EXFO accelerates integration plan and improves profitability

QUEBEC CITY, CANADA, August 21, 2018 — EXFO Inc. (NASDAQ: EXFO, TSX: EXF) announced today an accelerated integration plan for its newly acquired monitoring and analytics technologies, while reducing its cost structure to strengthen profitable growth.

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.”

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 more than 2,000 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 guarantees 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, as well as 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; our ability to successfully integrate businesses that we acquire; 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.

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For more information

Vance Oliver
Director, Investor Relations
(418) 683-0913, Ext. 23733
vance.oliver@exfo.com