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

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

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.

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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