EXFO accelerates integration plan and improves profitability

EXFO (NASDAQ:EXFO;TSX:EXF) announced that the company is accelerating its integration plan for its newly acquired monitoring and analytics technologies while reducing its cost structure to strengthen profitable growth.

The company said that as part of improving its profitability, EXFO will simplify its corporate structure and optimise resources while reducing its workforce by less than five percent.

As quoted in the press release:

Accelerating technology and systems integration. The company will fast-track the integration of Astellia’s and Ontology’s solutions with EXFO’s technologies on a common monitoring and analytics platform. This highly differentiated platform, with big data capabilities, will address critical visibility and quality of experience issues for communications service providers as they invest in the digital transformation of their networks.

Improving profitability.

EXFO will also simplify its corporate structure, optimize resources and increase efficiency as the company converges toward fewer sites and reduces its workforce by less than 5%. The company, however, will continue to invest in the business areas and product lines affected by the reorganization.

These initiatives will allow EXFO to focus more efficiently on high-growth vectors in the test, monitoring and analytics markets like fiber, network virtualization and 5G deployments, as well as reallocate selected resources to better serve customers in key geographic regions.

Once this reorganization is completed, EXFO intends to benefit from annualized cost savings of US$10.5 million. The company will incur US$8.0 million in restructuring costs, including US$6.0 million in severance expenses. From total restructuring expenses, US$3.4 million will be recorded in the fourth quarter of fiscal 2018, which was not reflected in previously issued guidance. Remaining restructuring costs will mostly be incurred in the first half of 2019.

“Although we have made difficult decisions, I am convinced they will provide EXFO with a greater focus and differentiated portfolio to move the company ahead of the market,” said EXFO’s CEO Philippe Morin. “Communications service providers are embarking on massive transformations of their fiber and 5G network infrastructures, while increasing investments in analytics, virtualization and IoT solutions. Through this reorganization, we are putting the right resources in the right places to increase EXFO’s efficiency, agility and value to customers, while improving profitable growth.”

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