FARO Reports Second Quarter 2013 Results

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.

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

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.



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