- Quarterly sales of $92.8 million, up 13.8% year-over-year
- Construction BIM segment quarterly sales of $22.7 million, up 19.8% year-over-year
- Increased gross margin year-over-year to 57.9% for the quarter
- Decreased G&A expense to 11.9% of sales, down 1.2 percentage points year-over-year
"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:
- development by others of new or improved products, processes or technologies that make the Company's products less competitive or obsolete;
- the Company's inability to maintain its technological advantage by developing new products and enhancing its existing products;
- 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 financial conditions;
- the impact of fluctuations in foreign exchange rates; 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, 2017 and in Part II, Item 1A. Risk Factors in the Company's Quarterly Report on Form 10-Q for the quarter ended March 31, 2018.
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:
- Factory Metrology - High-precision 3D measurement, imaging and comparison of parts and complex structures within production and quality assurance processes
- 3D Machine Vision - 3D vision for both control and measurement to the manufacturing floor through 3D sensors and custom solutions
- Construction BIM - 3D capture of as-built construction projects and factories to document complex structures and perform quality control, planning and preservation
- Public Safety Forensics - Capture and analysis of on-site real world data to investigate crash, crime and fire, plan security activities and provide virtual reality training for public safety personnel
- Product Design - Capture detailed and precise 3D data from existing products permitting CAD analysis and redesign, after market design and legacy part replication
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,
|
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,
|
|
December 31,
| ||||
|
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 |
|
|
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
|
|
Q1 2017
|
|
% 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. |
