LAKE MARY, Fla., Oct. 26, 2017 /PRNewswire/
-- FARO® (NASDAQ: FARO), the world's most trusted
source for 3D measurement and imaging solutions for factory
metrology, construction BIM-CIM, product design, public safety
forensics and 3D machine vision, today announced its financial
results for the third quarter and nine months ended September 30, 2017. The third quarter of
2017 was the first quarter following the completion of FARO's Going
Vertical in Harmony (GVH) initiative; and the improvement in new
order bookings, sales, gross margin and profitability reinforces
FARO's commitment to its strategic objectives.
![FARO logo. (PRNewsFoto/FARO Technologies, Inc.) FARO logo. (PRNewsFoto/FARO Technologies, Inc.)](https://mma.prnewswire.com/media/591521/FARO_TECHNOLOGIES__INC__LOGO.jpg)
Third Quarter 2017
New order bookings for third
quarter 2017 were $90.5 million, an
increase of 13.4%, compared with $79.8
million for third quarter 2016. Sales increased to
$90.3 million, an increase of 13.4%,
for the three months ended September 30,
2017 from $79.6 million for
the three months ended September 30,
2016. The sales increase was driven by a strong increase in
product unit sales in our Construction BIM-CIM and Other segment
which includes the Public Safety Forensics and Product Design
verticals, higher average selling prices, and continued service
revenue growth.
Gross margin for third quarter 2017 increased to 57.7%, compared
with 53.6% for the third quarter last year. The increase was
related primarily to the introduction of our technically advanced,
next-generation products resulting in higher average selling prices
and our growing service revenue.
Operating income for third quarter 2017 was $2.4 million, compared with operating income of
$0.8 million in the third quarter
last year. This increase is primarily due to the execution of
our strategic initiatives to drive sales growth and improve gross
margin.
Net income for third quarter 2017 was $1.6 million or $0.10 per share, compared with net income of
$1.1 million or $0.07 per share in the third quarter last
year.
As of September 30, 2017, cash and
short-term investments was $140.8
million, of which $99.8
million was held by foreign subsidiaries.
Nine months ended September 30,
2017
New order bookings for the nine months ended
September 30, 2017 were $266.4 million, an increase of 13.4%, compared
with $234.9 million for the nine
months ended September 30,
2016. Sales increased to $254.5
million, an increase of 8.8%, for the nine months ended
September 30, 2017 from $233.9 million for the nine months ended
September 30, 2016. Similar to
our third quarter results, the sales increase was primarily driven
by a strong increase in product unit sales within the Construction
BIM-CIM vertical, higher average selling prices, and continued
growth in service revenue.
Gross margin for the first nine months of 2017 increased to
56.0%, compared with 55.3% for the same prior year period.
Similar to our third quarter results, the increase was related
primarily to the introduction of our technically advanced,
next-generation products resulting in higher average selling prices
and our growing service revenue.
Operating loss for the first nine months of 2017 was
$3.8 million, compared with an
operating income of $9.7 million for
the first nine months last year. This decrease was primarily
due to our strategic decision to grow our global sales headcount to
drive sales growth, which included $7.4
million in start-up sales headcount costs, and an additional
$3.8 million in acquisition-related
R&D costs.
Net loss for the first nine months of 2017 was $3.5 million or $0.21 per share, compared with net income of
$7.6 million or $0.45 per share in the first nine months of
2016.
"We are selectively continuing to grow the salesforce to drive
the top line. Consistent with our strategy, we grew our
trailing 12-month average sales full time experienced (FTE)
headcount by 18.2% over the same prior year period. As
previously discussed, start-up sales headcount requires
approximately 12 months to become FTE headcount. Hence, our costs
reflected the onboarding of this personnel, but our sales do not
yet reflect the full benefits. Our third quarter performance
demonstrated continued progress towards our long-term financial
objectives. The increase in sales, the gross margin
increases, and the two percent of sales decline in G&A expense
underscore our commitment to drive operating margin and resulted in
our return to quarterly profit," stated Simon Raab, Ph.D., FARO's President and CEO. "We
continued our aggressive new product drumbeat and in the past 12
months we have launched next generation products across all our
core platforms, including our next generation Quantum Arm product
line in August 2017. The Construction
BIM-CIM vertical team has capitalized on its market-leading laser
scanner technology to deliver strong 2017 performance with
year-to-date sales growth exceeding 27%. Our vertical market
approach coupled with our investment in sales headcount, release of
new products, and expense controls has re-energized the growth of
the company and represent important steps towards our long-term
financial objectives."
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, 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," "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, 2016 and Form 10-Q for
the quarters ended March 31, 2017 and
June 30, 2017.
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, 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
- Construction BIM-CIM - 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
- 3D Machine Vision - 3D vision for both control and measurement
to the manufacturing floor through 3D sensors and custom
solution
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™ and FARO Cobalt Array Imager 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
|
|
Nine Months
Ended
|
(in thousands, except
share and per share data)
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2017
|
|
September 30,
2016
|
Sales
|
|
|
|
|
|
|
|
Product
|
$
|
68,563
|
|
$
|
61,280
|
|
$
|
193,476
|
|
$
|
182,232
|
Service
|
21,687
|
|
18,320
|
|
61,018
|
|
51,654
|
Total
sales
|
90,250
|
|
79,600
|
|
254,494
|
|
233,886
|
Cost of
Sales
|
|
|
|
|
|
|
|
Product
|
26,673
|
|
25,880
|
|
78,186
|
|
74,938
|
Service
|
11,543
|
|
11,042
|
|
33,765
|
|
29,665
|
Total cost of sales
(exclusive of depreciation and
amortization, shown separately below)
|
38,216
|
|
36,922
|
|
111,951
|
|
104,603
|
Gross
Profit
|
52,034
|
|
42,678
|
|
142,543
|
|
129,283
|
Operating
Expenses:
|
|
|
|
|
|
|
|
Selling and
marketing
|
25,990
|
|
19,781
|
|
74,884
|
|
56,399
|
General and
administrative
|
10,307
|
|
10,747
|
|
32,883
|
|
31,139
|
Depreciation and
amortization
|
4,368
|
|
3,381
|
|
12,075
|
|
9,733
|
Research and
development
|
9,019
|
|
7,928
|
|
26,530
|
|
22,344
|
Total operating
expenses
|
49,684
|
|
41,837
|
|
146,372
|
|
119,615
|
Income (loss) from
operations
|
2,350
|
|
841
|
|
(3,829)
|
|
9,668
|
Other (income)
expense
|
|
|
|
|
|
|
|
Interest income,
net
|
(78)
|
|
(21)
|
|
(249)
|
|
(119)
|
Other (income)
expense, net
|
(147)
|
|
(167)
|
|
320
|
|
824
|
Income (loss) before
income tax expense (benefit)
|
2,575
|
|
1,029
|
|
(3,900)
|
|
8,963
|
Income tax expense
(benefit)
|
947
|
|
(61)
|
|
(442)
|
|
1,401
|
Net income
(loss)
|
$
|
1,628
|
|
$
|
1,090
|
|
$
|
(3,458)
|
|
$
|
7,562
|
Net income (loss) per
share - Basic
|
$
|
0.10
|
|
$
|
0.07
|
|
$
|
(0.21)
|
|
$
|
0.45
|
Net income (loss) per
share - Diluted
|
$
|
0.10
|
|
$
|
0.07
|
|
$
|
(0.21)
|
|
$
|
0.45
|
Weighted average
shares - Basic
|
16,708,446
|
|
16,674,176
|
|
16,697,729
|
|
16,647,662
|
Weighted average
shares - Diluted
|
16,796,518
|
|
16,701,617
|
|
16,697,729
|
|
16,669,550
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED BALANCE SHEETS
|
|
|
(in thousands, except
share data)
|
September 30,
2017
(unaudited)
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
Cash and cash
equivalents
|
$
|
129,841
|
|
$
|
106,169
|
Short-term
investments
|
10,970
|
|
42,942
|
Accounts receivable,
net
|
60,449
|
|
61,364
|
Inventories,
net
|
59,044
|
|
51,886
|
Prepaid expenses and
other current assets
|
20,919
|
|
16,304
|
Total current
assets
|
281,223
|
|
278,665
|
Property and
equipment:
|
|
|
|
Machinery and
equipment
|
66,049
|
|
57,063
|
Furniture and
fixtures
|
6,863
|
|
6,099
|
Leasehold
improvements
|
19,588
|
|
18,778
|
Property and
equipment, at cost
|
92,500
|
|
81,940
|
Less: accumulated
depreciation and amortization
|
(60,189)
|
|
(50,262)
|
Property and
equipment, net
|
32,311
|
|
31,678
|
Goodwill
|
52,567
|
|
46,744
|
Intangible assets,
net
|
22,983
|
|
22,279
|
Service and sales
demonstration inventory, net
|
35,250
|
|
29,136
|
Deferred income tax
assets, net
|
14,498
|
|
14,307
|
Other long-term
assets
|
1,049
|
|
905
|
Total
assets
|
$
|
439,881
|
|
$
|
423,714
|
LIABILITIES AND
SHAREHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
Accounts
payable
|
$
|
11,964
|
|
$
|
11,126
|
Accrued
liabilities
|
22,507
|
|
24,572
|
Income taxes
payable
|
—
|
|
618
|
Current portion of
unearned service revenues
|
29,080
|
|
27,422
|
Customer
deposits
|
3,065
|
|
2,872
|
Total current
liabilities
|
66,616
|
|
66,610
|
Unearned service
revenues - less current portion
|
12,665
|
|
13,813
|
Deferred income tax
liabilities
|
1,683
|
|
1,409
|
Other long-term
liabilities
|
2,191
|
|
2,225
|
Total
liabilities
|
83,155
|
|
84,057
|
Shareholders'
equity:
|
|
|
|
Common stock - par
value $.001, 50,000,000 shares authorized; 18,197,628 and
18,170,267
issued, respectively; 16,711,152 and 16,680,791 outstanding,
respectively
|
18
|
|
18
|
Additional paid-in
capital
|
218,242
|
|
212,602
|
Retained
earnings
|
179,682
|
|
183,436
|
Accumulated other
comprehensive loss
|
(9,387)
|
|
(24,561)
|
Common stock in
treasury, at cost; 1,486,476 and 1,489,476 shares,
respectively
|
(31,829)
|
|
(31,838)
|
Total shareholders'
equity
|
356,726
|
|
339,657
|
Total liabilities and
shareholders' equity
|
$
|
439,881
|
|
$
|
423,714
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
(UNAUDITED)
|
|
|
|
Nine Months
Ended
|
(in
thousands)
|
September 30,
2017
|
|
September 30,
2016
|
Cash flows
from:
|
|
|
|
Operating
activities:
|
|
|
|
Net (loss)
income
|
$
|
(3,458)
|
|
$
|
7,562
|
Adjustments to
reconcile net (loss) income to net cash (used in) provided by
operating activities:
|
|
|
|
Depreciation and
amortization
|
12,075
|
|
9,733
|
Stock-based
compensation
|
4,823
|
|
4,068
|
Provision for bad
debts
|
321
|
|
727
|
Loss on disposal of
assets
|
263
|
|
814
|
Provision for excess
and obsolete inventory
|
1,271
|
|
2,937
|
Deferred income tax
expense (benefit)
|
224
|
|
(734)
|
Income tax benefit
from exercise of stock options
|
—
|
|
(354)
|
Change in operating
assets and liabilities:
|
|
|
|
Decrease (increase)
in:
|
|
|
|
Accounts
receivable
|
3,701
|
|
12,850
|
Inventories
|
(11,450)
|
|
(8,689)
|
Prepaid expenses and
other current assets
|
(3,834)
|
|
(995)
|
(Decrease) increase
in:
|
|
|
|
Accounts payable and
accrued liabilities
|
(2,774)
|
|
1,128
|
Income taxes
payable
|
(598)
|
|
—
|
Customer
deposits
|
(6)
|
|
(1,155)
|
Unearned service
revenues
|
(1,326)
|
|
559
|
Net cash (used in)
provided by operating activities
|
(768)
|
|
28,451
|
Investing
activities:
|
|
|
|
Proceeds from sale of
investments
|
32,000
|
|
11,000
|
Purchases of property
and equipment
|
(6,081)
|
|
(5,272)
|
Payments for
intangible assets
|
(1,345)
|
|
(1,440)
|
Acquisition of
business
|
(5,496)
|
|
(20,911)
|
Net cash provided by
(used in) investing activities
|
19,078
|
|
(16,623)
|
Financing
activities:
|
|
|
|
Payments on capital
leases
|
(6)
|
|
(6)
|
Payment of contingent
consideration for acquisitions
|
(521)
|
|
(434)
|
Income tax benefit
from exercise of stock options
|
—
|
|
354
|
Proceeds from
issuance of stock
|
387
|
|
519
|
Net cash (used in)
provided by financing activities
|
(140)
|
|
433
|
Effect of exchange
rate changes on cash and cash equivalents
|
5,502
|
|
1,732
|
Increase in cash
and cash equivalents
|
23,672
|
|
13,993
|
Cash and cash
equivalents, beginning of period
|
106,169
|
|
107,356
|
Cash and cash
equivalents, end of period
|
$
|
129,841
|
|
$
|
121,349
|
FARO TECHNOLOGIES,
INC. AND SUBSIDIARIES
|
CONDENSED
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
|
(UNAUDITED)
|
|
|
|
Three Months Ended
|
|
Nine Months
Ended
|
(in
thousands)
|
September 30,
2017
|
|
September 30,
2016
|
|
September 30,
2017
|
|
September 30,
2016
|
Net income
(loss)
|
$
|
1,628
|
|
$
|
1,090
|
|
$
|
(3,458)
|
|
$
|
7,562
|
Currency translation
adjustments, net of income tax
|
3,875
|
|
1,339
|
|
15,174
|
|
6,165
|
Comprehensive
income
|
$
|
5,503
|
|
$
|
2,429
|
|
$
|
11,716
|
|
$
|
13,727
|
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SOURCE FARO Technologies, Inc.