LAKE MARY, Fla., Aug. 8 /PRNewswire-FirstCall/ -- FARO
Technologies, Inc. (NASDAQ:FARO) today reported sales for the
second quarter of 2005 of approximately $30.9 million, an increase
of $6.8 million, or 28.2% from $24.1 million the second quarter of
2004. New order bookings for the second quarter were approximately
$34.5 million, an increase of $12.6 million, or 57.5% compared with
approximately $21.9 million in the year-ago quarter. That brought
new order bookings for the first half of 2005 to approximately
$59.6 million, an increase of $18.6 million, or 45.4% compared to
$41.0 million in the first half of 2004. The Company reported net
income for the second quarter ended July 2, 2005 of approximately
$1.9 million or $0.13 per diluted share, a 53.7% decrease compared
with approximately $4.1 million or $0.29 per diluted share in the
second quarter of 2004. (Logo:
http://www.newscom.com/cgi-bin/prnh/20000522/FLM035LOGO )
Regionally sales increased 45.6% in the Americas to $15.0 million,
from $10.3 million in the second quarter of 2004. Sales increased
12.0% in Europe/Africa to $12.1 million from $10.8 million in the
second quarter of 2004. In the Asia/Pacific region sales increased
26.7% to $3.8 million from $3.0 million in the first quarter of
2004. New orders increased 64.4% in the Americas to $14.3 million,
from $8.7 million in the second quarter of 2004. New orders
increased 22.2% to $13.2 million in Europe/Africa from $10.8
million in the second quarter of 2004. In Asia/Pacific new orders
grew 119% to $7.0 million from $3.2 million in the second quarter
of 2004. "We increased our sales force by 53 or 35% in the first
half of 2005," said Simon Raab, Chief Executive Officer. "We
continued to aggressively price our products to grow market demand.
This investment has resulted in a dramatic increase in new orders,
continued acceleration in growth rate and expansion of the CAM2
market. We are cutting G&A costs to drive profitability and we
are increasing manufacturing capacity worldwide to meet this
growing demand." Gross margin for the second quarter of 2005 was
approximately 59.5%, compared to 63.2% in the second quarter of
2004. Gross margin declined primarily as a result of higher price
discounts and the impact of the integration of iQvolution (1.3%),
which the Company acquired on March 29, 2005. Selling, general and
administrative ("SG&A") expenses were approximately $13.7
million, or 44.3% of sales in the second quarter, an increase of
$4.8 million from $8.9 million or 36.9% of sales in the second
quarter of 2004. SG&A expenses as a percentage of sales were
higher in the second quarter primarily as a result of the Company's
ongoing expansion of sales offices ($1.7 million), and higher
expenses related to Sarbanes-Oxley 404 compliance ($313,000) and
legal defense costs ($336,000). The Company hired 53 new sales
people in the first half of 2005 and expects a ramp up time of
approximately 3-6 months for new sales people to become fully
effective. Operating margin for the second quarter of 2005 was
approximately 7.3%, compared to 19.2% in the second quarter of
2004. The effective income tax rate in the second quarter of 2005
was approximately 14.1% compared to 15.6% in the year-ago quarter.
Subsequent to the second quarter the Company has taken steps to
reduce expenses. The Company expects that these steps will result
in approximately $700,000 of reduced expenses for the remainder of
2005, of which approximately $500,000 will be directly related to
SG&A and the remainder will lower production costs. Outlook for
the remainder of 2005 Based on the year-to-date new order growth,
and on our historically stronger second half compared to the first
half, we are maintaining our overall sales guidance at $125 - $132
million for fiscal 2005. We expect our Gross Margin in the second
half to be similar in aggregate to the first half, or approximately
60%-62%. We expect SG&A expenses as a percentage of sales to be
less in the second half of 2005 than in the first half, as our new
sales force becomes fully productive, and acquisition integration
expenses begin to decline compared to the second quarter. There
will be ongoing expense for the establishment of the Singapore
regional headquarters and manufacturing facility as well as
Sarbanes-Oxley compliance and litigation costs. "We will continue
to vigorously defend ourselves in the previously reported patent
issue with Cimcore-Romer, and our previously announced design
work-around of the infinite rotation issue effectively removes the
threat of injunction and minimizes the distraction of this case as
we execute our growth plan this year and beyond," Raab said.
Therefore, based on these items, our first half results, revenue
projections in the second half of the year, and an expected 15%-20%
income tax rate, we are expecting earnings per share for 2005 to be
in the lower end of our existing guidance of $1.15-$1.45. Financial
Table Follows 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 our plans, objectives, projections,
expectations, assumptions, strategies, or future events. 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
"may," "believes," "anticipates," "expects," "intends," "plans,"
"seeks," "estimates," "will," "should," "could," "projects,"
"forecast," "target," "goal," and similar expressions or
discussions of our strategy or other intentions identify
forward-looking statements. Other written or oral statements, which
constitute forward-looking statements, also may be made by the
Company from time to time. 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 forward-looking statements
include, but are not limited to: * The inability of our news sales
people hired in the first half of 2005 to become fully trained and
effective in 3-6 months such as to reduce our selling expenses as a
percentage of sales in the second half of the year; * the inability
to protect our patents and other proprietary rights in the United
States and foreign countries and the assertion and ultimate outcome
of infringement claims against us, including the pending suit by
Cimcore-Romer against us; * Our inability to effectively integrate
the iQvolution acquisition and achieve the expected benefits from
it; * Our inability to keep our financial results within our target
goals as a result of various potential factors, such as investments
in potential acquisitions or strategic sales, product, or other
initiatives; * The fact that the market potential for the CAM2
market and the potential adoption rate for our products are
difficult to quantify and predict; * The effects of increased
competition as a result of recent consolidation in the CAM2 market;
* Difficulty in predicting our effective tax rate; * Our inability
to further penetrate our customer base; * Development by others of
new or improved products, processes or technologies that make our
products obsolete or less competitive; * Our inability to maintain
our technological advantage by developing new products and
enhancing our existing products; * The cyclical nature of the
industries of our customers and the financial condition of our
customers; * Fluctuations in our annual and quarterly operating
results as a result of a number of factors; * The inability of our
products to displace traditional measurement devices and attain
broad market acceptance; * The impact of competitive products and
pricing in the CAM2 market and the broad market for measurement and
inspection devices; * Our inability to continue to grow sales in
the Asia Pacific region; * Our inability to find less expensive
alternatives to stock options to attract and retain employees; *
Risks associated with expanding international operations, such as
fluctuations in currency exchange rates, difficulties in staffing
and managing foreign operations, political and economic
instability, and the burdens of complying with a wide variety of
foreign laws and labor practices; * The loss of our Chief Executive
Officer, our President and Chief Operating Officer, our Executive
Vice President and Treasurer, or our Chief Financial Officer or
other key personnel; * The failure to effectively manage our
growth; * The loss of a key supplier and the inability to find a
sufficient alternative supplier in a reasonable period or on
commercially reasonable terms; and * the other risks detailed in
the Company's Annual Report on Form 10-K and other filings from
time to time with the Securities and Exchange Commission. About
FARO: FARO Technologies, Inc. (NASDAQ:FARO) and its international
subsidiaries design, develop, and market software and portable,
computerized measurement devices. The Company's products allow
manufacturers to perform three- dimensional inspections of parts
and assemblies on the shop floor. This helps eliminate
manufacturing errors, and thereby increases productivity and
profitability for a variety of industries in FARO's worldwide
customer base. Principal products include the FARO Gage and
Gage-Plus(TM), Platinum and Titanium model Faro Arms(R), SI and X
model FARO Laser Trackers(R) , Laser Scanner LS and a CAM2(R)
family of advanced CAD-based measurement and reporting software.
FARO Technologies is ISO 9001 certified and Guide 25 approved.
Learn more at http://www.faro.com/ . FARO TECHNOLOGIES, INC. AND
SUBSIDIARIES SUMMARY FINANCIAL TABLE CONSOLIDATED STATEMENTS OF
INCOME (UNAUDITED) (amounts in thousands, except share and per
share data) Three Months Ended Six Months Ended Jul. 2, Jul. 3,
Jul. 2, Jul. 3, 2005 2004 2005 2004 SALES $30,895 $24,077 $58,511
$45,102 COST OF SALES 12,505 8,849 22,778 16,410 Gross profit
18,390 15,228 35,733 28,692 OPERATING EXPENSES: Selling 9,358 6,233
17,024 11,796 General and administrative 4,368 2,633 7,836 5,200
Depreciation and amortization 789 538 1,480 1,094 Research and
development 1,633 1,206 2,960 2,648 Total operating expenses 16,148
10,610 29,300 20,738 INCOME FROM OPERATIONS 2,242 4,618 6,433 7,954
OTHER INCOME (EXPENSES) Interest income 170 74 302 148 Other
income, net (111) 173 (139) 379 Interest expense (76) (2) (78) (5)
INCOME BEFORE INCOME TAX 2,225 4,863 6,518 8,476 INCOME TAX EXPENSE
313 760 1,137 1,525 NET INCOME $1,912 $4,103 $5,381 $6,951 NET
INCOME PER SHARE - BASIC $0.13 $0.30 $0.38 $0.51 NET INCOME PER
SHARE - DILUTED $0.13 $0.29 $0.37 $0.50 Weighted average shares -
Basic 14,226,540 13,766,588 14,131,266 13,565,132 Weighted average
shares - Diluted 14,578,313 14,154,243 14,491,672 14,039,826
SELECTED CONSOLIDATED BALANCE SHEET DATA (UNAUDITED) (in thousands)
Jul. 2, 2005 Cash and investments $25,740 Current assets $80,082
Total assets $112,223 Current liabilities $15,932 Obligations under
capital leases - less current portion $265 Total liabilities
$17,365 Total shareholders' equity $94,858 Total liabilities and
shareholders' equity $112,223 SELECTED CONSOLIDATED STATEMENT OF
CASH FLOWS DATA (UNAUDITED) (in thousands) Jul. 2, 2005 Net cash
used in operating activities $(4,529) Net cash provided by
investing activities $354 Net cash provided by financing activities
$272 Effect of Exchange Rate Changes on Cash $(1,504) Cash and Cash
Equivalents, Beginning of Period $16,357 Cash and Cash Equivalents,
End of Period $10,950
http://www.newscom.com/cgi-bin/prnh/20000522/FLM035LOGO
http://photoarchive.ap.org/ DATASOURCE: FARO Technologies, Inc.
CONTACT: Greg Fraser, EVP of FARO, +1-407-333-9911; or Vic Allgeier
of The TTC Group, +1-212-227-0997, for FARO Web site:
http://www.faro.com/
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