FORM 8-K | ||
FARO TECHNOLOGIES, INC. | ||
(Exact name of registrant as specified in its charter) | ||
Florida | 0-23081 | 59-3157093 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
o | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
o | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
o | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
o | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Exhibit Number | Description | |
99.1 |
FARO Technologies, Inc. (Registrant) | ||||||
April 25, 2018 | /s/ Robert Seidel | |||||
By: | Robert Seidel | |||||
Its: | Chief Financial Officer | |||||
(Duly Authorized Officer and Principal Financial Officer) |
• | 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 |
• | 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. |
• | 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 |
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 |
(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 |
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 |
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 | % |
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