FARO Reports First Quarter 2014 Sales Growth of 12%

LAKE MARY, Fla., April 29, 2014 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the first quarter ended March 29, 2014.  Sales in the first quarter of 2014 increased 12.2% to $73.4 million, from $65.4 million in the first quarter of 2013.  The Company reported net income increased to $5.0 million, or $0.29 per share, in the first quarter of 2014, from $4.6 million, or $0.27 per share, in the comparable period in 2013.

New order bookings for the first quarter of 2014 increased 9.8% to $70.9 million, from $64.6 million in the first quarter of 2013.

First quarter gross margin at 54.6%, was lower than 56.3% in the first quarter of 2013. This was primarily driven by a write-down of laser scanner demonstration and service loaner inventory that became obsolete through the highly successful release of the Focus3D and X330/X130 laser scanners.  Partially offsetting this charge was favorable pricing and related gross margin arising from the Tracker and the new Laser Scanner product lines.

The Company's operating margin for the first quarter was 9.5%, compared with 8.7% in the first quarter of 2013.  Operating margin was favorably impacted by top line sales growth, solid cost management, and timing of planned R&D expenditures.

"The first quarter was a strong start to the new fiscal year, as our results were in-line with our internal expectations," stated Jay Freeland, FARO's President & CEO.  "Customer demand in all three regions was solid, driving double-digit sales growth in the Americas and Asia and an improving European market where our orders achieved double-digit growth.  While we continue to exercise prudent cost control across all departments, in 2014 we are accelerating our investments in R&D, creating new products for our early stage markets such as Architecture, Engineering and Construction and Forensics as well as our primary markets such as Aerospace, Automotive, and Heavy Industrial.  We remain diligent in developing new ways to disrupt and transform the marketplace."

This press release contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 that are subject to risks and uncertainties, such as statements about FARO's growth, demand for and customer acceptance of FARO's products, anticipated improvement in the markets in which FARO operates, and FARO's product development and product launches. Statements that are not historical facts or that describe the Company's plans, objectives, projections, expectations, assumptions, strategies, or goals are forward-looking statements. In addition, words such as "continue," "are," "remain," "will," and similar expressions or discussions of FARO's plans or other intentions identify forward-looking statements. Forward-looking statements are not guarantees of future performance and are subject to various known and unknown risks, uncertainties, and other factors that may cause actual results, performances, or achievements to differ materially from future results, performances, or achievements expressed or implied by such forward-looking statements. Consequently, undue reliance should not be placed on these forward-looking statements.

Factors that could cause actual results to differ materially from what is expressed or forecasted in such forward-looking statements include, but are not limited to:

  • development by others of new or improved products, processes or technologies that make the Company's products less competitive or obsolete;
  • the Company's inability to maintain its technological advantage by developing new products and enhancing its existing products;
  • declines or other adverse changes, or lack of improvement, in industries that the Company serves or the domestic and international economies in the regions of the world where the Company operates and other general economic, business, and financial conditions; and
  • other risks detailed in Part I, Item 1A. Risk Factors in the Company's Annual Report on Form 10-K for the year ended December 31, 2013.

Forward-looking statements in this release represent the Company's judgment as of the date of this release. The Company undertakes no obligation to update publicly any forward-looking statements, whether as a result of new information, future events, or otherwise, unless otherwise required by law.

About FARO
FARO is the world's most trusted source for 3D measurement technology. The Company develops and markets computer-aided measurement and imaging devices and software. Technology from FARO permits high-precision 3D measurement, imaging and comparison of parts and complex structures within production and quality assurance processes. The devices are used for inspecting components and assemblies, rapid prototyping, documenting large volume spaces or structures in 3D, surveying and construction, as well as for investigation and reconstruction of accident sites or crime scenes.

Approximately 15,000 customers are operating more than 30,000 installations of FARO's systems, worldwide. The Company's global headquarters is located in Lake Mary, FL; its European regional headquarters in Stuttgart, Germany; and its Asia Pacific regional headquarters in Singapore. FARO has other offices in the United States, Canada, Mexico, Brazil, Germany, the United Kingdom, France, Spain, Italy, Poland, Turkey, the Netherlands, Switzerland, Portugal, India, China, Malaysia, Vietnam, Thailand, South Korea and Japan.

More information is available at http://www.faro.com.

Financial tables to follow:











FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)








Three Months Ended 











(in thousands, except share and per share data)


March 29, 2014


March 30, 2013

SALES





Product


$          59,822


$          52,482

Service


13,552


12,888

Total sales


73,374


65,370

COST OF SALES 





Product


25,153


21,339

Service


8,138


7,206

Total cost of sales (exclusive of depreciation and amortization, shown separately below)


33,291


28,545

GROSS PROFIT


40,083


36,825






OPERATING EXPENSES:





Selling 


17,433


16,650

General and administrative


8,413


7,515

Depreciation and amortization


1,847


1,833

Research and development


5,430


5,125

Total operating expenses


33,123


31,123

INCOME FROM OPERATIONS


6,960


5,702

OTHER (INCOME) EXPENSE





Interest income


(17)


(16)

Other expense, net


160


115

Interest expense


-


1

INCOME BEFORE INCOME TAX  EXPENSE 


6,817


5,602

INCOME TAX EXPENSE


1,841


1,028

NET INCOME 


$            4,976


$            4,574

NET INCOME PER SHARE - BASIC


$              0.29


$              0.27






NET INCOME PER SHARE - DILUTED


$              0.29


$              0.27






Weighted average shares - Basic


17,205,892


17,009,773






Weighted average shares - Diluted


17,364,373


17,176,876

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS













March 29,





2014


December 31,

(in thousands, except share data)


(unaudited)


2013

ASSETS





Current assets:





Cash and cash equivalents


$   122,716


$      124,630

Short-term investments


64,994


64,994

Accounts receivable, net


64,739


66,309

Inventories, net


50,238


48,940

Deferred income taxes, net


5,082


4,601

Prepaid expenses and other current assets


15,183


14,645

    Total current assets


322,952


324,119

Property and equipment:





Machinery and equipment


38,079


36,924

Furniture and fixtures


7,072


6,888

Leasehold improvements


12,307


11,765

    Property and equipment at cost


57,458


55,577

Less: accumulated depreciation and amortization


(40,516)


(39,126)

    Property and equipment, net


16,942


16,451

Goodwill


19,336


19,358

Intangible assets, net


8,273


8,112

Service inventory


20,345


19,033

Deferred income taxes, net


4,415


4,423

Total assets


$   392,263


$      391,496

LIABILITIES AND SHAREHOLDERS' EQUITY





Current liabilities:





Accounts payable


$    10,381


$        14,881

Accrued liabilities


18,533


20,133

Income taxes payable


31


1,690

Current portion of unearned service revenues


22,404


21,331

Customer deposits


2,289


2,910

Current portion of obligations under capital leases


6


8

      Total current liabilities


53,644


60,953

Unearned service revenues - less current portion


13,608


13,414

Deferred income tax liability, net


1,233


1,171

Obligations under capital leases - less current portion


8


8

Total liabilities


68,493


75,546

Commitments and contingencies





Shareholders' equity:





Common stock - par value $.001, 50,000,000 shares authorized; 17,913,793 and 17,868,372 issued; 17,233,558 and 17,188,137 outstanding, respectively


18


18

Additional paid-in capital


194,797


191,874

Retained earnings


130,845


125,867

Accumulated other comprehensive income


7,185


7,266

Common stock in treasury, at cost - 680,235 shares


(9,075)


(9,075)

Total shareholders' equity


323,770


315,950

Total liabilities and shareholders' equity


$   392,263


$      391,496











 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








Three Months Ended






(in thousands)


March 29, 2014


March 30, 2013

CASH FLOWS FROM:





OPERATING ACTIVITIES:





Net income 


$             4,976


$             4,574

Adjustments to reconcile net income to net cash (used in) provided by





    operating activities:





Depreciation and amortization


1,847


1,833

Compensation for stock options and restricted stock units


1,246


1,018

(Net recovery of) provision for bad debts


(120)


274

Deferred income tax (benefit) expense


(410)


1,162

Change in operating assets and liabilities:





Decrease (increase) in:





   Accounts receivable


1,869


7,541

   Inventories, net 


(2,541)


(1,299)

   Prepaid expenses and other current assets


(539)


(2,069)

   Income tax benefit from exercise of stock options


(58)


(808)

(Decrease) increase in:





   Accounts payable and accrued liabilities


(6,103)


(676)

   Income taxes payable


(1,619)


(1,658)

   Customer deposits


(645)


5

   Unearned service revenues


1,274


376

        Net cash (used in) provided by operating activities


(823)


10,273






INVESTING ACTIVITIES:





Purchases of property and equipment


(2,124)


(256)

Payments for intangible assets


(419)


(494)

        Net cash used in investing activities


(2,543)


(750)






 FINANCING ACTIVITIES:





Payments on capital leases


(50)


(63)

Income tax benefit from exercise of stock options


58


808

Proceeds from issuance of stock, net


1,619


3,049

        Net cash provided by financing activities


1,627


3,794






EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(175)


(1,952)






(DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS


(1,914)


11,365






CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


124,630


93,233






CASH AND CASH EQUIVALENTS, END OF PERIOD


$         122,716


$         104,598

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)








Three Months Ended 

(in thousands)


March 29, 2014


March 30, 2013











Net income


$               4,976


$                4,574

Currency translation adjustments, net of tax


(81)


(3,429)

Comprehensive income


$               4,895


$                1,145






 

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"Safe Harbor" Statement under the Private Securities Litigation Reform Act of 1995: Statements in this press release regarding FARO Technologies, Inc.'s business which are not historical facts are "forward-looking statements" that involve risks and uncertainties. For a discussion of such risks and uncertainties, which could cause actual results to differ from those contained in the forward-looking statements, see "Risk Factors" in the Company's Annual Report or Form 10-K for the most recently ended fiscal year.

 

SOURCE FARO Technologies, Inc.



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