FARO Reports Second Quarter 2012 Sales and Net Income Growth of 11.8%

31 Jul, 2012, 16:02 ET from FARO Technologies, Inc.

LAKE MARY, Fla., July 31, 2012 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the second quarter ended June 30, 2012.  Sales in the second quarter of 2012 increased 11.8% to $66.8 million, from $59.7 million in the second quarter of 2011.  The Company reported net income increased by 11.8% to $4.7 million, or $0.28 per share, in the second quarter of 2012, from $4.2 million, or $0.25 per share, in the second quarter of 2011.

(Logo: http://photos.prnewswire.com/prnh/20110415/MM84316LOGO )

New order bookings for the second quarter of 2012 were $71.0 million, an increase of 13.6% from $62.5 million in the second quarter of 2011. 

"We had strong results in Asia and the Americas with sales increasing by 28.8% and 17.4%, respectively, over the second quarter of last year.  Despite a sluggish and uncertain European economy, sales in Europe increased 9.4% when measured in Euros. However, due to the strengthening of the US dollar, European sales showed a modest decline of 2.9% when translated to US dollars," stated Jay Freeland, FARO's President and CEO.  "Net income grew at the same pace as revenue even after absorbing considerable expenses related to litigation, the completion of FCPA monitoring activities and the unfavorable effect of exchange rates."    

Gross margin for the second quarter of 2012 was 55.5%, compared to 56.1% in the second quarter of 2011 and reflects lower average selling prices resulting from promotions to reduce inventory in preparation for new product introductions and an increase in sales of the Laser Scanner products sold through our distributor channel.

The Company's operating margin for the second quarter increased to 10.3%, compared to 9.6% in the second quarter of 2011 and included approximately $1.2 million of professional fees related to the final review by the FCPA Monitor and an increase in patent litigation expenses of $0.4 million.  The Company does not expect to incur further expenses related to FCPA matter going forward.

"In the second half of the year, we expect continuing economic headwinds in Europe that could spill over to other regions.  Accordingly, we will be vigilant in cost containment while continuing to invest in product development and driving aggressive sales and marketing activities," Freeland concluded.

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 demand for its products, and its future operating results and financial condition. 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 "intend," "believe," "will," "expect" 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 obsolete or less competitive;
  • production delays caused by shortages of raw materials incorporated in the Company's products;
  • the cyclical nature of the industries of the Company's customers and material adverse changes in customers' access to liquidity and capital;
  • 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 financing conditions;
  • risks associated with international operations, such as fluctuations in currency exchange rates, difficulties in staffing and managing foreign operations, political and economic instability, compliance with import and export regulations, and the burdens and potential exposure of complying with a wide variety of U.S. and foreign laws and labor practices;
  • 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, 2011.

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.

About FARO

With over 30,000 installations and 15,000 customers globally, FARO Technologies, Inc. designs, develops, and markets portable, computerized measurement and imaging devices and software used to create digital models -- or to perform evaluations against an existing model -- for anything requiring highly detailed 3-D measurements, including part and assembly inspection, factory planning and asset documentation, as well as specialized applications ranging from surveying, recreating accident sites and crime scenes to digitally preserving historical sites.

FARO's technology increases productivity by dramatically reducing the amount of on-site measuring time, and the various industry-specific software packages enable users to process and present their results quickly and more effectively.

Principal products include the world's best-selling portable measurement arm -- the FaroArm; the world's best-selling laser tracker -- the FARO Laser Tracker X and Xi; the FARO Laser ScanArm; FARO Focus 3D Laser Scanner; the FARO Gage, Gage-PLUS and PowerGAGE; and the CAM2 Q family of advanced CAD-based measurement and reporting software. FARO Technologies is ISO-9001 certified and ISO-17025 laboratory registered.

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 30,

December 31,

2012

2011

(in thousands, except share data)

(Unaudited)

ASSETS

Current Assets:

  Cash and cash equivalents

$ 74,748

$ 64,540

  Short-term investments

64,989

64,997

  Accounts receivable, net

53,246

57,512

  Inventories, net

54,057

49,934

  Deferred income taxes, net

6,190

5,297

  Prepaid expenses and other current assets

10,617

9,207

    Total current assets

263,847

251,487

Property and Equipment:

  Machinery and equipment

30,587

29,171

  Furniture and fixtures

6,197

5,963

  Leasehold improvements

10,728

10,233

       Property and equipment at cost

47,512

45,367

Less: accumulated depreciation and amortization

(31,373)

(29,134)

       Property and equipment, net

16,139

16,233

Goodwill

18,339

18,610

Intangible assets, net

6,670

6,849

Service inventory

18,160

17,316

Deferred income taxes, net

2,240

2,296

Total Assets

$ 325,395

$ 312,791

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

  Accounts payable

$ 9,295

$ 13,396

  Accrued liabilities

15,674

18,076

  Income taxes payable

2,448

2,682

  Current portion of unearned service revenues

16,751

15,638

  Customer deposits

4,339

4,072

  Current portion of obligations under capital leases

38

84

       Total current liabilities

48,545

53,948

Unearned service revenues - less current portion

9,232

9,540

Deferred tax liability, net

1,279

1,148

Obligations under capital leases - less current portion

65

257

Total Liabilities

59,121

64,893

Shareholders' Equity:

  Common stock - par value $.001, 50,000,000 shares authorized; 17,626,558   and 17,381,110 issued; 16,946,323 and 16,700,875 outstanding, respectively

18

17

  Additional paid-in capital

178,361

169,780

  Retained earnings

92,844

81,360

  Accumulated other comprehensive income

4,126

5,816

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

(9,075)

(9,075)

Total Shareholders' Equity

266,274

247,898

Total Liabilities and Shareholders' Equity

$ 325,395

$ 312,791

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended

Six Months Ended

(in thousands, except share and per share data)

June 30, 2012

July 2, 2011

June 30, 2012

July 2, 2011

SALES

Product

$ 55,432

$ 49,692

$ 109,856

$ 92,650

Service

11,330

10,019

22,135

19,627

Total Sales

66,762

59,711

131,991

112,277

COST OF SALES

Product

22,320

19,349

42,826

34,922

Service

7,382

6,846

14,919

13,567

Total Cost of Sales (exclusive of depreciation and amortization, shown separately below)

29,702

26,195

57,745

48,489

GROSS PROFIT

37,060

33,516

74,246

63,788

OPERATING EXPENSES:

Selling

15,841

15,309

31,879

29,461

General and administrative

8,134

6,917

14,762

13,507

Depreciation and amortization

1,689

1,722

3,368

3,336

Research and development

4,525

3,814

8,933

7,446

Total operating expenses

30,189

27,762

58,942

53,750

INCOME FROM OPERATIONS

6,871

5,754

15,304

10,038

OTHER (INCOME) EXPENSE

Interest income

(20)

(39)

(121)

(65)

Other (income) expense, net

401

124

261

(5)

Interest expense

7

2

20

31

INCOME BEFORE INCOME TAX EXPENSE

6,483

5,667

15,144

10,077

INCOME TAX EXPENSE

1,749

1,434

3,660

2,601

NET INCOME

$ 4,734

$ 4,233

$ 11,484

$ 7,476

NET INCOME PER SHARE - BASIC

$ 0.28

$ 0.26

$ 0.68

$ 0.46

NET INCOME PER SHARE - DILUTED

$ 0.28

$ 0.25

$ 0.67

$ 0.45

Weighted average shares - Basic

16,921,012

16,448,229

16,861,221

16,349,190

Weighted average shares - Diluted

17,140,115

16,845,877

17,157,185

16,724,019

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended

Six Months Ended

(in thousands)

June 30, 2012

July 2, 2011

June 30, 2012

July 2, 2011

Net income

$ 4,734

$ 4,233

$ 11,484

$ 7,476

Currency translation adjustments

(3,022)

2,771

(1,688)

5,342

Comprehensive income

$ 1,712

$ 7,004

$ 9,796

$ 12,818

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended

(in thousands)

June 30, 2012

July 2, 2011

CASH FLOWS FROM:

OPERATING ACTIVITIES:

  Net income

$ 11,484

$ 7,476

  Adjustments to reconcile net income to net cash provided by

  operating activities:

    Depreciation and amortization

3,368

3,336

    Compensation for stock options and restricted stock units

1,866

1,366

    Provision for (net recovery of) bad debts

(84)

1,082

    Deferred income tax benefit

(744)

(16)

  Change in operating assets and liabilities:

     Decrease (increase) in:

    Accounts receivable

3,535

5,920

    Inventories, net

(6,173)

(14,773)

    Prepaid expenses and other current assets

(1,569)

(2,032)

    Income tax benefit from exercise of stock options

(1,114)

(1,013)

  Increase (decrease) in:

    Accounts payable and accrued liabilities

(6,313)

44

    Income taxes payable

933

197

    Customer deposits

317

(1,723)

    Unearned service revenues

1,191

2,200

             Net cash provided by operating activities

6,697

2,064

INVESTING ACTIVITIES:

   Purchases of property and equipment

(2,533)

(2,534)

   Payments for intangible assets

(443)

(425)

             Net cash used in investing activities

(2,976)

(2,959)

FINANCING ACTIVITIES:

   Payments on capital leases

(98)

(117)

   Income tax benefit from exercise of stock options

1,114

1,013

   Proceeds from issuance of stock, net

5,601

6,875

            Net cash provided by financing activities

6,617

7,771

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS

(130)

(259)

INCREASE IN CASH AND CASH EQUIVALENTS

10,208

6,617

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

64,540

50,722

CASH AND CASH EQUIVALENTS, END OF PERIOD

$ 74,748

$ 57,339

 

SOURCE FARO Technologies, Inc.



RELATED LINKS

http://www.faro.com