FARO Reports Second Quarter 2013 Results

Jul 30, 2013, 16:05 ET from FARO Technologies, Inc.

LAKE MARY, Fla., July 30, 2013 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the second quarter ended June 29, 2013.  Sales in the second quarter of 2013 increased to $68.3 million, from $66.8 million in the second quarter of 2012.  The Company reported net income of $3.6 million, or $0.21 per share, in the second quarter of 2013, compared to $4.7 million, or $0.28 per share, in the second quarter of 2012.

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New order bookings for the second quarter of 2013 were $66.7 million, a decrease of 6.1% from $71.0 million in the second quarter of 2012. 

Gross margin for the second quarter of 2013 was 54.0%, compared to 55.5% in the second quarter of 2012.  Gross margins were slightly lower primarily due to lower average selling prices for certain metrology products.

The Company's operating margin for the second quarter decreased to 8.0%, compared to 10.3% in the second quarter of 2012. Operating expenses increased due to staffing costs and related expenses of $1.8 million primarily in our sales and marketing and research and development organizations, offset by lower legal and professional fees of approximately $1.0 million.

"Our results in the second quarter were impacted by ongoing economic softness in Europe and Asia.  While interest in FARO products remains strong, many customers have deferred purchase decisions in light of economic uncertainty," stated Jay Freeland, FARO's President and CEO.  "The Americas region continues to show signs of strength, generating double-digit sales growth in the quarter and our product development pipeline remains robust.  To capitalize on anticipated improvement in our markets, we added staff to our sales and research and development organizations, which adversely impacted our second quarter results but positions the Company well looking forward.  We expect the second half of 2013 should provide an opportunity for improvement driven by the global increase in new sales account managers.  However, if the overall macroeconomic environment remains stagnant for the rest of 2013, our markets may remain under some pressure."   

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, anticipated improvement in the markets in which it operates, its product development pipeline, its ability to capitalize on market conditions, 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;
  • 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, 2012.

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 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 offices in Brazil, Mexico, United Kingdom, France, Spain, Italy, Poland, Netherlands, India, China, Malaysia, Vietnam, Thailand and Japan.

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

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)

Three Months Ended 

Six Months Ended 

(in thousands, except share data)

June 29, 2013

June 30, 2012

June 29, 2013

June 30, 2012

SALES

Product

$        55,174

$      55,432

$       107,656

$      109,856

Service

13,155

11,330

26,043

22,135

Total Sales

68,329

66,762

133,699

131,991

COST OF SALES 

Product

22,921

22,320

44,260

42,826

Service

8,482

7,382

15,688

14,919

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

31,403

29,702

59,948

57,745

GROSS PROFIT

36,926

37,060

73,751

74,246

OPERATING EXPENSES:

Selling 

16,716

15,841

33,366

31,879

General and administrative

7,826

8,134

15,341

14,762

Depreciation and amortization

1,736

1,689

3,569

3,368

Research and development

5,162

4,525

10,287

8,933

Total operating expenses

31,440

30,189

62,563

58,942

INCOME FROM OPERATIONS

5,486

6,871

11,188

15,304

OTHER (INCOME) EXPENSE

Interest income

(19)

(20)

(35)

(121)

Other expense, net

504

401

619

261

Interest expense

0

7

1

20

INCOME BEFORE INCOME TAX    EXPENSE 

5,001

6,483

10,603

15,144

INCOME TAX EXPENSE

1,370

1,749

2,398

3,660

NET INCOME 

$          3,631

$        4,734

$          8,205

$        11,484

NET INCOME PER SHARE - BASIC

$            0.21

$          0.28

$            0.48

$            0.68

NET INCOME PER SHARE -   DILUTED

$            0.21

$          0.28

$            0.48

$           0.67

Weighted average shares - Basic

17,097,973

16,921,012

17,054,354

16,861,221

Weighted average shares -   Diluted

17,173,015

17,140,115

17,177,748

17,157,185

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

June 29,

December 31,

2013

2012

(in thousands, except share data)

(unaudited)

ASSETS

Current Assets:

Cash and cash equivalents

$          111,308

$         93,233

Short-term investments

64,993

64,990

Accounts receivable, net

51,717

62,559

Inventories, net

47,781

48,894

Deferred income taxes, net

5,925

7,216

Prepaid expenses and other current assets

11,823

11,186

Total current assets

293,547

288,078

Property and Equipment:

Machinery and equipment

33,296

32,236

Furniture and fixtures

6,443

6,516

Leasehold improvements

10,884

10,897

    Property and equipment at cost

50,623

49,649

Less: accumulated depreciation and amortization

(36,326)

(34,305)

    Property and equipment, net

14,297

15,344

Goodwill

18,656

18,816

Intangible assets, net

7,252

7,048

Service inventory

17,784

19,125

Deferred income taxes, net

2,370

2,396

Total Assets

$          353,906

$       350,807

LIABILITIES AND SHAREHOLDERS' EQUITY

Current Liabilities:

Accounts payable

$             7,386

$         10,413

Accrued liabilities

16,443

18,216

Income taxes payable

1,088

4,886

Current portion of unearned service revenues

19,431

19,460

Customer deposits

3,047

2,662

Current portion of obligations under capital leases

15

45

      Total current liabilities

47,410

55,682

Unearned service revenues - less current portion

11,344

11,221

Deferred tax liability, net

1,152

1,149

Obligations under capital leases - less current portion

16

19

Total Liabilities

59,922

68,071

Commitments and contingencies 

Shareholders' Equity:

Common stock - par value $.001, 50,000,000 shares authorized;   17,788,200 and 17,653,879 issued; 17,107,965 and 16,973,644   outstanding, respectively

18

18

Additional paid-in capital

187,098

181,094

Retained earnings

112,563

104,358

Accumulated other comprehensive income

3,380

6,341

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

(9,075)

(9,075)

Total Shareholders' Equity

293,984

282,736

Total Liabilities and Shareholders' Equity

$          353,906

$       350,807

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)

Six Months Ended

(in thousands)

June 29, 2013

June 30, 2012

CASH FLOWS FROM:

OPERATING ACTIVITIES:

Net income 

$          8,205

$        11,484

Adjustments to reconcile net income to net cash provided by

    operating activities:

Depreciation and amortization

3,569

3,368

Compensation for stock options and restricted stock units

2,105

1,866

Provision for bad debts

315

(84)

Deferred income tax expense (benefit) expense

1,281

(744)

Change in operating assets and liabilities:

Decrease (increase) in:

Accounts receivable

9,644

3,535

Inventories, net 

1,101

(6,173)

Prepaid expenses and other current assets

(765)

(1,569)

Income tax benefit from exercise of stock options

(814)

(1,114)

Increase (decrease) in:

Accounts payable and accrued liabilities

(4,565)

(6,313)

Income taxes payable

(2,868)

933

Customer deposits

458

317

Unearned service revenues

594

1,191

            Net cash provided by operating activities

18,260

6,697

INVESTING ACTIVITIES:

Purchases of property and equipment

(891)

(2,533)

Payments for intangible assets

(832)

(443)

        Net cash used in investing activities

(1,723)

(2,976)

 FINANCING ACTIVITIES:

Payments on capital leases

(76)

(98)

Income tax benefit from exercise of stock options

814

1,114

Proceeds from issuance of stock, net

3,084

5,601

        Net cash provided by financing activities

3,822

6,617

EFFECT OF EXCHANGE RATE CHANGES ON CASH AND   CASH EQUIVALENTS

(2,284)

(130)

INCREASE  IN CASH AND CASH EQUIVALENTS

18,075

10,208

CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD

93,233

64,540

CASH AND CASH EQUIVALENTS, END OF PERIOD

$       111,308

$        74,748

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)

Three Months Ended 

Six Months Ended 

(in thousands)

June 29, 2013

June 30, 2012

June 29, 2013

June 30, 2012

Net income

$         3,631

$         4,734

$         8,205

$       11,484

Currency translation adjustments

468

(3,022)

(2,961)

(1,688)

Comprehensive income

$         4,099

$         1,712

$         5,244

$         9,796

 

SOURCE FARO Technologies, Inc.



RELATED LINKS

http://www.faro.com