FARO Reports Third Quarter Revenue Growth of 12%, EPS Growth of 38%

LAKE MARY, Fla., Oct. 30, 2013 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the third quarter ended September 28, 2013.  Sales in the third quarter of 2013 increased $7.5 million, or 12.3%, to $68.2 million, from $60.7 million in the third quarter of 2012.  The Company reported net income increased 37.3% to $5.0 million, or $0.29 per share, in the third quarter of 2013 compared to $3.7 million, or $0.21 per share, in the third quarter of 2012.

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

New order bookings for the third quarter of 2013 were $63.4 million, an increase of 3.9% from $61.0 million in the third quarter of 2012. 

Gross margin for the third quarter of 2013 was 56.9%, compared to 53.2% in the third quarter of 2012.  Gross margins increased primarily due to lower manufacturing costs with improved average selling prices for certain metrology products.

The Company's operating margin for the third quarter increased to 11.1%, compared to 8.3% in the third quarter of 2012. Operating expenses increased due to staffing costs and related expenses of $4.1 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 strong third quarter revenue growth reflects improved market conditions, excellent sales execution and the positive effect of several new product launches.  We continued to accelerate our R&D spending in the quarter and we successfully leveraged our cost base to generate a 38% increase in earnings," stated Jay Freeland, FARO's President & CEO.  "We launched two important new products over the last two months. The first was our next generation Laser Line Probe with increased speed and data density.  The second, launched at the start of the fourth quarter, is our next generation Laser Scanner, the X330.  This new, disruptive scanner increases our measurement range to beyond 330 meters, while improving image clarity twofold and incorporating GPS technology for positioning.  Overall it was a very good quarter for the Company and we continue to maintain our leadership in the market."   

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 sales strategy and execution, its product launches, its ability to maintain market leadership, 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; 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, 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, 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 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 


Nine Months Ended 



















(in thousands, except share data)


September 28, 2013


September 29, 2012


September 28, 2013


September 29, 2012

SALES









Product


$                    55,014


$                    49,274


$                    162,670


$                      159,130

Service


13,176


11,460


39,219


33,595

Total Sales


68,190


60,734


201,889


192,725

COST OF SALES 









Product


21,372


21,107


65,632


63,933

Service


7,997


7,323


23,685


22,242

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


29,369


28,430


89,317


86,175

GROSS PROFIT


38,821


32,304


112,572


106,550










OPERATING EXPENSES:









Selling 


16,366


14,154


49,732


46,033

General and administrative


7,275


7,266


22,616


22,028

Depreciation and amortization


1,699


1,796


5,268


5,164

Research and development


5,884


4,065


16,171


12,998

Total operating expenses


31,224


27,281


93,787


86,223

INCOME FROM OPERATIONS


7,597


5,023


18,785


20,327

OTHER (INCOME) EXPENSE









Interest income


(19)


(20)


(54)


(141)

Other expense, net


809


(46)


1,428


215

Interest expense


2


2


3


22

INCOME BEFORE INCOME TAX  EXPENSE 


6,805


5,087


17,408


20,231

INCOME TAX EXPENSE


1,763


1,414


4,161


5,074

NET INCOME 


$                      5,042


$                      3,673


$                      13,247


$                        15,157

NET INCOME PER SHARE - BASIC


$                        0.29


$                        0.22


$                         0.78


$                           0.90










NET INCOME PER SHARE - DILUTED


$                        0.29


$                        0.21


$                         0.77


$                           0.88










Weighted average shares - Basic


17,095,066


16,944,120


17,053,223


16,892,338










Weighted average shares - Diluted


17,185,380


17,094,102


17,191,407


17,148,555










 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS













September 28,





2013


December 31,

(in thousands, except share data)


(unaudited)


2012

ASSETS





Current Assets:





Cash and cash equivalents


$          116,905


$         93,233

Short-term investments


64,995


64,990

Accounts receivable, net


52,939


62,559

Inventories, net


48,973


48,894

Deferred income taxes, net


6,207


7,216

Prepaid expenses and other current assets


14,614


11,186

Total current assets


304,633


288,078

Property and Equipment:





Machinery and equipment


34,519


32,236

Furniture and fixtures


6,748


6,516

Leasehold improvements


11,211


10,897

    Property and equipment at cost


52,478


49,649

Less: accumulated depreciation and amortization


(38,143)


(34,305)

    Property and equipment, net


14,335


15,344

Goodwill


19,125


18,816

Intangible assets, net


7,972


7,048

Service inventory


18,137


19,125

Deferred income taxes, net


2,452


2,396

Total Assets


$          366,654


$       350,807

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$             8,902


$         10,413

Accrued liabilities


18,786


18,216

Income taxes payable


324


4,886

Current portion of unearned service revenues


19,526


19,460

Customer deposits


2,324


2,662

Current portion of obligations under capital leases


4


45

      Total current liabilities


49,866


55,682

Unearned service revenues - less current portion


11,701


11,221

Deferred tax liability, net


1,171


1,149

Obligations under capital leases - less current portion


17


19

Total Liabilities


62,755


68,071

Commitments and contingencies 





Shareholders' Equity:





Common stock - par value $.001, 50,000,000 shares authorized; 17,795,117 and 17,653,879 issued; 17,114,882 and 16,973,644 outstanding, respectively


18


18

Additional paid-in capital


188,413


181,094

Retained earnings


117,607


104,358

Accumulated other comprehensive income


6,936


6,341

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


(9,075)


(9,075)

Total Shareholders' Equity


303,899


282,736

Total Liabilities and Shareholders' Equity


$          366,654


$       350,807

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








Nine Months Ended






(in thousands)


September 28, 2013


September 29, 2012

CASH FLOWS FROM:





OPERATING ACTIVITIES:





Net income 


$                         13,247


$                          15,157

Adjustments to reconcile net income to net cash provided by





    operating activities:





Depreciation and amortization


5,268


5,164

Compensation for stock options and restricted stock units


3,237


2,956

Provision for (net recovery of) bad debts


426


(155)

Deferred income tax expense (benefit) expense


996


(670)

Change in operating assets and liabilities:





Decrease (increase) in:





Accounts receivable


8,951


6,398

Inventories, net 


620


(5,998)

Prepaid expenses and other current assets


(3,365)


(1,231)

Income tax benefit from exercise of stock options


(814)


(1,135)

Increase (decrease) in:





Accounts payable and accrued liabilities


(925)


(7,307)

Income taxes payable


(3,700)


82

Customer deposits


(258)


(1,707)

Unearned service revenues


512


1,730

            Net cash provided by operating activities


24,195


13,284






INVESTING ACTIVITIES:





Purchases of property and equipment


(1,883)


(3,139)

Payments for intangible assets


(1,787)


(772)

        Net cash used in investing activities


(3,670)


(3,911)






 FINANCING ACTIVITIES:





Payments on capital leases


(76)


(119)

Income tax benefit from exercise of stock options


814


1,135

Proceeds from issuance of stock, net


3,267


6,107

        Net cash provided by financing activities


4,005


7,123






EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH
EQUIVALENTS


(858)


(531)






INCREASE  IN CASH AND CASH EQUIVALENTS


23,672


15,965






CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


93,233


64,540






CASH AND CASH EQUIVALENTS, END OF PERIOD


$                       116,905


$                          80,505






 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)



























Three Months Ended 


Nine Months Ended 

(in thousands)



September 28, 2013


September 29, 2012


September 28, 2013


September 29, 2012























Net income

$                       5,042


$                       3,673


$                     13,247


$                     15,157

Currency translation adjustments


3,558


1,303


597


(385)

Comprehensive income



$                       8,600


$                       4,976


$                     13,844


$                     14,772












 

SOURCE FARO Technologies, Inc.



RELATED LINKS
http://www.faro.com

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