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FARO Reports First Quarter 2018 Financial Results

LAKE MARY, Fla., April 25, 2018 — (PRNewswire) — FARO® (NASDAQ: FARO), the world's most trusted source for 3D measurement and imaging solutions for 3D factory, construction BIM, product design, and public safety forensics, today announced its financial results for the first quarter ended March 31, 2018.  Highlights from the quarter included:

FARO logo. (PRNewsFoto/FARO Technologies, Inc.)

"Our first quarter performance provides another quarter that validates our vertical market strategy and growth initiatives with our third consecutive quarter of double digit sales growth and gross margin increase year-over-year," stated Dr. Simon Raab, President and Chief Executive Officer.  "We continued our innovation in the construction BIM market by releasing FARO BuildIT Construction software to leverage laser scanner technology to eliminate waste and enhance quality control in construction projects.  Our emerging verticals of product design and public safety forensics combined to deliver strong year-over-year sales growth, demonstrating the high growth potential in these markets and the returns associated with our sales headcount investments.  Quarterly earnings were affected by our intentional acceleration of R&D activities for the fast-growing BIM and 3D machine vision markets.  In the quarter, we kicked off our global lean continuous improvement initiative named FARO Best! to further drive efficiencies and improvement in operating margin.  With these initiatives and continued investment in R&D, both organically and through the acquisition of strong talent and technologies, we continue to provide more value to our customers and shareholders."

Total sales increased by $11.2 million, or 13.8%, to $92.8 million for the quarter ended March 31, 2018 from $81.6 million for the quarter ended March 31, 2017.  Our sales increase was primarily driven by a strong increase in product unit sales in our construction BIM segment, higher average selling prices in our 3D factory segment, and continued service revenue growth.  New order bookings increased by $9.2 million, or 10.6%, to $96.1 million for the quarter ended March 31, 2018 from $86.9 million for the quarter ended March 31, 2017.

Gross margin for the quarter was 57.9%, up 4.3 percentage points compared with 53.6% in the same prior year period, reflecting a strong increase in our product gross margin, mostly due to higher average selling prices especially in our 3D factory segment and improved manufacturing efficiencies with our volume increases in the construction BIM and public safety forensics verticals.

Operating income was $0.7 million for the first quarter of 2018, reflecting an increase of $2.7 million compared with an operating loss of $2.0 million in the first quarter last year.  This increase was primarily driven by the execution of our strategic initiatives to deliver double digit sales growth and a strong increase in gross margin by developing next-generation, market-leading products and expanding our sales headcount across our vertical markets.

Net income for the first quarter of 2018 was $0.5 million or $0.03 per share, compared with a net loss of $1.5 million or $0.09 per share in the first quarter last year.

As of March 31, 2018, cash and short-term investments totaled $149.8 million, of which $93.9 million was held by foreign subsidiaries.

*****

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 and customer acceptance of FARO's products, FARO's product development and product launches, FARO's growth, strategic and continuous improvement initiatives and FARO's growth potential. 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 "is," "will" 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:

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.

FARO is the world's most trusted source for 3D measurement, imaging and realization technology. The Company develops and markets computer-aided measurement and imaging devices and software for the following vertical markets:

FARO's global headquarters is located in Lake Mary, Florida. The Company also has a technology center and manufacturing facility consisting of approximately 90,400 square feet located in Exton, Pennsylvania containing research and development, manufacturing and service operations of our FARO Laser Tracker, FARO Cobalt Array Imager, and Tracer product lines. The Company's European regional headquarters is located in Stuttgart, Germany and its Asia-Pacific regional headquarters is located in Singapore. FARO has other offices in the United States, Canada, Mexico, Brazil, Germany, the United Kingdom, France, Spain, Italy, Poland, Turkey, the Netherlands, Switzerland, India, China, Malaysia, Thailand, South Korea, Japan, and Australia.

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

 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(UNAUDITED)



Three Months Ended

(in thousands, except share and per share data)

March 31, 2018


March 31, 2017

Sales




Product

$

70,581



$

62,380


Service

22,253



19,182


Total sales

92,834



81,562


Cost of Sales




Product

26,884



27,058


Service

12,164



10,755


Total cost of sales (exclusive of depreciation and amortization,
shown separately below)

39,048



37,813


Gross Profit

53,786



43,749


Operating Expenses




Selling and marketing

28,271



22,872


General and administrative

11,073



10,699


Depreciation and amortization

4,343



3,718


Research and development

9,406



8,466


Total operating expenses

53,093



45,755


Income (loss) from operations

693



(2,006)


Other expense (income)




Interest income

(73)



(82)


Other expense, net

184



8


Income (loss) before income tax expense (benefit)

582



(1,932)


Income tax expense (benefit)

127



(471)


Net income (loss)

$

455



$

(1,461)


Net income (loss) per share - Basic

$

0.03



$

(0.09)


Net income (loss) per share - Diluted

$

0.03



$

(0.09)


Weighted average shares - Basic

16,837,754



16,684,164


Weighted average shares - Diluted

17,142,770



16,684,164


 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS


(in thousands, except share data)

March 31,
 2018
(unaudited)


December 31,
 2017

ASSETS




Current assets:




Cash and cash equivalents

$

138,826



$

140,960


Short-term investments

10,957



10,997


Accounts receivable, net

71,631



72,105


Inventories, net

58,376



53,786


Prepaid expenses and other current assets

19,119



16,311


Total current assets

298,909



294,159


Property and equipment:




Machinery and equipment

69,355



66,514


Furniture and fixtures

6,853



6,945


Leasehold improvements

20,230



19,872


Property and equipment at cost

96,438



93,331


Less: accumulated depreciation and amortization

(64,907)



(61,452)


Property and equipment, net

31,531



31,879


Goodwill

54,511



52,750


Intangible assets, net

25,399



22,540


Service and sales demonstration inventory, net

41,703



39,614


Deferred income tax assets, net

15,738



15,606


Other long-term assets

2,861



2,030


Total assets

$

470,652



$

458,578


LIABILITIES AND SHAREHOLDERS' EQUITY




Current liabilities:




Accounts payable

$

11,145



$

11,569


Accrued liabilities

24,367



27,362


Income taxes payable

2,104



4,676


Current portion of unearned service revenues

30,976



29,674


Customer deposits

2,456



2,604


Total current liabilities

71,048



75,885


Unearned service revenues - less current portion

12,531



11,815


Deferred income tax liabilities

700



695


Income taxes payable - less current portion

15,952



15,952


Other long-term liabilities

2,092



2,165


Total liabilities

102,323



106,512


Commitments and contingencies




Shareholders' equity:




Common stock - par value $.001, 50,000,000 shares authorized; 18,416,020 and
18,277,142 issued, respectively; 16,955,679 and 16,796,884 outstanding, respectively

18



18


Additional paid-in capital

231,209



223,055


Retained earnings

171,444



168,624


Accumulated other comprehensive loss

(2,608)



(7,822)


Common stock in treasury, at cost; 1,460,341 and 1,480,258 shares, respectively

(31,734)



(31,809)


Total shareholders' equity

368,329



352,066


Total liabilities and shareholders' equity

$

470,652



$

458,578



 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(UNAUDITED)



Three Months Ended

(in thousands)

March 31, 2018


March 31, 2017

Cash flows from:




Operating activities:




Net income (loss)

$

455



$

(1,461)


Adjustments to reconcile net income (loss) to net cash used in operating activities:




Depreciation and amortization

4,343



3,718


Stock-based compensation

1,553



1,417


Provision for bad debts

24



89


Loss on disposal of assets

127



77


Provision for excess and obsolete inventory

312



567


Deferred income tax (benefit) expense

(128)



6


Change in operating assets and liabilities:




Decrease (increase) in:




Accounts receivable

1,808



1,722


Inventories

(5,208)



(2,480)


Prepaid expenses and other current assets

(936)



(1,181)


(Decrease) increase in:




Accounts payable and accrued liabilities

(4,846)



(2,442)


Income taxes payable

(2,571)



(618)


Customer deposits

(213)



(123)


Unearned service revenues

1,231



430


Net cash used in operating activities

(4,049)



(279)


Investing activities:




Purchases of property and equipment

(2,243)



(1,745)


Payments for intangible assets

(650)



(332)


Acquisition of businesses

(3,966)




Net cash used in investing activities

(6,859)



(2,077)


Financing activities:




Payments on capital leases

(46)



(2)


Proceeds from issuance of stock related to stock option exercises

6,785



268


Net cash provided by financing activities

6,739



266


Effect of exchange rate changes on cash and cash equivalents

2,035



1,779


Decrease in cash and cash equivalents

(2,134)



(311)


Cash and cash equivalents, beginning of period

140,960



106,169


Cash and cash equivalents, end of period

$

138,826



$

105,858


 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(UNAUDITED)



Three Months Ended

(in thousands)

March 31, 2018


March 31, 2017

Net income (loss)

$

455



$

(1,461)


Currency translation adjustments, net of income tax

5,214



4,159


Comprehensive income

$

5,669



$

2,698


 

 

FARO TECHNOLOGIES, INC. AND SUBSIDIARIES

UNAUDITED SUPPLEMENTAL DATA


(revenue in thousands)


Q1 2018
Revenue


Q1 2017
Revenue


% Change

Reporting Segments







3D Factory(1)


$

61,358



$

57,222



7.3

%

Construction BIM(2)


22,682



18,941



19.8

%

Emerging Verticals(3)


8,794



5,399



62.9

%

Total


$

92,834



$

81,562



13.8

%

 

(1) The 3D Factory reporting segment (formerly known as Factory Metrology) includes our Factory Metrology and 3D Machine Vision verticals.

(2) The Construction BIM reporting segment contains solely our Construction BIM vertical (formerly known as Construction BIM-CIM).

(3) The Emerging Verticals reporting segment (formerly known as Other) includes our Product Design and Public Safety Forensics verticals.

 

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SOURCE FARO Technologies, Inc.

Contact:
Company Name: FARO Technologies, Inc.
Nancy Setteducati
Email Contact 1-407-3339911x1082
Web: http://www.faro.com
Financial data for FARO Technologies, Inc.