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EXFO's fourth-quarter and full-year results disappoint; shares sink

Company officials pledged to do a better job on execution in 2019
Symbol of mobile networks.
EXFO develops smarter test, monitoring and analytics solutions for fixed and mobile network operators

EXFO Inc (TSX:EXF) reported disappointing fiscal fourth-quarter and full-year results Friday, swinging from a profit to a loss due to delays in getting deals done and a challenging market environment.

The Quebec City company said that in the fourth quarter of fiscal 2018, the net loss amounted to US$4 million, or US$0.07 per share, compared to net earnings of US$0.8 million, or US$0.02 per share, in the fourth quarter of 2017.

For fiscal 2018, the net loss totaled US$11.9 million, or US$0.22 per share, compared to net earnings of US$0.9 million, or US$0.02 per share, in 2017.

"I am disappointed with our financial results in 2018 due to deal delays and the current market environment," said EXFO CEO Philippe Morin.

Shares of EXFO in Canada dropped 16.38% to C$3.88. In the US, they dropped 15.73% to US$3.

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Sales in the fourth quarter of fiscal 2018 reached US$69.2 million, below the consensus expectation of US$76.57 million although it was higher than the US$63 million in the fourth quarter of 2017.

Annual sales improved 10.8% to US$269.5 million in fiscal 2018 from US$243.3 million in 2017.

The loss in the fourth quarter of 2018 included net expenses totaling US$6 .6 million, US$1.7 million in after-tax amortization of intangible assets, and US$3.4 million in after-tax restructuring changes among others.

The net loss in 2018 included net expenses totaling US$17.1 million, US$9.4 million in after-tax amortization of intangible assets, US$1.7 million in stock-based compensation costs, and US$3.4 million in after-tax restructuring charges. 

Morin said they "have planned significant improvements for 2019 with an increased focus on execution."

EXFO closed two acquisitions in fiscal 2018: Astellia, a leading provider of mobile network and subscriber intelligence, and Yenista Optics, a supplier of advanced optical test equipment for the R&D and manufacturing markets.

The Quebec City, Canada, company develops smarter test, monitoring and analytics solutions for fixed and mobile network operators, webscale companies and equipment manufacturers in the global communications industry.

Reporting by Rene Pastor, contactable on [email protected]

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