-releases/exfo-reports-second-quarter-results-for-fiscal-2019-300823365.html

SOURCE EXFO Inc.