FARO Technologies Inc.

$FARO - Nasdaq - Computers and Electronic Equipment
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FARO Reports First Quarter 2013 Results

LAKE MARY, Fla., April 30, 2013 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO) today announced results for the first quarter ended March 30, 2013. Sales in the first quarter of 2013 increased $0.2 million to $65.4 million, from $65.2 million in the first quarter of 2012. The Company reported net income of $4.6 million, or $0.27 per share, in the first quarter of 2013, compared with $6.7 million, or $0.39 per share, in the first quarter of 2012.

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

New order bookings for the first quarter of 2013 were $64.6 million, an increase of 4.0% from $62.1 million in the first quarter of 2012.

Gross margin for the first quarter of 2013 was 56.3%, compared with 57.0% in the first quarter of 2012. Gross margins were slightly lower, primarily as a result of proportionately higher laser scanner sales sold through the distribution channel, which yield lower margins but allow FARO to avoid incurring related selling expense, as well as some pricing pressure in certain metrology products. Gross margins have improved from 53.4% in the fourth quarter of 2012, largely as a result of manufacturing cost improvements and increased margins from warranty sales.

The Company's operating margin for the first quarter of 2013 decreased to 8.7% from 12.9% in the first quarter of 2012, resulting from slightly lower gross margins and increased staffing and travel costs of approximately $1.6 million primarily in our sales and marketing, customer service and research and development organizations.

The Company's cash balance increased by $11.3 million during the quarter.

"Our results for the quarter reflect continuing sluggish European and Asian markets where order and sales levels remain somewhat weaker than expected. In the Americas, order volume in the quarter was particularly strong, up 25% year-over-year.  As expected, competition has intensified in tight markets.  Our overarching goals are to remain the industry leader and grow sales and earnings in all market conditions.  As such, in the first quarter of 2013 we made additional investments in sales and marketing personnel to aggressively grow product and service revenue, and expanded our research & development teams to accelerate new product development," stated Jay Freeland, President and Chief Executive Officer.

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 and competition for its products, its position as industry leader 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 











(in thousands, except share data)


March 30, 2013


March 31, 2012

SALES





Product


$          52,482


$          54,424

Service


12,888


10,805

Total Sales


65,370


65,229

COST OF SALES 





Product


21,339


20,506

Service


7,206


7,537

Total Cost of Sales (exclusive of depreciation and amortization,

shown separately below)


28,545


28,043

GROSS PROFIT


36,825


37,186






OPERATING EXPENSES:





Selling 


16,650


16,038

General and administrative


7,515


6,628

Depreciation and amortization


1,833


1,679

Research and development


5,125


4,408

Total operating expenses


31,123


28,753

INCOME FROM OPERATIONS


5,702


8,433

OTHER (INCOME) EXPENSE





Interest income


(16)


(101)

Other expense (income), net


115


(140)

Interest expense


1


13

INCOME BEFORE INCOME TAX  EXPENSE 


5,602


8,661

INCOME TAX EXPENSE


1,028


1,911

NET INCOME 


$            4,574


$            6,750

NET INCOME PER SHARE - BASIC


$              0.27


$              0.40






NET INCOME PER SHARE - DILUTED


$              0.27


$              0.39






Weighted average shares - Basic


17,009,773


16,788,241






Weighted average shares - Diluted


17,176,876


17,162,959






  







FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS













March 30,


December 31,



2013


2012

(in thousands, except share data)


(unaudited)



ASSETS





Current Assets:





Cash and cash equivalents


$  104,598


$        93,233

Short-term investments


64,991


64,990

Accounts receivable, net


53,721


62,559

Inventories, net


50,024


48,894

Deferred income taxes, net


6,025


7,216

Prepaid expenses and other current assets


13,106


11,186

Total current assets


292,465


288,078

Property and Equipment:





Machinery and equipment


32,196


32,236

Furniture and fixtures


6,366


6,516

Leasehold improvements


10,812


10,897

    Property and equipment at cost


49,374


49,649

Less: accumulated depreciation and amortization


(34,913)


(34,305)

    Property and equipment, net


14,461


15,344

Goodwill


18,485


18,816

Intangible assets, net


7,186


7,048

Service inventory


18,316


19,125

Deferred income taxes, net


2,345


2,396

Total Assets


$  353,258


$      350,807

LIABILITIES AND SHAREHOLDERS' EQUITY





Current Liabilities:





Accounts payable


$     9,460


$        10,413

Accrued liabilities


18,260


18,216

Income taxes payable


2,379


4,886

Current portion of unearned service revenues


19,235


19,460

Customer deposits


2,692


2,662

Current portion of obligations under capital leases


28


45

      Total current liabilities


52,054


55,682

Unearned service revenues - less current portion


11,312


11,221

Deferred tax liability, net


1,118


1,149

Obligations under capital leases - less current portion


17


19

Total Liabilities


64,501


68,071






Shareholders' Equity:





Common stock - par value $. 001, 50,000,000 shares authorized; 17,771,559 and

17,653,879 issued; 17,091,324 and 16,973,644 outstanding, respectively


18


18

Additional paid-in capital


185,969


181,094

Retained earnings


108,933


104,358

Accumulated other comprehensive income


2,912


6,341

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


(9,075)


(9,075)

Total Shareholders' Equity


288,757


282,736

Total Liabilities and Shareholders' Equity


$  353,258


$      350,807






  







FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)








Three Months Ended






(in thousands)


March 30, 2013


March 31, 2012

CASH FLOWS FROM:





OPERATING ACTIVITIES:





Net income 


$              4,574


$              6,750

Adjustments to reconcile net income to net cash provided by





    operating activities:





Depreciation and amortization


1,833


1,679

Compensation for stock options and restricted stock units


1,018


773

Provision for bad debts


274


11

Deferred income tax (benefit) expense


1,162


(5)

Change in operating assets and liabilities:





Decrease (increase) in:





Accounts receivable


7,541


9,254

Inventories, net 


(1,299)


(6,432)

Prepaid expenses and other current assets


(2,069)


(1,979)

Income tax benefit from exercise of stock options


(808)


(1,056)

Increase (decrease) in:





Accounts payable and accrued liabilities


(676)


(4,290)

Income taxes payable


(1,658)


(774)

Customer deposits


5


(258)

Unearned service revenues


376


661

            Net cash provided by operating activities


10,273


4,334






INVESTING ACTIVITIES:





Purchases of property and equipment


(256)


(703)

Payments for intangible assets


(494)


(193)

        Net cash used in investing activities


(750)


(896)






 FINANCING ACTIVITIES:





Payments on capital leases


(63)


(131)

Income tax benefit from exercise of stock options


808


1,056

Proceeds from issuance of stock, net


3,049


5,288

        Net cash provided by financing activities


3,794


6,213






EFFECT OF EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS


(1,952)


(603)






INCREASE  IN CASH AND CASH EQUIVALENTS


11,365


9,048






CASH AND CASH EQUIVALENTS, BEGINNING OF PERIOD


93,233


64,540






CASH AND CASH EQUIVALENTS, END OF PERIOD


$           104,598


$             73,588






  









FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)



















Three Months Ended 

(in thousands)




March 30, 2013


March 31, 2012















Net income




$            4,574


$            6,750

Currency translation adjustments




(3,429)


1,334

Comprehensive income




$            1,145


$            8,084








 

SOURCE FARO Technologies, Inc.

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