LAKE MARY, Fla., Oct. 28,
2014 /PRNewswire/ -- FARO Technologies, Inc. (NASDAQ: FARO)
today announced results for the third quarter ended September 27, 2014. Sales in the third
quarter of 2014 increased 20.6% to $82.2
million from $68.2 million in
the third quarter of 2013. Net income increased $6.2 million, or 122.6%, to $11.2 million, or $0.64 per share, in the third quarter of 2014
from $5.0 million, or $0.29 per share, in the third quarter of
2013. In the three months ended September 27, 2014, the Company recorded a
discrete tax benefit of $4.5 million
due to the reversal of a valuation allowance originally established
against certain net operating losses. Excluding the tax
benefit, Q3 Net Income would have been $6.7
million or $0.38 per share, up
31.0% from the third quarter of 2013.
New order bookings for the third quarter of 2014 increased
$13.7 million, or 21.8%, to
$77.0 million from $63.3 million in the third quarter of 2013.
Gross profit increased $7.2
million, or 18.6%, to $46.0
million from $38.8 million in
the prior year quarter primarily driven by higher sales volume in
laser scanners and arms. Gross margin of 56.0% decreased 90
basis points from the third quarter of 2013 primarily driven by a
less favorable sales mix with the strong growth of laser scanner
sales and reduced service margin.
Operating margin decreased slightly to 10.9% in the third
quarter of 2014 from 11.1% in the third quarter of 2013 primarily
due to the lower gross margin and higher investment in R&D. In
the third quarter of 2014, R&D spending increased $1.5 million, or 24.9%, to $7.4 million from $5.9
million in the third quarter of 2013.
"FARO performed very well in the third quarter. We
produced strong top line growth with solid margins and operating
earnings, while continuing to invest in new product development,
expansion of our sales organization and IT systems
infrastructure. Our sales growth was driven by continued
strength in laser scanning and meaningful growth in the arm product
line with the release of the new laser line probe. In this
quarter, we also acquired The CAD Zone, which we expect will
accelerate our penetration in the law enforcement forensic
technologies market – keeping in mind the market is still in the
early stages of development," stated Jay
Freeland, FARO's President and CEO. "We expect our
revenue for 2014 will be consistent with our targeted longer term
organic growth model of mid-teens annual revenue growth. In
total, the third quarter was very strong for the Company."
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 FARO's growth, demand for and customer
acceptance of FARO's products, anticipated improvement in the
markets in which FARO operates, and FARO's product development and
product launches. 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",
"future," "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; 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, 2013 and Part II, Item 1A. Risk
Factors in the Company's Quarterly Report on Form 10-Q for the
quarter ended June 28, 2014.
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 other offices
in the United States, Canada, Mexico, Brazil, Germany, the United
Kingdom, France,
Spain, Italy, Poland, Turkey, the
Netherlands, Switzerland,
Portugal, India, China,
Malaysia, Vietnam, Thailand, South
Korea, and Japan.
More information is available at http://www.faro.com
Financial tables to follow:
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF OPERATIONS
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(in thousands, except
share and per share data)
|
|
September 27,
2014
|
|
September 28,
2013
|
|
September 27,
2014
|
|
September 28,
2013
|
SALES
|
|
|
|
|
|
|
|
|
Product
|
|
$
67,581
|
|
$
55,014
|
|
$
194,785
|
|
$
162,670
|
Service
|
|
14,658
|
|
13,176
|
|
42,888
|
|
39,219
|
Total
sales
|
|
82,239
|
|
68,190
|
|
237,673
|
|
201,889
|
COST OF
SALES
|
|
|
|
|
|
|
|
|
Product
|
|
26,640
|
|
21,372
|
|
78,185
|
|
65,632
|
Service
|
|
9,558
|
|
7,997
|
|
27,847
|
|
23,685
|
Total cost of sales
(exclusive of depreciation and amortization, shown separately
below)
|
|
36,198
|
|
29,369
|
|
106,032
|
|
89,317
|
GROSS
PROFIT
|
|
46,041
|
|
38,821
|
|
131,641
|
|
112,572
|
|
|
|
|
|
|
|
|
|
OPERATING
EXPENSES
|
|
|
|
|
|
|
|
|
Selling and
marketing
|
|
19,059
|
|
16,366
|
|
56,207
|
|
49,732
|
General and
administrative
|
|
8,832
|
|
7,275
|
|
26,112
|
|
22,616
|
Depreciation and
amortization
|
|
1,805
|
|
1,699
|
|
5,520
|
|
5,268
|
Research and
development
|
|
7,352
|
|
5,884
|
|
19,440
|
|
16,171
|
Total operating
expenses
|
|
37,048
|
|
31,224
|
|
107,279
|
|
93,787
|
INCOME FROM
OPERATIONS
|
|
8,993
|
|
7,597
|
|
24,362
|
|
18,785
|
OTHER (INCOME)
EXPENSE, net
|
|
|
|
|
|
|
|
|
Interest
income
|
|
(28)
|
|
(19)
|
|
(67)
|
|
(54)
|
Other (income)
expense, net
|
|
(89)
|
|
809
|
|
(78)
|
|
1,428
|
Interest
expense
|
|
5
|
|
2
|
|
6
|
|
3
|
INCOME BEFORE INCOME
TAX (BENEFIT) EXPENSE
|
|
9,105
|
|
6,805
|
|
24,501
|
|
17,408
|
INCOME TAX (BENEFIT)
EXPENSE
|
|
(2,118)
|
|
1,763
|
|
1,974
|
|
4,161
|
NET
INCOME
|
|
$
11,223
|
|
$
5,042
|
|
$
22,527
|
|
$
13,247
|
NET INCOME PER SHARE
- BASIC
|
|
$
0.65
|
|
$
0.29
|
|
$
1.31
|
|
$
0.78
|
|
|
|
|
|
|
|
|
|
NET INCOME PER SHARE
- DILUTED
|
|
$
0.64
|
|
$
0.29
|
|
$
1.29
|
|
$
0.77
|
|
|
|
|
|
|
|
|
|
Weighted average
shares - Basic
|
|
17,258,029
|
|
17,095,066
|
|
17,233,879
|
|
17,053,223
|
|
|
|
|
|
|
|
|
|
Weighted average
shares - Diluted
|
|
17,410,391
|
|
17,185,380
|
|
17,396,788
|
|
17,191,407
|
|
|
|
|
|
|
|
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
|
|
|
|
|
|
|
September
27,
|
|
|
|
|
2014
|
|
December
31,
|
(in thousands, except
share data)
|
|
(unaudited)
|
|
2013
|
ASSETS
|
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
|
$ 116,910
|
|
$ 124,630
|
Short-term
investments
|
|
64,996
|
|
64,994
|
Accounts receivable,
net
|
|
68,939
|
|
66,309
|
Inventories,
net
|
|
56,482
|
|
48,940
|
Deferred income
taxes, net
|
|
5,883
|
|
4,601
|
Prepaid expenses and
other current assets
|
|
15,901
|
|
14,645
|
Total current
assets
|
|
329,111
|
|
324,119
|
Property and
equipment:
|
|
|
|
|
Machinery and
equipment
|
|
41,115
|
|
36,924
|
Furniture and
fixtures
|
|
6,928
|
|
6,888
|
Leasehold
improvements
|
|
15,482
|
|
11,765
|
Property and equipment at cost
|
|
63,525
|
|
55,577
|
Less: accumulated
depreciation and amortization
|
|
(41,756)
|
|
(39,126)
|
Property and equipment, net
|
|
21,769
|
|
16,451
|
Goodwill
|
|
19,579
|
|
19,358
|
Intangible assets,
net
|
|
8,834
|
|
8,112
|
Service
inventory
|
|
21,589
|
|
19,033
|
Deferred income
taxes, net
|
|
8,845
|
|
4,423
|
Total
assets
|
|
$ 409,727
|
|
$ 391,496
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
|
Current
liabilities:
|
|
|
|
|
Accounts
payable
|
|
$ 9,853
|
|
$ 14,881
|
Accrued
liabilities
|
|
23,434
|
|
20,133
|
Income taxes
payable
|
|
418
|
|
1,690
|
Current portion of
unearned service revenues
|
|
22,464
|
|
21,331
|
Customer
deposits
|
|
1,223
|
|
2,910
|
Current portion of
obligations under capital leases
|
|
8
|
|
8
|
Total current
liabilities
|
|
57,400
|
|
60,953
|
Unearned service
revenues - less current portion
|
|
13,635
|
|
13,414
|
Deferred income tax
liability
|
|
1,203
|
|
1,171
|
Obligations under
capital leases - less current portion
|
|
2
|
|
8
|
Other long-term
liabilities
|
|
481
|
|
-
|
Total
liabilities
|
|
72,721
|
|
75,546
|
|
|
|
|
|
|
|
|
|
|
Shareholders'
equity:
|
|
|
|
|
Common stock - par
value $.001, 50,000,000 shares authorized; 17,954,933 and
17,868,372 issued; 17,274,698 and 17,188,137 outstanding,
respectively
|
|
18
|
|
18
|
Additional paid-in
capital
|
|
198,202
|
|
191,874
|
Retained
earnings
|
|
148,394
|
|
125,867
|
Accumulated other
comprehensive income
|
|
(533)
|
|
7,266
|
Common stock in
treasury, at cost - 680,235 shares
|
|
(9,075)
|
|
(9,075)
|
Total shareholders'
equity
|
|
337,006
|
|
315,950
|
Total liabilities and
shareholders' equity
|
|
$ 409,727
|
|
$ 391,496
|
|
|
|
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
|
|
|
|
|
Nine Months
Ended
|
|
|
|
|
|
(in
thousands)
|
|
September 27,
2014
|
|
September 28,
2013
|
CASH FLOWS
FROM:
|
|
|
|
|
OPERATING
ACTIVITIES:
|
|
|
|
|
Net
income
|
|
$
22,527
|
|
$
13,247
|
Adjustments to
reconcile net income to net cash provided by
|
|
|
|
|
operating activities:
|
|
|
|
|
Depreciation and
amortization
|
|
5,520
|
|
5,268
|
Compensation for
stock options and restricted stock units
|
|
3,669
|
|
3,237
|
(Net recovery of)
provision for bad debts
|
|
(272)
|
|
426
|
Deferred income tax
(benefit) expense
|
|
(5,804)
|
|
996
|
Income tax benefit
from exercise of stock options
|
|
(137)
|
|
(814)
|
Change in operating
assets and liabilities:
|
|
|
|
|
Decrease (increase)
in:
|
|
|
|
|
Accounts
receivable
|
|
(5,392)
|
|
8,951
|
Inventories,
net
|
|
(12,965)
|
|
620
|
Prepaid expenses and
other current assets
|
|
(1,881)
|
|
(3,365)
|
(Decrease) increase
in:
|
|
|
|
|
Accounts payable and
accrued liabilities
|
|
(805)
|
|
(925)
|
Income taxes
payable
|
|
(1,151)
|
|
(3,700)
|
Customer
deposits
|
|
(1,659)
|
|
(258)
|
Unearned service
revenues
|
|
2,827
|
|
512
|
Net cash
provided by operating activities
|
|
4,477
|
|
24,195
|
|
|
|
|
|
INVESTING
ACTIVITIES:
|
|
|
|
|
Purchases of property
and equipment
|
|
(10,306)
|
|
(1,883)
|
Payments for
intangible assets
|
|
(1,080)
|
|
(1,787)
|
Purchase of business
acquired
|
|
(1,000)
|
|
-
|
Net cash
used in investing activities
|
|
(12,386)
|
|
(3,670)
|
|
|
|
|
|
FINANCING
ACTIVITIES:
|
|
|
|
|
Payments on capital
leases
|
|
(6)
|
|
(76)
|
Income tax benefit
from exercise of stock options
|
|
137
|
|
814
|
Proceeds from
issuance of stock, net
|
|
2,522
|
|
3,267
|
Net cash
provided by financing activities
|
|
2,653
|
|
4,005
|
|
|
|
|
|
EFFECT OF EXCHANGE
RATE CHANGES ON CASH AND CASH EQUIVALENTS
|
|
(2,464)
|
|
(858)
|
|
|
|
|
|
(DECREASE) INCREASE
IN CASH AND CASH EQUIVALENTS
|
|
(7,720)
|
|
23,672
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, BEGINNING OF PERIOD
|
|
124,630
|
|
93,233
|
|
|
|
|
|
CASH AND CASH
EQUIVALENTS, END OF PERIOD
|
|
$
116,910
|
|
$
116,905
|
|
|
|
|
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(UNAUDITED)
|
|
|
|
|
|
|
|
|
|
|
|
Three Months
Ended
|
|
Nine Months
Ended
|
(in
thousands)
|
|
September 27,
2014
|
|
September 28,
2013
|
|
September 27,
2014
|
|
September 28,
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income
|
|
$
11,223
|
|
$
5,042
|
|
$
22,527
|
|
$
13,247
|
Currency translation
adjustments, net of tax
|
|
(7,817)
|
|
3,558
|
|
(7,799)
|
|
597
|
Comprehensive
income
|
|
$
3,406
|
|
$
8,600
|
|
$
14,728
|
|
$
13,844
|
|
|
|
|
|
|
|
|
|
Logo -
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SOURCE FARO Technologies, Inc.